Senate Health Care Bill Rearranges Deck Chairs on Titanic
Consumer Power Report #550
Welcome to the Consumer Power Report.
The Senate this summer is rearranging the deck chairs on the Obama, the proverbial ship of state the former president steered straight into the iceberg of taxpayer-funded health insurance, never to return.
Similar to the band that played as the Titanic sank in 1912, the Congressional Budget Office (CBO) has dutifully released its score of the Better Care Reconciliation Act, the Senate bill purported to replace Obamacare. CBO is playing basically the same tune it played when it scored the House Obamacare replacement bill, the American Health Care Act, which the House passed on May 4.
That tune is a siren call, beguiling people into assuming that having health insurance under Obamacare implies having access to affordable health care. The fact, however, is many people stand to gain by losing their Obamacare coverage, and many more would benefit by leaving the third-party-payer system congressional Republicans propose.
Most people of average means already have access to better, cheaper health care than they get when paying for non-catastrophic care by handing their insurance card to a front-desk worker at their doctor’s office. They just don’t realize it.
Someone with a $6,500 Obamacare Bronze Plan deductible typically pays higher prices for a routine visit than a person who pays cash. Let me repeat that: Most patients pay more, not less, for health care when they pay with insurance if they have not met their deductibles. Cash customers typically pay 25 to 98 percent less for services.
The perversity of the American health care system is that insured patients are glad they pay more, in the hope of meeting their deductibles so they can enjoy the illusion of free health care for the few months remaining in the year. The perversity of Obamacare is that it entrenched this inefficient payment model as the foundation of our country’s health care system. The perversity of today’s Republican-controlled Congress is its perpetuation of the myth that “health insurance” and “health care” are the same.
A better system would encourage patients to save most of the money they are wasting on insurance premiums in a tax-advantaged health savings account. With the remainder, they could buy low-premium, high-deductible insurance plans—and hope never to hand their insurance cards to a doctor’s office desk clerk as long as they live.
Patients should use insurance only if catastrophe strikes and pay cash for all non-catastrophes. (This is exactly how people use homeowners and auto insurance.) It is better to pay steeply discounted cash prices for routine care in most years and $10,000 in a catastrophic year than to pay $6,000 for routine care every year and $6,500 in a catastrophic year.
Congressional Republicans want to have it both ways. On one hand, fear of leaving people supposedly stranded (i.e., without health insurance) is driving them to squander the greatest opportunity in a generation to liberate Americans from the health insurance-for-routine-care racket. This is evident in the Senate’s and House’s insistence on letting people wait to buy health insurance until after they develop preexisting conditions. It is evident in each chamber’s punting repeal of Obamacare mandates to state lawmakers. The Senate’s insistence everyone must pay the same prices for insurance reinforces this.
On the other hand, congressional Republicans appear to understand—in a way CBO, congressional Democrats, and the mainstream media do not—that encouraging people to exit the third-party-payer health care system for routine care is the only way to empower patients to get the most bang for their buck in health care. This is evident in each chamber’s willingness to legalize low-premium, high-deductible insurance plans that people should buy and forget about until catastrophe strikes, if that day comes.
Congressional Republicans’ Obamacare replacement plans are halfhearted attempts to steer the American health care system away from the course Obama plotted in 2010. The Republican plans are mere lifeboats—sure to help some people, sure to let others wallow with the ghost of Obamacare. And the band plays on.
— Michael T. Hamilton (firstname.lastname@example.org, @MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.
IN THIS ISSUE:
Senate Republican leaders on Tuesday abandoned plans to vote on a bill to repeal and replace Obamacare because the measure lacks enough support to even begin debate.
Republican lawmakers were unable to find consensus after an hour-long private meeting with Vice President Mike Pence and other administration members.
Republicans originally hoped to hold a procedural vote Wednesday to begin debate on the measure, which would have eliminated Obamacare mandates, slowed the rate of Medicaid growth for able-bodied adults and cut many Obamacare taxes.
Senate Republicans are scheduled to attend a 4 p.m. meeting at the White House. …
A top GOP aide told the Washington Examiner it is “unclear” whether the vote has been canceled.
SOURCE: Susan Ferrechio, Washington Examiner
As insurance markets collapse, premiums soar, and Congress inches forward on reform, states are seizing the initiative by lowering regulatory barriers standing in the way of quality, affordable health care for millions of Americans.
Recently, Virginia enacted legislation that allows patients to form “direct primary care” agreements with their doctors, which do away with traditional fee-for-service billing and instead charge patients a flat monthly fee, generally between $25 and $85. This gives patients access to routine medical services, such as physicals and vaccines, without the need to worry about deductibles and co-pays.
Aetna’s recent announcement that it would no longer sell health-care marketplace plans in Virginia, which came days after the governor signed the legislation into law, highlights the needs for more health care options.
Virginia is not alone. Insurers are pulling out of other states, too. Those states should follow Virginia’s lead by removing innovation-stifling rules that keep people from taking advantage of this increasingly popular model for health care.
