Health Reform – the Ultimate Fix

by Dr. Brian Hill, M.D. & Ronald E. Bachman FSA, MAAA

A majority of Americans believe that a health reform fix is needed.  For those in power the following is the perspective of a concerned physician and an actuary, two professionals who work in the dysfunctional system.  Please read, it’s important for a few noble Congressmen and women to listen to these insights. Consider what kind of fix you may be voting for.    

The need for reform a reform fix is non-partisan.  The existing problems are non-partisan. Medicine is non-partisan.  There is not a Democrat prostate cancer, a Libertarian heart attack, or Republican diabetes.

Like good medicine, health care reform should be based on evidence based standards that rein in costs while maintaining quality of care.  The goals of the Senate legislation are laudable: “The purpose of this is to provide affordable, quality health care for all Americans and reduce the growth in health care spending.”

We have been repeatedly told that current health care costs and trends are unsustainable. They say our businesses, families and government cannot sustain this level of spending. Our country will go bankrupt. We need to find a way to spend less money on health care.  But, the 12/10/2009 report from the Chief Actuary for the Center for Medicare and Medicaid (CMS) states that “total national healthcare expenditures under this bill would increase by an estimated total of $234 billion” more than if we just kept our current system.  The CBO states, “the agency has not assessed the net effect of the current legislation on National Healthcare Expenditures.”  

The Senate bill seems to make an unsustainable path more unsustainable. It actually raises the cost curve. If we are worried about bankrupting our country, then why are we looking to a plan where the costs actually go up? This means that our government will eventually be unable to pay for Medicare for seniors, funds will not be available to help decrease the costs of health insurance premiums for poor families, and children needing government assistance may not have any. 

According to the latest CBO report from 3/11/2010, the cost of the bill is estimated at $875 billion for years 2009-2019. With a few other additions that brings the total to around $1 trillion. This additional expenditure is above and beyond the normal cost for delivering health care, currently running about $2.5 trillion a year. 

Medicare cuts are more than $493 billion.  The cuts will be based mostly around decreasing reimbursement to hospitals, physicians and other aspects of health care for our seniors. The cuts in Medicare will hold off the expected bankruptcy of that program by 9 years, moving the expected date of exhaustion of the trust fund from 2017 to 2026. CMS states that “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).”  Simulations by the Office of the Actuary suggest that roughly 20% of Part A (hospital) providers would become unprofitable within the 10-year projection period.” 

Increases in federal taxes will total more than $486 billion.  The payroll tax for Medicare will go up. High-cost employer-sponsored health plans will be taxed. Medical device manufactures like those that make pacemakers will be taxed. Pharmaceuticals will be taxed. Insurance companies will be taxed. Investment income will be taxes. These taxes will both stifle innovation and according to the Chief Actuary, be “passed through to health consumers in the form of higher drug and device prices or higher insurance premiums.”  

The expansion of health insurance to 30 million people sounds good.  But, a majority (15-18 million) will come from the expansion of Medicaid. Currently, about half of physicians do not accept Medicaid patients.  Federal price controls limit adequate reimbursements and treatments to the detriment of patients.  The Chief Actuary of CMS states that “providers might tend to accept …fewer Medicare and Medicaid patients, exacerbating existing access problems...” 

According to the CBO, state spending on Medicaid would increase more than $25 billion. States costs for their portion of Medicaid will also increase. Many states are furloughing teachers, decreasing the numbers of firemen and policemen, and limiting our legal system because of budget shortfalls. The states cannot tolerate another huge unfunded federal mandate. The new medical cost mandates will further squeeze out the states’ ability to fund other projects of education, roads, bridges, fire safety, police, and other local needs.

In summary, the fix is a $1 trillion dollar plan that expands healthcare to 30 million people. It raises the costs of what is already considered an unsustainable cost problem. It cuts access to health care for our seniors and shifts $486 billion in cuts from Medicare beneficiaries to non-elderly poor. A majority of those that receive insurance will receive a substandard product (Medicaid) that few physicians will take. Our states will have to find more service cuts or raise taxes. Medicare goes bankrupt in 2026. Fewer people will be inclined to pursue a medical career, further worsening a physician shortage already expected to be 200,000 doctors by 2025. Our economic recovery is slowed and job growth is negatively impacted. 

No wonder the Americans are shouting…NO to this health reform fix.  It is not now or never. We can do it right if we work together.  The Senate bill is a fix to our system like cocaine to an experimenting adolescent. Some may find the temporary “high” worth the devastation, and many will become addicted to the federal drug of dependency.  But rational adults know that it will destroy our future and our children’s future.  The first oath of medicine is to do no harm. Congress is violating the first premise of good treatment. Please, for the sake of our children, for the sake of our country, and for the sake of a free world…don’t shove that needle into our children’s life blood.