Obamacare’s Negative Prognosis

Tait Trussell is a national award-winning writer, former vice-president of the American Enterprise Institute and former Washington correspondent for The Wall Street Journal.


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The Medicare Modernization Act proved that combining the efficiencies of private industry with government oversight could provide the highest quality prescription drug coverage to seniors. It’s known as Medicare Part D. It gave seniors access to many choices of drug providers. Some Americans wondered, an article Nov. 16, 2009 in Politico said, whether private industry could keep costs reasonable and if people would be in control of their choices. In 2009, the Centers for Medicare and Medicaid (CMS) found that 26 million enrollees in Part D had access to more than 2,000 plans offered by a range of providers. Costs have remained reasonable for customers. The Politico article went on to report a nonpartisan national poll found that 88 percent of its customers favor the prescription drug plan.

Astonishingly, the long-standing British health system (NHS), born in 1948, is now being recognized as too complex and unwieldy, The New York Times reported July 24. The health Secretary is promising to put more power in the hands of patients rather than 150 bureaucrats.

The Galen Institute study explaining why Obamacare is unworkable was written by an eminently qualified expert in the health field, James C. Capretta, a fellow in the Economics and Ethics Program at the Ethics and Public Policy Center. He formerly was top budget officer for health care as associate director of the Office of Management and Budget (OMB). He also is a health policy and research consultant with Civic Enterprises, LLC, and is with the Hudson Institute. Earlier, he served Congress for a decade as a senior analyst for health care issues.

The Galen Institute study focused its analysis on Medicare, the largest culprit in national health costs. It’s estimated to cost $497 billion in 2009. Congress has known for many years that Medicare and Medicaid spending threaten to push the nation’s finances past the breaking point, Capretta notes. “If the country can’t pay for its existing health care commitments,” how could we “subsidize health care to millions of new beneficiaries?” As the rest of the developed world “is moving toward retrenchment of their welfare states, Americans are rightly concerned that their government has just piled an enormous new budgetary risk onto an already precarious outlook.

“Between 2010 and 2030,” the Galen Institute study points out, “the population aged 65 and older is projected to  increase from 41 million to 71 million people” driving up entitlement spending even more rapidly…. “The health law does absolutely nothing to address this fundamental aspect of the entitlement crisis.” As for the ‘cost curve,’ which was promised to go down, the chief actuary at the Centers for Medicare and Medicaid, after passage of the law, projected “overall national health expenditures would be higher in 2019 than if the law had not been enacted at all.”

The Galen Institute study: “What’s needed more than anything else in health care is a coherent, reality-based policy prescription for altering the basic dynamics away from cost escalation to productivity improvement and more efficient patient care. That’s the goal. But getting there requires a clear and accurate diagnosis of what is creating the cost problem in the first place….The Medicare program, as it operates today, is a primary cause of the cost problem.” It is “pulling the rest of the health system down the tracks at an accelerated and dangerous rate….It is “the most important reason health care is expensive and needlessly inefficient….

“At the heart of” the inefficiency in our health system is “Medicare—and more precisely Medicare’s dominant fee-for-service (FFS) insurance structure.” FFS enrollees face no additional cost when they use more services, and health care providers earn more only when service use rises.” The result is a “fragmented dysfunctional system virtually frozen in place—for all users of health care, not just Medicare beneficiaries….

“The Obama White House and its allies” saw the solution as a “top-down payment reform program” through which patients would get their care through new organizational arrangements. “The alternative is a bottom-up approach in which cost-conscious customers choose between competing insurers and delivery systems based on price and quality.” Capretta points to Rep. Paul Ryan’s (R-Wis) proposed “Roadmap” as a comprehensive plan for health and other policies to solve the long-run budget problem. The “core reform is the conversion of the entitlement from a defined benefit to a defined contribution model.” With “cost-conscious consumers looking for the best value for their money, cost-cutting innovation would be rewarded….Physicians and hospitals would have strong financial incentives to reorganize themselves” to be more productive and capable of capturing more of “what would become a highly competitive marketplace. That’s the way to slow the growth of health care costs. Indeed, it’s the only way to do so without harming the quality of care.”

Under the Medicare prescription drug program, Capretta writes, “Beneficiaries get a fixed dollar entitlement that they can use to buy coverage from a number of different competing plans…” (and) “government has no role in setting premiums or drug prices. And how is it working? Costs have come in 40 percent below original expectations.” Bottom-up, not top-down, is what works.

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  • George

    "It has worked since the prescription drug program of Medicare went into effect in 2006."

    Really Tait? Really?