Direct primary care allows doctors to get out from under the mountain of paperwork associated with billing insurance companies. This can reduce their administrative overhead by 40 percent.
Dr. Chad Savage of Brighton, Mich., discovered these benefits when he switched to the direct primary care model after 12 years in a traditional practice. “I was making more money in the insurance system but had 3,500 patients. And a whole lot more paperwork,” he said. He now plans to cap his number of patients at 800.
Patients benefit from doctors’ smaller caseloads because they are able to develop personal relationships with their doctors and to be seen for more than just 5 or 10 minutes at a time.
This model also gives doctors the flexibility to communicate with their patients via phone, email or video chat. Such services are rare in the traditional insurance-driven model, because doctors are not typically reimbursed unless they meet with patients in person.
Direct primary care does not cover specialized treatments or emergency care, so patients are encouraged to maintain health insurance that covers those risks. But for everyday medical procedures, direct primary care can offer patients superior care at a far lower cost.
How much lower? Direct primary care clinics across five states achieved savings of $2,551 per patient in 2010, according to a study in the American Journal of Managed Care. And because their doctors had the time needed to detect and treat conditions before they grew severe, members of the clinic were 62 percent less likely to be hospitalized, compared with nonmembers.
Direct primary care is increasingly popular with doctors, and today more than 600 clinics nationwide operate in this way. Still, regulatory roadblocks in many states prevent the model from becoming more widespread. …
SOURCE: J.C. Hernandez, The Virginian-Pilot
The Florida Supreme Court on Thursday ruled that a law limiting pain-and-suffering damages in medical malpractice cases is unconstitutional, rejecting a controversial change that the Legislature and then-Gov. Jeb Bush approved in 2003.
Justices were sharply divided, with the four-member majority finding that the caps on “non-economic” damages violated equal-protection rights. Also, the majority disputed that a malpractice insurance “crisis” exists—a justification that lawmakers used in approving the limits.
“We conclude that the caps on noneconomic damages … arbitrarily reduce damage awards for plaintiffs who suffer the most drastic injuries,” said the majority opinion shared by Chief Justice Jorge Labarga and justices Barbara Pariente, R. Fred Lewis and Peggy Quince. “We further conclude that because there is no evidence of a continuing medical malpractice insurance crisis justifying the arbitrary and invidious discrimination between medical malpractice victims, there is no rational relationship between the personal injury noneconomic damage caps … and alleviating this purported crisis. Therefore, we hold that the caps on personal injury noneconomic damages … violate the Equal Protection Clause of the Florida Constitution.”
But Justice Ricky Polston, in a blistering dissent joined by justices Charles Canady and Alan Lawson, argued that the majority was overstepping its role.
“The majority just discards and ignores all of the Legislature’s work and factfinding,” Polston wrote. “But, under our constitutional system, it is the Legislature, not this (Supreme) Court, that is entitled to make laws as a matter of policy based upon the facts it finds. It is the Legislature’s task to decide whether a medical malpractice crisis exists, whether a medical malpractice crisis has abated, and whether the Florida statutes should be amended accordingly. For a majority of this (Supreme) Court to decide that a crisis no longer exists, if it ever existed, so it can essentially change a statute and policy it dislikes, improperly interjects the judiciary into a legislative function.” …
SOURCE: Tallahassee Democrat
There is more to life than Medicaid.
D.C. conservatives say it’s the best Medicaid reform bill ever. Democrats and progressive Republicans say it’s a crippling cut to the poor and immoral. What nobody is talking about is the rest of the health care and health insurance market and how it is immoral to ensure [that] no middle-income family can live with dignity without unsustainable taxpayer support. Whatever we do or don’t do with Medicaid, why do we need to destroy the rest of the market for the debate over Medicaid? Why is nobody talking about healing the private market first?
Obamacare’s [actuarially] insolvent regulations and market-distorting exchanges and subsidies, built on top of existing government-sponsored distortions, destroyed health insurance in America and made health care unaffordable for all but the wealthy. That is a fact. That premiums have tripled in only the fourth year of implementation and that they will skyrocket thanks to only one or two insurers having a monopoly in most of the country is a reality before our eyes, not just a projection score from CBO. Why is nobody discussing ways to solve the private market crisis—repeal of Obamacare and enactment of free-market, supply-side health care reforms?
The supposed rationale for this arson of our health care system was the pursuit of universal coverage. But the reality is that 84 percent of all coverage increases came from Medicaid, not from the private insurance market. Even much of the remaining 16 percent increase since 2011 came from 1) Young individuals who never wanted insurance but were coerced into it by the individual mandate; 2) More people getting employer plans thanks to the recovering job market. Unemployment decreased from 10 percent to 4.3 percent; and 3) Individuals who are getting lavish subsidies but only need the subsidies because the Obamacare regulations made insurance unaffordable without them. Private insurance coverage for everyone older than 26 has actually decreased since enactment of Obamacare.
The remaining middle-income Americans and small business owners, thus, must suffer from crushing costs the size of another mortgage … for what?
Why did we have to destroy the entire market just to expand Medicaid? …
SOURCE: Daniel Horowitz, Conservative Review