Philadelphia Reflections

The musings of a physician who has served the community for over six decades

Related Topics

Reflections on Impending Obamacare
Reform was surely needed to remove distortions imposed on medical care by its financing. The next big questions are what the Affordable Care Act really reforms; and, whether the result will be affordable for the whole nation. Here are some proposals, just in case.

Obamacare: Examination and Response
An appraisal of the Affordable Care Act and-- with some guesswork-- its tricky politics. Then, a way to capture major new revenue, even paying down existing Medicare debt, without raising premiums or harming quality care. Then, an offering of reforms even more basic, but more incremental. Finally, the briefest of statements about the basic premise.

Obamacare And Its Repair, Executive Summary

For a while, there was a great air of mystery about why President Obama was in such a hurry to get his healthcare bill through the Democrat-dominated House of Representatives, after passage by a Democrat-majority Senate. There were to be no amendments, and in front of television several thousand pages were dumped on the desks of Congressmen with no amendments permitted, under orders to call a vote within a day. Just read Jacob Hacker's book The Road to Nowhere about the Clinton Plan for Health of ten years earlier, and since Hacker was a campaign advisor for Obama, make a strong guess that Obama was following the same plan -- but encountered a sudden twist. Everybody in the House and Senate had been encouraged to submit his best ideas, so inevitably the House and Senate versions differed so much they had to go to a House-Senate conference committee, also dominated by Democrats. As related by Hacker, the plan was for the President to appear before the conference committee, pick the cherries out of both puddings, and emerge with his health bill. The rest would be discarded as useful camouflage.

Unfortunately, the Senate bill passed but Senator Kennedy died, and to general amazement, a Republican Senator (Scott Brown) was elected to take his seat in Massachusetts. Senator Byrd of West Virginia died soon thereafter, and the ability of the Senate to defeat a filibuster was destroyed while the health bill was half-way through the plan. Since an amended bill would have to be resubmitted to the Senate, it would never pass. So an identical copy of the Senate bill was hammered through the House of Representatives, avoiding the need for a conference committee, and thus avoiding certain defeat in the Senate. So the Obama bill is really the Senate version, containing much baggage which was originally intended to be dropped. And failing to contain some nuggets which would have come from the House bill, which might have made the final product make more sense. Soon afterwards, the House of Representatives suddenly elected sixty-some Tea Party stalwarts, making it absolutely certain that Obama was just going to have to live with the 450 sections of the Senate bill, because these hootin', hollering Congressmen quite naturally supposed that their districts had sent them to Congress to defeat Obamacare, anyway they could. Rather than accept the voters' mandate that Obamacare just wouldn't do, an effort was made to portray the new Republican Congressmen as mindless obstructionists. Which is exactly what they thought the voters wanted them to be. When the Supreme Court then put its foot on the federal government telling the states to take the uninsured into Medicaid, this lesson in what the Tenth Amendment says, was soon followed by the utter failure of the computer programs for the Electronic Insurance Exchanges, and nobody could see what their health plan looked like (or cost), to say nothing of being unable to buy it if they wanted to. Although Section 1251 of the Affordable Care Act assures that everyone could keep his old plan if he preferred it, millions of letters were sent to subscribers who couldn't buy one of the new plans for computer reasons, that their old plans were canceled, while the President confused everybody by repeating the mantra that they could keep their old plans.

Quite soon, employers of more than fifty employees were given a two-year delay in mandated switch-over, echoing the experience which had caused the Clinton Health Plan to be withdrawn a decade earlier, and arousing the suspicion that Big Business was again going to pull out. Individuals were given no such reprieve and naturally were upset about it. Just about every newly offered plan contained a far larger deductible than most people had ever seen and a higher premium than they had ever paid. What made it affordable was the government subsidy, which the computer mess made it difficult to measure. Very few had read the 450 sections of the new law of the Land, and if they had, would have been highly disconcerted. Much of it was never intended to be enacted, but it was impossible to know which sections they were, and so it was not reassuring to be told that the President intended not to implement such unidentified sections. With our troops retreating in Afghanistan and Iraq, and both Syria and Russia conducting acts of war in defiance of us. And the economy still in a slump after five years of "recovery". And the Federal Reserve buying dud bonds by the trillions of dollars worth. And the rest of our allies in worse financial shape than we were -- incompetence was a word on every tongue, to defend against it by the Democrats, to denounce it by every Republican.

So that's where it stands, six months before the next election. In the meantime, I have been working on two projects for real reform of the healthcare system. The first is to improve on the Health Savings Accounts, which John McClaughry and I devised in 1980. The proposal is that since anyone and everyone can start an account, it is universal by definition, portable between jobs, tax-deductible for everyone, and running about 30% cheaper than conventional insurance. I am proposing to expand the program by making Flexible Spending Accounts convertible to it and permitting it to pay the premiums for the deductible catastrophic insurance which is a condition for buying it. Doing so would extend the income tax deduction which you get if your employer buys insurance for you, to everyone. But all of that is without mentioning the astonishing amounts of money that would accumulate from investing the HSA in low-cost index funds of premium American stocks. Nothing is guaranteed, but the experience of the last century is that this approach would assure enough internal income to pay for the entire lifetime healthcare cost of most people who bought it young enough. If you are sixty-four years old, you may have missed most of your chance, but younger people could have quite a windfall. The transition from here to there is pretty technical, and I hope I have not over-simplified it.

The second theme I have pursued is to start listing the many simplifications and cost savings for American healthcare, which I have assembled in sixty years of practicing medicine. What I am suggesting is what real healthcare reform would look like, not just coverage extension. The Congressional Budget Office predicts that spending a trillion dollars will still leave us 30 million uninsured people under the Affordable Care Act. Instead of that, I propose we develop three specialized (and probably non-insurance) programs for 8 million people in jail, 8 million mentally impaired, and twelve million illegal immigrants. Forget about mandatory; if you want to help thirty million people, devise three specialized programs aimed at these three groups, and you have it. Meanwhile, a whole group of flaws was introduced into American health insurance during the last Depression of the 1930s, and they should be repaired. It is preposterous to use three insurance plans to pay for a medical service (80% primary, 20% secondary, plus Major Medical for outliers). First dollar coverage was designed to exploit the Henry Kaiser income tax deduction, which should have been repealed decades ago. Co-pay of 20% has no effect on utilization, and 50% co-pay would infuriate people; co-pay should be abolished. Service benefits mean you never know what your bill is, and never know how much it is going to be; costs escalate. Payment by diagnosis means it doesn't matter how long you stay in the hospital, or how many tests you have, the hospital gets paid the same; consequently, it is essentially a rationing device for inpatients, making hospitals charge emergency room and outpatient services astronomical amounts. And the whole thing has transformed the purpose of health insurance. Nowadays, the real reason to have health insurance is to keep the hospital from fleecing you. Which they have to do, to remain solvent. The list goes on and on, to the point where you have to concede that you can only do so much in a short time. You just have to hold back to keep from overturning the system.

Originally published: Tuesday, September 29, 2009; most-recently modified: Wednesday, May 29, 2019

Wow, this is in every rseepct what I needed to know.
Posted by: Starly   |   Jul 29, 2011 3:02 PM
were there supposed to be 12 suggestions in this section?
Posted by: bzp   |   Oct 3, 2009 9:42 AM