Obamacare Truth: Higher Taxes, Worse Care
10:55 AM
by Nick Stone of Drawnlines Politics.
Drawnlines tackles, point by point, the reasons why Obamacare is a terrible plan for most American families, particularly the Middle Class. We will delve into the talking points and details to figure out why The Economist Magazine says Obamacare "will hurt".
Who's Covered, Who Still Isn't:
A keystone in the president's proposal to lower overall health care cost is the concept of insuring every American. This is also known as "universal coverage", where the risk pool is broadened by adding in lower risk participants. The Senate Finance Bill claims to cover 94% of Americans, short of the 97% that HR3200 (the "pull grandma's plug" bill) would cover. Three main sets of individuals disproportionately make up the current ranks of our uninsured: 1)the young and healthy that rarely see a doctor and choose to avoid high health insurance premiums, 2)those who cannot afford health insurance and do not qualify for state or federal programs, and 3)illegal immigrants
Bringing the first subset of people back into the ranks of the insured is especially critical for the president to decrease "average" health premiums, because young healthy people would essentially subsidize care for the elderly and sick, while requiring little care themselves. By being more likely to have regular checkups and blood work while under insurance, the young would also then be more likely to catch health concerns early on. That, of course, sharply increases survivability and decreases long term care costs.
While 100% coverage (for citizens of the country) would of course be ideal to bring down the cost of insurance, I've read that a figure in the high 90s is essential for substantive reform to be effective and efficient. By spending upward of $829b and still leaving at least 6% of Americans without coverage, the goal of cost savings may be out of reach. Obamacare would then be just another spending bill, but with vast consequences for those who receive care or pay taxes.
Subsidies and Penalties:
One of the greatest questions has long been that of requiring insurance. How, for example, would a mandate be enforced? The most likely answer would be the example set forth by the state of Massachusetts which imposes a financial penalty on individuals without health coverage. Because the penalty is still cheaper than the cost of insurance, many impoverished Mass. families choose to pay the penalty and still do not carry insurance. This is a human tragedy, and a great example of unintended consequences of health care overhaul. This is a major deficiency of the Baucus Bill.
To assist poor families in purchasing coverage, all health care bills currently under consideration provide for subsidies to families and individuals who would be unable to afford insurance by themselves. The question then is how much, to whom, and how to pay for it. Any increase in subsidies increases number of insured, but it also increases the cost of the bill to taxpayers and must be offset by new revenue sources.
Middle Class Tax and Fee Hikes:
Economic Policy Expert Douglas Holtz-Eaken wrote a WSJ editorial specifically calling the Baucus Bill a "Tax Bill". He cites that the Baucus Bill alone has $400b in new taxes and fees. According to Holtz-Eakin, "The Joint Committee on Taxation indicates that 87% of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000." It amounts to a massive new burden imposed on the Middle Class.
One revenue source is speculated to come from so-called "Cadillac plans", or health insurance packages which spend a lot of money on care by providing coverage for additional procedures, more care, better prescription coverage, lower premiums and/or lower co-pays. Recipients of these insurance plans are disproportionately union workers who get their insurance through the companies they work for (like GE, GM, US Steel, Chrysler, Boeing) and who have accepted improved health benefits in lieu of pay increases for decades. These workers and the unions that represent them have threatened vociferously to kill the president's health care overhaul if gold plated "Cadillac plans" are subjected to a tax to bring down the cost curve for other Americans, though the possibility is still on the table. The president of AFSCME has already threatened to discontinue his union's support for the president if health care targets high value plans or fails to include a public option.
Insurance companies themselves will be taxed for providing policies worth more than $8,000 or $21,000 for families, which they will pass along to their customers. Medical device and drug companies will be hit with taxes upward of $180b, also to be passed along to consumers by higher fees and premiums. Other tax hike proposals include a soft drink tax, smoke and alcohol taxes, and all kinds of peripheral taxes large and small which will disproportionately hit families that the bill alleges to protect from high premiums.
The Best Care in the World Goes Away:
It has been suggested by some that the USA does not have the best care in the world by arguing that we have a higher mortality rate than other industrialized countries, and that we spend double as much money on health care per person per year as many others without the same life expectancy. While it is true that the United States could improve some factors of our health care - notably by focusing on preventative care rather than reactive care - the overall health picture in the States looks pretty good.
Fact. If you do in fact find yourself in need of a doctor, there is nowhere in the world better to be than right here in the USA. We have more specialists, shorter wait times, more advanced treatments, and better access to actual care than any nation on Earth. We also have the best and brightest doctors from around the world, because we pay them a living wage - for now.
