Obamacare 2017

Posted by David A. Peterson on 28. November 2016 in Economics, Health, Issues, Opinion |

Over the years I have written several opinionated blog posts on Obamacare. Now that the Republicans control the Legislative & Executive branches of government it’s time for them to govern on this subject.

ObamaCare needs to be repealed and replaced.

As I wrote in October of 2013 (see article below) Obamacare has permeated the healthcare community. History will write the official demise of this legislation, but it’s safe to say that sick people enrolled, healthy young people did not.

Secretary Sebelius to Testify

This sick vs. well led me to the main opinion of the 2013 post in which I wrote:

“We need to start looking at Plan B – How does the nation fund (subsidize) insurance for people that desperately need it?”

What the Obamacare exchange has effectively done well was to gather up all those that desperately need health insurance and gave them a central place to purchase this vital medical instrument.

I agree ahead of time that we didn’t have to blow up the entire insurance industry to make this happen. However… We badly need a bipartisan bill. We can’t replace bad legislation with more crap. Republicans have to lead, but they must find some leaders within the Democratic party to help repeal and replace the bill.

To bring the Democrats and Republicans to the table I propose:

  1. For Democrats: The new bill be named the 2017 Barack Obama Affordable Health Care Act. Give the man his due, he tried, he just doesn’t have a strong business acumen.
  2. For Republicans: The new bill should be stripped down to the following six items. This will leave us with a passable replacement bill and will allow substantial issues that are extremely partisan for the future debate.

3 items I think both Republicans & Democrats will accept:

  1. Kids staying on parents plan until age 26 or longer.
  2. Allow health insurance providers to sell across state lines.
  3. Keep the exchange format and possibly the current platform.

3 items I believe that through negotiations the bipartisan participants will compromise on:

  1. Pre-existing conditions for the unhealthy to be firmly addressed through a national high risk pool.
  2. One size fits all insurance plans to be scraped; new health plans including HSAs to be created by the marketplace.
  3. The new Act be truly revenue neutral – sorry Republicans this will require some form of tax. You can’t be both conservative and for an unfunded mandate.

Once these six items are tackled and the new Act becomes law the hard part begins. Health care is a mess, costs are rising, and were rising even before the original Obamacare.

Core Issues:

Future bills, after Obamacare 2017, of which there will be several should be tackled in a piecemeal manner. This will allow an up/down vote on specific core issues. Cost control, healthcare inflation, tort reform, fraud, abuse, Medicaid & Medicare, and much more needs attention.

To show the difficulty of just one of the core issues, I would like to touch on the economics of rising costs – i.e. Healthcare Inflation. Something doesn’t quite make sense.

Now that we have had 4 solid years of Obamacare throttling costs, there must be some good data out there. As an example we know that out of pocket expenses, especially deductibles, have gone up significantly. Shouldn’t we have seen a serious reduction of medical services by those on company plans or those healthy people on Obamacare?

The simple economic rule is that as cost rise usage of the service should fall. In this case cost didn’t just rise they shot up.

A deeper look into those on Obamacare should reveal that those who are sick used the program to the fullest. While those healthy individuals should have avoided procedures. With the loss of millions of medical procedures such as EKGs, MRIs, Knee Replacements, medical tests, etc., the costs for all these services should be dropping like a rock.

What happened? Was there a drop in services used? Or did we (taxpayers) actually cover the additional deductibles so the increase was a  Net-0 for the end user?

Here’s another way to look at it; if all the really sick people are now on Obamacare shouldn’t private and/or company insurance, in which the deductibles also rose through the roof, seen costs drop?

If fewer people are going to the doctor because they are basically well and they have high deductibles, then the number of all office visits requiring deductibles being met should be dropping.

If deductibles had gone up only 5% then maybe these costs were absorbed somewhere else. But that’s not what happened. Deductibles went way up, example: For individuals the amount rose from $500 to $1,500 per year. Family plans (again just examples) $1,500 to $6,500 a year.

An average family can’t absorb an additional $6,500 a year, that’s 3 to 6 months of mortgage payments or 1 to 2 years of car payments. That’s 8 months worth of groceries! That money isn’t laying around. And if it is not laying around it can’t be spent on healthcare.

…and we’re talking yearly family healthcare expenses with just rising deductibles we haven’t mentioned the increasing premium payments.

If we are not spending the money on healthcare then there should be less dollars in the overall healthcare system. Why isn’t there or where is the deflationary spiral in the health care system?

I hope I have shown just how complicated just one core issue, healthcare inflation, will be to tackle. The original Obamacare Act should have produced enough empirical data over the past 4 years to lead us to some conclusions on at least this one core issue.

I believe the core issues are all very complicated and need to be addressed in a piecemeal manner. My advice: Write and pass a stripped down Obamacare 2017 that both parties can agree on then, and only then attack the core issues. Please don’t blow up the entire system again. Bring to the table those that have the business acumen, that can speak to the issues and please do it in a bipartisan way.

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