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Wednesday, January 19, 2011

How Obamacare is already costing us

For all that Democrats think that the more popular elements of Obamacare have already gone into effect and are winning converts, Sally Pipes reminds us that Obamacare is, on the contrary, already damaging health care.
For starters, it has effectively stopped the construction of physician-owned hospitals throughout the country.

Section 6001 of the health-care law required physician-owned hospitals to obtain their Medicare certification by the end of last year. Without it, they can't treat Medicare patients. And the facilities needed to be open to get that certification.

So construction halted at 45 hospitals as the New Year arrived. Work on countless others will never start, having been effectively banned by ObamaCare. This will limit competition in the health-care marketplace, driving up costs for patients.
And contrary to their promises, it's already forcing people to give up their current insurance.
New rules requiring insurers in the individual and small-group markets to spend at least 80 percent of premium dollars on medical claims are intended to ensure that consumers get good value for their money. Instead, they'll push many plans out of existence. And with fewer competitors to keep them honest, the insurers that survive will have an easier time raising rates.

Other measures kicking in are petty -- but punitive. For example, people can no longer use tax-free Health Savings Accounts on basic over-the-counter drugs. Instead, they must pay for a doctor's appointment -- and then get a prescription for a pricier pharmacist-dispensed drug.

Consider the case of Claritin, an allergy medication that recently was approved for OTC use. A report from the National Center for Policy Analysis found that longtime users of the drug saw their daily costs fall 80 percent, from about $2.50 to just 50 cents. ObamaCare reverses this trend by encouraging people to opt for higher-priced prescription drugs when a cheaper OTC medication would work just as well.

And some measures are cut-off-your-nose-to-spite-your-face punitive -- like the new $2.5 billion excise tax on pharmaceutical companies. Drug manufacturers won't simply swallow this new bill; they'll pass it onto consumers in the form of higher prices.

Thus, by (for example) increasing the cost of care for patients who need cholesterol-lowering statins or cancer-fighting meds, ObamaCare harms our health.
Remember these facts when you hear the Democrats talk about all that Obamacare has done already for us.


Writecraft said...

I'm the controller for a dental lab, and I see Obamacare rolling toward my job like a steamroller.
Last year, 16,000 of the 25,000 dental labs in the US went under (according to the boss, I don't follow the literature.) The medical devices tax applies to everything we sell: dentures, crowns, bridges, implants, and so on.
It doesn't take a whole lot of Economics knowledge to look at the supply/demand curve on this: we have a dramatically reduced building capacity, the new tax will reduce it further. When supply goes down while demand remains the same... well you can all do that math.

Stuart Hutchings said...

Betsy this topic has been covered quite a bit actually. These hospitals are mostly, in fact I think entirely, "specialty" hospitals primarily owned by physician groups. Specialty hospitals cater to specific types of care and that pretty much means high revenue care. A serious problems for hospitals these days (and has been for at least a decade) is that these specialty centers didn't really 'expand' care, they effectively siphoned off patients. The thinking being, you "specialize" in treating say heart replacements, you must be better. Whether that is true or not isn't actually measured, its just an effective perception. These "specialties" are the high 'profit' care items, which provide the revenue of the far less 'sexy' aspects of a hospital (food service, infection control, operational maintenance, etc) and care with is profit neutral, and therefore at higher risk of actually being a loss leader. Also, physicians in these specialties are also very powerful at hospitals, whether it would seem fair or not, as they bring in the big bucks, they tend to have their interests and egos catered. If they conclude they can make more money at the specialty hospital, they leave. Basically these means in the long run, your 'normal' hospital becomes the equivalent to our post offices. They have to perform the non-profit generating services while the other players get to elect to focus on the profitable services only. While that may make and effective argument for why it may be time to end "snail" mail letter delivery and eliminating the government supported postal service, I'm pretty certain that when your family member suffers from a bad case of pneumonia, you'll want to know that there is a place she can go that will treat her very well and at a reasonable cost.

But by all means, ignore the details and focus on the simple tag line.. ObamaCare killed 45 hospitals.

Pat Patterson said...

That's like arguing that the Porsche GT3 shouldn't be sold because it takes customers away from the Cayman.

pumping-irony said...

I dunno, we got a lot of "speciality" government agencies.... Wouldn't mind seeing a few of those close (fat chance.)

Stuart Hutchings said...

Um, no Pat, it isn't like that at all.

The presumption was that these physician owned hospitals simply increased the number of available hospitals, thus encouraging the natural benefits of competition for customers. But that is factually incorrect if you consider the details. Additionally, lack of Medicare certification didn't prevent these hospitals from being built but not being able to serve Medicare patients did because specialty hospitals tend to address issues experienced more commonly by the elderly. That and the fact Medicare is already a significant portion of our health care economy. If these physician owned hospitals were truly intended to be equivalent of 'normal' hospitals, then they could in fact offer us the benefits of market dynamics through competition, heck even innovation through seeking to either improve quality of care or efficiency of delivery. But instead it leads to cherry-picking customers, which drives up the costs of the other hospitals who have to provide care for unprofitable services and (strictly IMO) likely also by charging a little more because "hey that hospital specializes in XXXX treatment, clearly they must be better"... the type of thinking I've personally witnessed countless times in my life when folks I know, etc have experienced life altering health care events.

The part of the debate we tend to ignore, or at least understate, is how the individual thinks when its their wallet versus their loved ones is radically different. I'm watching this play out among folks I grew up with (thanks Facebook). When we were kids, I was considered the school conservative/fascist (and I know where I stand on at least this board). Now, wow... I truly am a liberal by comparison. Anyway, while several of them frequently rant continually about issues with government and a general opinion that all our troubles would be over if everyone else would stop free loading (so to speak), they are working on a continual effort to raise money for a class mate devastated by the costs associated with their cancer treatment. For three years they've worked to help the classmate pay for it, and some of them make pretty good money, and the person is still deeply in debt with realistically no way out. But they die otherwise (with their form of cancer is virtually guaranteed), so its not like there is a choice. If any of them face a similar issue, I suspect it would unfortunately divide their energies, thus probably making the continued treatment impossible (highly specialized, only a few places offer it).

As to the other issue Betsy linked, I hope to have some time this evening to look into it. I hadn't heard of it, and if accurate concerns me a lot.

Stuart Hutchings said...

Betsy, I post pretty rarely (mostly as I don't have the time and I'm trying to 'teach' myself to stay out of these discussions) but when I do I've seen a problem this interface. I often get an error saying the URL is too long and it doesn't seem to matter whether my respond is long or short.

Have others commented about this to you? I'm asking as I'd like to know if its a general issue or something more specific to my computers' configuration.

Rick Caird said...

First, Stuart, it is blogger, not Betsy. I occasionally see the error here and on other places that use blogger.

Specialty hospitals, not surprisingly, specialize. That means they have the experience and resources directed toward specific care. If you look at major, general care hospitals, they often have specific functions attached in which they specialize. One such example would be heart surgery. Not all hospitals in an area have the ability to provide that kind of care. But, some do and that is a non trivial extension.

Pat is right, though. Your argument is that we should have department stores and not boutiques because department stores smooth the costs by subsidizing some products. That is a terrible piece of reasoning. I had bypass surgery and I did not pick just any old hospital. I picked the one with which seemed to have the best program. I would not want one that was cross subsidizing different functions.

I can tell just from yoru reasoning on the doctor's hospitals that you prefer a lower quality of care for everyone rather than some getting better care than others. I have always objected to the idea of the lowest common denominator, but that is where liberals always seem to go.