We need to train and hire an army of new doctors and nurses to care for the 30-47 million Americans (depending on which estimate you use) that are about to join the ranks of the insured. Tens of millions of people are going to want to go see the doctor in this country after Obamacare passes. They will need a great deal of care up front as we shift paradigms toward a proactive care society. They will need blood work and x rays, colonoscopies and mammograms, etc. Not only can't we afford to maintain our current level of American medical professionals, we positively need a wave of new caregivers post haste if we are to prevent rationing.
Medicare Reimbursements Don't Add Up:
As part of our nation's overall health cost savings, the president has repeatedly asked of all Americans that we share in the sacrifice that will be required to bend down the cost curve. The devil, here too, is in the details. Who is going to suffer? The doctors surely will feel the squeeze, and 45% of practicing doctors have already said they would consider closing their practices under the president's health overhaul plan. Cue the rationing of care.
Doctors have had a sword hanging over their practices for more than a decade in the form of Medicare Reimbursement declines. Every year since 2003, Congress has declined to instate the reduced reimbursement rates because of intense lobbying efforts by the AMA. The cuts have been a part of the president's budget proposal every year until FY2010 under President Obama. The Obama budget has (inconsistently with his goal of reducing health spending) eliminated Medicare reimbursement decreases from his budget, and some key lawmakers have even advocated increases in Medicare reimbursements. This, of course, stands to add upwards of $250b to the final reform bill. Already, the Baucus Bill spends $10.9b to eliminate these cuts for next year but then assumes a 25% reduction for every ear starting 2011.
Also, in order to reverse the declining numbers of general practitioners, the health plans will change the way doctors are paid to reflect "resource use". A provision in the Baucus Bill will automatically cut payments by 5% to any doctors in the 90% percentile of "resource use" starting in 2015 according to the WSJ's "The War on Specialists" (Tuesday, October 6 2009). Specialists cost more in terms of resource use. They also save more lives. Anyone who has ever needed a cardiologist, endocrinologist, urologist, pathologist, or oncologist knows that a specialist is exactly the person to save the day when lives are hanging in the balance. Oh well - they get the axe under Obamacare.
Rationing and End of Life "Counseling":
Access to expensive life-saving procedures is a contentious part of the president's health care overhaul. In many socialized countries, these treatments are hard to come by and are often denied to the elderly. Other nations simply do not have the budget, the facilities, or the specialists to administer the types of care that people the world over have come to America to receive. For example, candidate for Congress and medical professional Robert Lowry points out that there are more MRI machines in Miami-Dade County than in the entire country of Canada.
Blogger Steven Crowder's documentary on Canadian health care should bring a chill to anyone in need of care, despite the cherry picked examples from Michael Moore's "Sicko" showing people breezing through Canadian clinics to receive their "free" care. The movie also fails to remind viewers that Canadian citizens pay significantly higher tax rates to pay for this "free care" among other social programs. Bottom line, the money has to come from somewhere. It will come from the blood and sweat of hard working Americans.
Americans may scoff at the idea of "death panels" as some sort of a joke now. But think very hard how much you believe that the government will shell out money for your grandmother to get a hip or that chemo or that heart surgery when she only has a few more years left in her. Already, the government proposes to decide whether or not to administer lifesaving care by determining cost and factoring in how many "quality years" of life the patient has left in them. In other words, Uncle Sam decides whether your grandmother lives to be 69 or 109... and worse yet, he decides whether she should live that long. Granny's getting expensive? Quick, pull her plug! That's dead serious.
Tort Reform is not a French Pastry:
The truth is that doctors win most medical liability cases they are presented with. But because the average cost of a court case for doctors is roughly $100,000 on top of superfluous procedures and tests known as "defensive medicine", the true costs of medical liability are outrageous. That, of course, is on top of the outrageous medical liability insurance rates that doctors must pay - even for doctors with perfect records. No doctors argue that there should be a zero liability for malpractice, but a jury of peers with no medical background should not be able to just throw a number against a wall and add as many zeroes as they wish. Caps and guidelines must be established to limit the liability that a doctor faces. Doing so will bend down the cost curve substantially, and the president should support such a measure if he is serious about putting pragmatism ahead of politics. Most Americans would benefit heftily by lower premiums charged by doctors facing lower overhead costs. Not so much the trial lawyers, however.
