Will Obamacare Fail?

Stanley Feld M.D.,FACP,MACE

Unfortunately, the answer is yes.

President Obama’s healthcare reform plan will fail because of its poor construction.

The majority of Americans agree with President Obama’s goals. Americans want affordable universal high quality healthcare. President Obama’s healthcare reform bill will not accomplish these goals.

President Obama’s healthcare reform bill will waste 2 trillion dollars, restrict access to care, raise taxes, ration care and destroy infrastructure of a healthcare system that provides excellent medical care to the sick.

Our healthcare system is broken because prices are out of control. President Obama’s healthcare reform bill with a mushrooming government bureaucracy will not control prices by competition. It will try to control prices by regulations and force. Price controls never work.

Previous behavior is a predictor of future behavior. It follows that previous healthcare system reform failures are a predictor of future healthcare reform failure.

President Obama’s healthcare reform plan is similar to the failed Massachusetts healthcare reform plan (Romneycare). Romneycare was destined to fail from the onset.

The similarities between Obamacare and Romneycare are glaring;

1. Both the Massachusetts healthcare reform plan and Obamacare mandate individual healthcare insurance.
2. If individuals do not have insurance they must pay a penalty.
3. Most businesses are required to participate or pay a fine.
4. Both healthcare reform plans rely on government-designed purchasing exchanges (healthcare insurance exchanges)
5. The healthcare insurance exchanges are supposed to provide a vehicle to control private health insurance.
6. The uninsured are covered by the expansion of Medicaid and with Obamacare the expansion of Medicare.
7. Qualified citizens receive healthcare insurance subsidies to help pay for their mandated healthcare insurance policies.
8. The state of Massachusetts has set up many new boards and committees to oversee and administer the healthcare reform plan. The added bureaucracy has failed to control costs.

I predicted the Massachusetts plan would fail at its onset. It has been plagued with cost overruns from the start. I cannot image President Obama’s plan can be budget neutral after ten years. I suspect many Americans can’t image it either. I think the Scott Brown election has given America the notion that the citizens of Massachusetts don’t think Obamacare can be successful.

Why did the Massachusetts Healthcare Reform Plan fail?

1. The healthcare reform plan is administered by the healthcare insurance industry. It controls the healthcare dollar and determines the premiums based on defective accounting rules. These rules permit the healthcare insurance industry to overestimate expenses and underestimate reserves. The result is increased premiums.
2. No one has the political will to challenge or change these rules. The rules permit the healthcare insurance industry to declare a loss while it is removing sixty five cents out of every healthcare dollar from the healthcare dollar pool.
3. There are 410,000 people who are newly insured in Massachusetts. Of those 200,000 are fully subsidized by Massachusetts state insurance exchange.

Policy makers underestimated the number of people that would qualify for subsidy.

1. 3% of the population remains uninsured. The total 140,000 uninsured are required to pay a penalty. Half (70,000) uninsured cannot afford the premiums or penalty and receive a waiver.
2. The state’s premiums have increased every year since the onset of healthcare reform. A typical family of four’s annual premium costs almost $13,788, the highest in the country. This is twice the cost of premiums in Texas. The premiums are 27% higher than the national average.
3. This cost does not include out of pocket expenses.
4. Massachusetts regulations serve to eliminate competition in the healthcare insurance market.
5. Mandates dictate the services needed to be covered.
6. Healthcare insurance vendors are required to sell "just-in-time" policies even if people wait until they are sick to buy coverage.
7. Patients game the system by purchasing health insurance when they need it. Patients then drop insurance a few months later and pay the less expensive penalty. The same will apply to President Obama’s plan.
8. Massachusetts’ safety-net hospitals are treating a disproportionate number of lower-income and uninsured patients. State compensation of these safety-net hospitals has been reduced under the new healthcare plan. It is only a matter of time before the safety net hospitals will declare bankruptcy. The alternative is to increase state taxes further. The result is people will move out of Massachusetts lowering the tax base
9. There is a "critical shortage" of primary-care physicians as a result of increasing the number of people covered and an increase in demand for medical services.
10. Physician compensation is decreasing. Physicians are fleeing the state. Patients cannot get doctor appointments.
11. New patients wait 44 days to get an appointment with a primary-care doctor. A secondary market for primary-care doctor appointments is developing. People are selling their appointment times to patients.
12. Appointment time shortages have led to an increasingly expensive emergency room visit for basic medical services. Emergency room visits increased 7%. More than half need emergency room attention. ER visits are very costly.
13. President Obama gave the state of Massachusetts an 8 billion dollar bailout to help cover healthcare reform expenses. The healthcare insurance industry benefited by the stimulus bailout.

The state has refused to permit the insurance industry to raise rates. The insurance industry will leave the state or decrease reimbursement for services. The results are obvious.

If you do not fix the defects in the healthcare system you will not fix the financial difficulties. People must own their healthcare dollar, be responsible for their own care and have the freedom to choose. All this adds up to consumer driven healthcare using the ideal medical saving accounts.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.