  • gretske

    Committed liberal progressives, like Obama and the scores of non-business professionals in his administration, believe that once the government has complete control over the health care system, it can reduce costs bureaucratically. They can't tell you how, but it will likely require a combination of rationing, cutting payments to doctors, use of lower cost treatments, or denying treatment entirely for the elderly and infirm. Horowitz is right, it will not work. Nationalized health care has not worked where ever it has been tried, but Obama will forge on, regardless of consequences.

  • Glenda McGee

    It isn't supposed to work. It is about culling the flock because they have spent our social security money. It is about UN Agenda 21 saying mother earth cannot afford a middle class. It is the Fourth Reich. It is genocide. It is the fulfillment of Tom Daschle's "the old need to get out of the way.

    Non union non goverment humans are the new jews. we are supposed to die, stupid.

    • USMCSniper

      It may get worse. As shortages become common the old will either go to Carousel like in Logab;s Run or be reprocessed as Soylent Green to feed the unwashed masses. The political elite will get meat, fresh fruit and vegetables just like in Amimal Farm.

  • DCinSC

    Just as my state closes liquor stores on election day – depriving voters of the right to imbibe while they're picking the next politician to drive them to drink…

    Most of America is more nauseated by this radical government take-over (er…'redistribution') than their last dose of Syrup of Ipecac.

    Perhaps we should replace the 'warning' skull and crossbones on poison containers with Nancy Pelosi's portrait – "You have to drink it to find out what's in it". Then again, Congress has a 640 grand bottled water bill – and simply based on that fact – I think we all have a pretty good idea what's in it – more government waste and sanctimony. We should all go green – a health prognosis for the 'new' lifestyle – or death wish – as the case may be…

  • Jean

    You said it, Glenda.

    I have an unhelpful, bitter comment to make. Over which I may be pilloried for Conservative Incorrectness. I have thought for a long time, ever since I became a practicing RN, that too little attention has been paid to the profit (greed) motive of hospitals and doctors. It's a very big factor contributing to the state of health care today. Money makes the world go around (sadly) and greed reverses its rotation.

    • http://intensedebate.com/people/aspacia aspacia

      True, and also the lawyers who cause doctors and hospitals to pay high insurance costs.

  • kayc

    Obamacare does nothing to control costs which is what americans were looking for a health care bill to do. Most did not want gov't in charge of their health care. Now we are only paying more for less coverage. This bill does not help anyone, except maybe those that never paid for any coverage at all and illegals.

  • guest

    It's not a question of our healthcare may get worse…it's when ! For me, it already has, I have asthma and on Medicare, my cost for Albuterol inhailers went from $7.oo up to $39.92, I now order from Canada when I can get 3 for $50.oo plus shipping.

  • http://intensedebate.com/people/Wesley69 Wesley69

    ObamaCare, while it can not be repealed until the Repuiblicans have a majority in Congress and control the Presidency(2013), can still be stopped. If the Republicans capture the House, they simply do not fund anything connected with ObamaCare. Any attempt by the administration to divert funds needs to be checked by taking the Executive Branch to court. Congress needs to spend the time INVESTIGATING everything in ObamaCare. As for the states, they can't nullify federal laws, but they can still challenge it in federal courts. The Republicans need to educate the American people in Representative Paul Ryan's proposals. They make fiscal sense, then again this administration wouldn't recognize it if 60-70% of the American people approved.

  • USMCSniper

    The progressive leadership does not care about the desires or wants of the great unwashed because they are elitests and they know better and will push their socialist agenda in spite of 150 million corpses from Communism and a consistent record of failure because their gang can make it work somehow, so they say.

  • BS77

    The major obstacle to the smooth implementation of this health system is a lack of money….THe Federal Government cannot keep spending trillions and trillions of dollars indefinitely. There aren't the funds for this juggernaut socialized medicine. As much as I would like to see everyone have "free" medical care….it will not happen without taxes going to British levels….Americans already see the taxes are going to climb……to levels never seen before.

  • Jerusha

    In the past, Medicare and Blue Cross have both been totally disinterested in my relatives' attempts to correct double billings on hospital statements that were hundreds of dollars per statement. An elderly relative currently sees a doctor who requires her to have an office call nearly every time she needs a prescription refill, which is frequently since she's taking several medications. If you multiple this times all his patients, he has quite a racket going. My point? A dedicated fraud unit, for not only Medicare, but also Medicaid, private insurances, SSI and Social Security disability would go far to make these programs more financially viable.

  • Done-with-it

    America needs to walk away from this government. It is useless, bent on having it's own way and using us to pay it's bills — We can refuse to re-elect this pernicious horde in Washington; find trustworthy people; dump the trash!

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