This is the eighth of a series of commentaries, written from a free market, individual-centered perspective, examining the serious deficiencies of our current health-care system, the underlying root causes of those problems, the looming government fiscal catastrophe secondary to health-care entitlement spending, the failure of the recently passed health-care “reform” to address the grave problems facing our nation related to health-care delivery, the harm the recently passed health-care “reform” will cause to our seriously ill economy; and a proposal for a framework to truly, effectively, and sustainably reform our health-care delivery system. This report argues that the passed health-care bill fails to reform but rather aggravates the health-care cost crisis.
Although initially interested in the health-care reform debate as a physician in the system, I have become passionately engaged as a father and uncle, and as a traditional American. I am the son and grandson of immigrants, but ultimately, as Americans we are all sons and daughters of immigrants. Until the last generation or two, parents and grandparents working hard and sacrificing for their children to have a better life had been a hallowed American tradition and, in fact, a critical underpinning of our American society. Now, this proud institution has been turned on its head by ever increasing deficit spending for entitlements. We are spending the future resources of our children and grandchildren so we can benefit now. Inherently, this robbing from our posterity also means we are not saving and investing in our country now so our children could have a better life tomorrow.
The author feels obligated to disclose underlying bias: 1. this analysis reflects the author’s strong belief in the efficiencies and fairness of truly free markets as well in the individual’s right and responsibility of self-determination and of self-reliance. 2. I have 3 daughters, 3 nieces, and 9 nephews who deserve their opportunity to live the American Dream – a dream made possible by the protection of our unalienable rights endowed by our Creator.
The Passed Health-Care Bill – Why It Will Make the Health-Care Crisis Worse and Not Better
Irrefutably, health-care cost growth is fiscally unsustainable. Medicare has an estimated $89 trillion unfunded liability. Medicaid costs continue to sky rocket, driving most of the state budgets into significant deficit. Estimates of annual health-care fraud range from a low of $60 billion to nearly $200 billion , and, as a percentage, are higher for the government programs than for the private insurance industry. Currently, Federal and state government pay for nearly 60% of all health-care expenditure. Only a tremendous leap of faith or naiveté could allow a person to believe that the solution to the health-care fiscal crisis could possibly come from turning the other 40% of health-care over to the Federal government.
Predictably, the recently passed government health-care “reform” fails to address any of the significant underlying cost drivers, but rather contributes further to them. As argued above, the third party payer system that shields the consumer of health-care services from the cost of the services is the critical underlying driver of our unsustainable health-care cost growth. The recently passed “health-care reform” fails to address this principal root cause. Instead, the new bill adds an estimated 32 million more people e.g. uninsured and those with pre-existing conditions, into the same faulty 3rd party payer system, exacerbating the current health-care cost crisis.
Similarly, the new bill does not address governmental regulation that has restricted health-care insurance industry competition. Rather, adding additional regulation and mandates will drive smaller insurance companies out of the business leaving just the few large players who will reap the benefits of Federal Government guaranteed, albeit regulated, profits. While such a model may be necessary for utilities because of the gross inefficiency and expense of duplicated infrastructure in that industry, such a model is inappropriate for the health-care insurance industry and restricts the salutary competitive market forces that result in higher customer service and lower costs.
Further, the bill includes no tort reform. And lastly, the bill does not recognize or address the significant contribution to the numbers of the uninsured as well as the increased health-care service expenditure that results from the Federal tax policy that effectively promotes employer-provided health-care insurance over individual-purchased insurance.
In the final analysis, since this “health-care reform” does not address any of the critical underlying drivers of health-care cost growth, government takeover of health-care can only control costs by taking away the individual’s ability to make their own health-care decisions and severely rationing health-care services. As it turns out, the passed health-care “reform” legislation creates a presidentially appointed Independent Payment Advisory Board (IPAB) empowered to create regulations, without Congressional approval, to slow Medicare spending i.e. rationing. Given that the demand for health-care services exceeds supply of those resources, rationing must and does occur. In our current system, utilization and rationing of health-care is by no means ideal. None the less, we can do better, from both an efficiency and moral perspective, than simply turning that process over to Federal bureaucrats.
The Passed Health-Care Bill – Will Increase the Federal Fiscal Deficit
Supporters of the passed health-care bill proudly highlight the CBO report that estimated the passed bill will result in a $181 billion reduction over the first 10 years. Sounds good but, Congressman Paul Ryan at President Obama’s health-care summit pointed out the CBO scoring of the bill was based on unreasonable assumptions and as such is grossly misleading. These assumptions included a budget that pays for 6 years of the new health-care program spending with 10 years of new program tax collections. Further, that estimate includes $52 billion dollars already assigned to Social Security (a program also rapidly approaching insolvency) to now also be assigned (yes, the same $52 billion) to this new medical entitlement. Similarly, $78 billion of premiums for the CLASS long term care supplemental insurance program (a new Federal subsidy created in this bill) were also double assigned. Most egregiously, the CBO was instructed to assume $500 billion of “Medicare savings” would be shifted into this new entitlement. Yes, the same Medicare program that currently has an estimated $89 trillion dollar unfunded liability. Congressman Ryan further pointed out the Medicare’s Chief Actuary predicted that diverting $500 billion from Medicare would result in 20% of providers dropping Medicare patients and also result in millions of seniors losing their Medicare Advantage coverage.
Recalculating the CBO estimate without these unreasonable assumptions, Congressman Ryan concluded this new entitlement would expand the deficit by $460 billion dollars over 10 years, not reduce the deficit by $131 billion deficit reduction as claimed in the CBO report. Further, over the 2nd ten years, the program would further expand the deficit an additional $1.4 trillion.
This more accurate estimate, disturbing as it is, in all likelihood, reflects a best case scenario. The Federal government health-care cost estimates have been notoriously inaccurate. Two such examples: 1. in its first year, 1987, Medicaid was expected to cost $238 million but wound up costing over $ 1 billion. (In fiscal 2009, Medicaid cost $251 billion.) 2. In 1965, the CBO estimated that Medicare costs would be $12 billion in 1990. Turns out the “reality” number was $90 billion – off by more than a factor of 7.
Call to Action: Though passed by an appalling political process and with complete disregard of our Constitution, though containing ineffective and even harmful policy, though disregarding the inalienable rights given to us by our Creator, the passed health-care reform bill is not the end of the debate but rather a new beginning. It is an opportunity to contrast irresponsible policy with prudent policy, to contrast misconceived policy with thoughtful policy, and to contrast policy that places government in the center with policy that places the individual in the center. Get in the fight and stay in the fight. We have learned, the hard way, the consequences of leaving it up to the career politicians. Contact your legislators and demand they exercise the privilege the voters gave them to represent us to effectively address health-care delivery and the other problems facing our states and nation. Learn about the issues and talk to others about the issues. We must join and financially support conservative think tanks that promote traditional American economic principles, personal freedoms, and values; and that shine the light of accountability on irresponsible or faulty government action and policy. Those organizations include The Heritage Foundation, The State Policy Network, The Commonwealth Foundation and your state’s conservative think tank (see SPN for your state’s organization). We must join and support our local grass roots organizations like the York 9-12 Patriots, York County Action, York Campaign for Liberty, and others, so we can take back the political process that has become corrupt and ineffective. We must work to bring up, from the grass root level, candidates – principled persons (Republicans, Democrats, and Independents) who will actually solve problems, who will respect the Constitution of the United States, and who will honor the “consent of the governed” entrusted to them by the citizens of our counties, states, and country.
God Bless and God Bless America!
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