The Public Option, Uncle Sam's Managed Care:
The Veterans Administration hospitals are a disaster. Medicare and Medicaid are bankrupt, and the latter is bankrupting the states through unfunded mandates. Medicare Advantage, the only federal entitlement ever to come in under budget, is itself unfunded and operating at pure deficit. And Medicare has a higher claim denial rate than any insurance company, hands down. This is not a shining endorsement of a government plan.
In an op-ed, three previous presidents of the AMA (Palmisano, Plested, and Johnson) wrote, "If the goal of reform is to provide the best possible patient care, let's take the government-controlled 'public option'- and any legislative trick that could lead to a public option- off the table. It will result in long waiting lines to see a doctor, substandard care, and an end to medical discovery." They also proudly proclaim, "The United States has the best health care in the world today."
Many congressmen and senators of both parties have declared simply that the government cannot both regulate an industry and compete in it. Because the government does not pay any taxes, can operate at a loss indefinitely, and because the government can stack the deck in its favor by creating rules in its favor, it will invariably take a competitor out of a market in which it competes. This is true regardless of industry. The public option is a bad idea for taxpayers and care recipients alike.
It's the Amendments, Stupid:
Even if all of the varying semblances of a bill can be melded together, the bill is still subject to amendments which will invariably add to the cost of the overall health reform. Someone will want a special study to be done in their state. Another Member will earmark funding for clinics for the homeless. Then someone will add money for a new clinic in an inner city. With each amendment, Obamacare becomes more costly and less efficient.
All in all, Obamacare is a complete disaster. The worst victims, as usual, will be Middle Class families that can afford neither new fees and taxes nor watered down health care access. When American health care is gone, they will have nowhere else in the world to turn.
It goes without saying that some type of overhaul is necessary to ensure that our uniquely American system of high quality care can continue while also decreasing the rate of cost inflation. Nobody wants to "do nothing" or champion "the status quo". But if Obamacare fails, it would be a great triumph upon which to build future health care reform. We would have a shining example of what not to do.
For excellent examples of the type of health care overhauls that could work without hoisting a new burden upon the shoulders of working families, please read a few health proposals located here:
Drawnlines Policy Page
My Eight Point Plan
A Few Examples of GOP Health Care Solutions
There's ALWAYS something new happening at Drawnlines Politics.
For videos and archives visit our homepage
Check out our new Election Center!
Drawnlines tackles, point by point, the reasons why Obamacare is a terrible plan for most American families, particularly the Middle Class. We will delve into the talking points and details to figure out why The Economist Magazine says Obamacare "will hurt".
Who's Covered, Who Still Isn't:
A keystone in the president's proposal to lower overall health care cost is the concept of insuring every American. This is also known as "universal coverage", where the risk pool is broadened by adding in lower risk participants. The Senate Finance Bill claims to cover 94% of Americans, short of the 97% that HR3200 (the "pull grandma's plug" bill) would cover. Three main sets of individuals disproportionately make up the current ranks of our uninsured: 1)the young and healthy that rarely see a doctor and choose to avoid high health insurance premiums, 2)those who cannot afford health insurance and do not qualify for state or federal programs, and 3)illegal immigrants
Bringing the first subset of people back into the ranks of the insured is especially critical for the president to decrease "average" health premiums, because young healthy people would essentially subsidize care for the elderly and sick, while requiring little care themselves. By being more likely to have regular checkups and blood work while under insurance, the young would also then be more likely to catch health concerns early on. That, of course, sharply increases survivability and decreases long term care costs.
While 100% coverage (for citizens of the country) would of course be ideal to bring down the cost of insurance, I've read that a figure in the high 90s is essential for substantive reform to be effective and efficient. By spending upward of $829b and still leaving at least 6% of Americans without coverage, the goal of cost savings may be out of reach. Obamacare would then be just another spending bill, but with vast consequences for those who receive care or pay taxes.
Subsidies and Penalties:
One of the greatest questions has long been that of requiring insurance. How, for example, would a mandate be enforced? The most likely answer would be the example set forth by the state of Massachusetts which imposes a financial penalty on individuals without health coverage. Because the penalty is still cheaper than the cost of insurance, many impoverished Mass. families choose to pay the penalty and still do not carry insurance. This is a human tragedy, and a great example of unintended consequences of health care overhaul. This is a major deficiency of the Baucus Bill.
To assist poor families in purchasing coverage, all health care bills currently under consideration provide for subsidies to families and individuals who would be unable to afford insurance by themselves. The question then is how much, to whom, and how to pay for it. Any increase in subsidies increases number of insured, but it also increases the cost of the bill to taxpayers and must be offset by new revenue sources.
