Sunday, March 19, 2017

Getting past healthcare noise

On September 9, 2009, before a joint session of Congress, President Barrack Obama revealed his Patient Protection and Affordable Care Act (commonly ACA or ObamaCare).  He said of the bill, “It will provide more security and stability to those who have health insurance. [it did not] It will provide insurance for those who don't [it did for many]. And it will slow the growth of health care costs for our families, our businesses, and our government. [it did not]”

The ObamaCare bill was flawed, its adoption was flawed, its implementation was flawed, and its result was flawed.  It is teetering on a precipice of unsustainable rising cost and unacceptable declining choices.

Its complexity is at the core of its failure. Being all things to all people in complex schemes with untold numbers of variables is a common formula for failure - especially when done without transparency and in a highly partisan manner.

President Obama would have been better off to simply have called for an expansion of Medicaid.   He would have achieved nearly the same reduction in the uninsured without the negative consequences of ObamaCare.

The Republican Party has called for the repeal and replacement of ObamaCare since its inception.  The Republican reform risks failure for similar reasons to Obamacare - complexity and potentially partisan passage.

Serious work on how exactly to do that has largely fallen to House Speaker Paul Ryan.  But there is not unanimity in the Republican Party and competing plans are proposed in the House of Representatives.  In the Senate, Rand Paul and others are critical of Ryan’s proposal and have offered an alternative as well.

President Trump is riding the fence at this point allowing Congressional Republicans to battle, but ultimately he probably sees himself as the arbiter of a final deal.

The Democratic minority, under the leadership of Representative Nancy Pelosi and Senator Chuck Schumer have opted to simply obstruct process and resist any change – thus making them near irrelevant in the process and outcome.

Unfortunately, the debate is once again about reform – not change – and is more about politics than health.

The Democrats need to stop defending a failed policy – ObamaCare.  They should say clearly and consistently –we believe there should be national healthcare.  The Republicans should say clearly and consistently – we believe that market forces provide for better healthcare outcomes.  Then debate the merits and develop a consensus.

Frankly, it seems that a compromise position is possible that could satisfy most Americans that can accommodate the principles of the two parties in a uniquely American model that integrates the public and private.

Every American citizen and legal resident should receive government provided catastrophic care akin to Medicare part A (e.g. hospitalization, non-elective surgery, associated care and rehabilitation) to ensure everyone has access to essential care and no one suffers economic collapse from illness, injury or disease.

Government already pays nearly 50% of all healthcare expenditures.  Medicare, Medicaid, SCHIP, VA, and Tricare would be subsumed by the new system.  The VA system would specialize once again (e.g. amputation, burn treatment, and PTSD).  Medicare would be authorized to negotiate drug prices (one of the highest costs of healthcare) to lower costs.

The remainder of healthcare beyond catastrophic care would fall in the private marketplace to maintain competition and encourage innovation.   Employers and individuals could obtain supplemental insurance of all ranges to suit their needs and budgets as well as health savings accounts.  Policies could be sold across state lines.  Vouchers (rather than tax credits) could be used by special populations (e.g. military dependents, retirees and disabled veterans, low income workers and retirees, etc.) to aid them in procuring supplemental insurance on the open market.

This seems a compromise that could serve all Americans.  There would be a great many details to address, but it just does not seem that hard to set the parameters of a system that could both provide essential catastrophic care to all while retaining the benefits of market competition and innovation, simplifying the system, and lowering healthcare expenditures overall.

This is just one way to better serve the American people through compromise.   President Trump has said, “We are going to take care of our people.”  Here is an example of one way to accomplish that goal in healthcare that is better than both ObamaCare and any reform that might emerge from Congress over the coming weeks.


  1. The Congressional Budget Office and the staff of the Joint Committee on Taxation (CBO and JCT) have evaluated the impact of the Ryan plan. The CBO is a non-partisan organization of the Congress that evaluates the impact of legislation.

    The CBO estimates that enacting Ryan’s legislation would reduce federal deficits by $337 billion over the 2017-2026 period. The net $337 billion savings results from a combination of $1.2T in reduced outlays (e.g. Medicaid costs and ACA insurance subsidies) and $.9T in reduced revenues (e.g. reduced taxes and fees collected through ACA changes in the IRS code).

    The estimate also predicts that in 2018 14 million more people would be uninsured under the legislation than under current law. Most of that decrease would result from people choosing to not buy insurance who now buy it because of the individual mandate penalty.

    Further, in 2026, an estimated 52 million people would be uninsured. That 52 million includes 28 million who would be uninsured under current Obamacare law, the 14 million who will chose to drop insurance, and in large part the remaining 10 million would result from “changes in Medicaid enrollment.”

    ObamaCare did reduce the number of uninsured from about 40 million to about 28 million, but not for the reasons predicted. The reduction came primarily from the expansion of Medicaid and the inclusion of children to the age of 26 in parental policies.

    Some have chosen to minimize the CBO report for various reasons, but the CBO cannot and should not be ignored. Their present and near term projections are often very accurate. As with all predictive assessments the longer term projections decrease in accuracy because straight line long term projections are always inaccurate due to unintended consequences or disruptive events, behavior or technology.

    That said, 2026 is not that far away and even if one adds a 20% error factor to the CBO estimate it is still a lot of people uninsured.

  2. This opinion piece in the Washington Post on March 20, 2017 by Robert J. Samuelson provides insight into Medicaid and an alternative path that is worthy of debate.


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