Middle Class Tax and Fee Hikes:
Economic Policy Expert Douglas Holtz-Eaken wrote a WSJ editorial specifically calling the Baucus Bill a "Tax Bill". He cites that the Baucus Bill alone has $400b in new taxes and fees. According to Holtz-Eakin, "The Joint Committee on Taxation indicates that 87% of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000." It amounts to a massive new burden imposed on the Middle Class.
One revenue source is speculated to come from so-called "Cadillac plans", or health insurance packages which spend a lot of money on care by providing coverage for additional procedures, more care, better prescription coverage, lower premiums and/or lower co-pays. Recipients of these insurance plans are disproportionately union workers who get their insurance through the companies they work for (like GE, GM, US Steel, Chrysler, Boeing) and who have accepted improved health benefits in lieu of pay increases for decades. These workers and the unions that represent them have threatened vociferously to kill the president's health care overhaul if gold plated "Cadillac plans" are subjected to a tax to bring down the cost curve for other Americans, though the possibility is still on the table. The president of AFSCME has already threatened to discontinue his union's support for the president if health care targets high value plans or fails to include a public option.
Insurance companies themselves will be taxed for providing policies worth more than $8,000 or $21,000 for families, which they will pass along to their customers. Medical device and drug companies will be hit with taxes upward of $180b, also to be passed along to consumers by higher fees and premiums. Other tax hike proposals include a soft drink tax, smoke and alcohol taxes, and all kinds of peripheral taxes large and small which will disproportionately hit families that the bill alleges to protect from high premiums.
The Best Care in the World Goes Away:
It has been suggested by some that the USA does not have the best care in the world by arguing that we have a higher mortality rate than other industrialized countries, and that we spend double as much money on health care per person per year as many others without the same life expectancy. While it is true that the United States could improve some factors of our health care - notably by focusing on preventative care rather than reactive care - the overall health picture in the States looks pretty good.
Fact. If you do in fact find yourself in need of a doctor, there is nowhere in the world better to be than right here in the USA. We have more specialists, shorter wait times, more advanced treatments, and better access to actual care than any nation on Earth. We also have the best and brightest doctors from around the world, because we pay them a living wage - for now.
We need to train and hire an army of new doctors and nurses to care for the 30-47 million Americans (depending on which estimate you use) that are about to join the ranks of the insured. Tens of millions of people are going to want to go see the doctor in this country after Obamacare passes. They will need a great deal of care up front as we shift paradigms toward a proactive care society. They will need blood work and x rays, colonoscopies and mammograms, etc. Not only can't we afford to maintain our current level of American medical professionals, we positively need a wave of new caregivers post haste if we are to prevent rationing.
Medicare Reimbursements Don't Add Up:
As part of our nation's overall health cost savings, the president has repeatedly asked of all Americans that we share in the sacrifice that will be required to bend down the cost curve. The devil, here too, is in the details. Who is going to suffer? The doctors surely will feel the squeeze, and 45% of practicing doctors have already said they would consider closing their practices under the president's health overhaul plan. Cue the rationing of care.
Doctors have had a sword hanging over their practices for more than a decade in the form of Medicare Reimbursement declines. Every year since 2003, Congress has declined to instate the reduced reimbursement rates because of intense lobbying efforts by the AMA. The cuts have been a part of the president's budget proposal every year until FY2010 under President Obama. The Obama budget has (inconsistently with his goal of reducing health spending) eliminated Medicare reimbursement decreases from his budget, and some key lawmakers have even advocated increases in Medicare reimbursements. This, of course, stands to add upwards of $250b to the final reform bill. Already, the Baucus Bill spends $10.9b to eliminate these cuts for next year but then assumes a 25% reduction for every ear starting 2011.
Also, in order to reverse the declining numbers of general practitioners, the health plans will change the way doctors are paid to reflect "resource use". A provision in the Baucus Bill will automatically cut payments by 5% to any doctors in the 90% percentile of "resource use" starting in 2015 according to the WSJ's "The War on Specialists" (Tuesday, October 6 2009). Specialists cost more in terms of resource use. They also save more lives. Anyone who has ever needed a cardiologist, endocrinologist, urologist, pathologist, or oncologist knows that a specialist is exactly the person to save the day when lives are hanging in the balance. Oh well - they get the axe under Obamacare.
Rationing and End of Life "Counseling":
Access to expensive life-saving procedures is a contentious part of the president's health care overhaul. In many socialized countries, these treatments are hard to come by and are often denied to the elderly. Other nations simply do not have the budget, the facilities, or the specialists to administer the types of care that people the world over have come to America to receive. For example, candidate for Congress and medical professional Robert Lowry points out that there are more MRI machines in Miami-Dade County than in the entire country of Canada.
Blogger Steven Crowder's documentary on Canadian health care should bring a chill to anyone in need of care, despite the cherry picked examples from Michael Moore's "Sicko" showing people breezing through Canadian clinics to receive their "free" care. The movie also fails to remind viewers that Canadian citizens pay significantly higher tax rates to pay for this "free care" among other social programs. Bottom line, the money has to come from somewhere. It will come from the blood and sweat of hard working Americans.
Americans may scoff at the idea of "death panels" as some sort of a joke now. But think very hard how much you believe that the government will shell out money for your grandmother to get a hip or that chemo or that heart surgery when she only has a few more years left in her. Already, the government proposes to decide whether or not to administer lifesaving care by determining cost and factoring in how many "quality years" of life the patient has left in them. In other words, Uncle Sam decides whether your grandmother lives to be 69 or 109... and worse yet, he decides whether she should live that long. Granny's getting expensive? Quick, pull her plug! That's dead serious.
Tort Reform is not a French Pastry:
The truth is that doctors win most medical liability cases they are presented with. But because the average cost of a court case for doctors is roughly $100,000 on top of superfluous procedures and tests known as "defensive medicine", the true costs of medical liability are outrageous. That, of course, is on top of the outrageous medical liability insurance rates that doctors must pay - even for doctors with perfect records. No doctors argue that there should be a zero liability for malpractice, but a jury of peers with no medical background should not be able to just throw a number against a wall and add as many zeroes as they wish. Caps and guidelines must be established to limit the liability that a doctor faces. Doing so will bend down the cost curve substantially, and the president should support such a measure if he is serious about putting pragmatism ahead of politics. Most Americans would benefit heftily by lower premiums charged by doctors facing lower overhead costs. Not so much the trial lawyers, however.
The Public Option, Uncle Sam's Managed Care:
The Veterans Administration hospitals are a disaster. Medicare and Medicaid are bankrupt, and the latter is bankrupting the states through unfunded mandates. Medicare Advantage, the only federal entitlement ever to come in under budget, is itself unfunded and operating at pure deficit. And Medicare has a higher claim denial rate than any insurance company, hands down. This is not a shining endorsement of a government plan.
In an op-ed, three previous presidents of the AMA (Palmisano, Plested, and Johnson) wrote, "If the goal of reform is to provide the best possible patient care, let's take the government-controlled 'public option'- and any legislative trick that could lead to a public option- off the table. It will result in long waiting lines to see a doctor, substandard care, and an end to medical discovery." They also proudly proclaim, "The United States has the best health care in the world today."
Many congressmen and senators of both parties have declared simply that the government cannot both regulate an industry and compete in it. Because the government does not pay any taxes, can operate at a loss indefinitely, and because the government can stack the deck in its favor by creating rules in its favor, it will invariably take a competitor out of a market in which it competes. This is true regardless of industry. The public option is a bad idea for taxpayers and care recipients alike.
It's the Amendments, Stupid:
Even if all of the varying semblances of a bill can be melded together, the bill is still subject to amendments which will invariably add to the cost of the overall health reform. Someone will want a special study to be done in their state. Another Member will earmark funding for clinics for the homeless. Then someone will add money for a new clinic in an inner city. With each amendment, Obamacare becomes more costly and less efficient.
All in all, Obamacare is a complete disaster. The worst victims, as usual, will be Middle Class families that can afford neither new fees and taxes nor watered down health care access. When American health care is gone, they will have nowhere else in the world to turn.
It goes without saying that some type of overhaul is necessary to ensure that our uniquely American system of high quality care can continue while also decreasing the rate of cost inflation. Nobody wants to "do nothing" or champion "the status quo". But if Obamacare fails, it would be a great triumph upon which to build future health care reform. We would have a shining example of what not to do.
For excellent examples of the type of health care overhauls that could work without hoisting a new burden upon the shoulders of working families, please read a few health proposals located here:
Drawnlines Policy Page
My Eight Point Plan
A Few Examples of GOP Health Care Solutions
There's ALWAYS something new happening at Drawnlines Politics.
For videos and archives visit our homepage
Check out our new Election Center!
Posted by Nick Stone
on 10:55 AM.
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