Politics & Policy

Obamacare Under Attack

Is it time to eliminate government health insurance?

Despite President Obama’s recent declaration that the Patient Protection and Affordable Care Act — Obamacare — will be “a lasting legacy that I am extraordinarily proud of,” the legislation remains under vigorous attack. Polls demonstrate that up to 60 percent of Americans want it repealed. While many in the newly elected Congress focus their attention on reversing or limiting the implementation of Obamacare, the courts are assessing the constitutionality of some of its fundamental edicts.

Constitutional questions aside, a whole host of concerns about specific impacts of the PPACA underlie the opposition to it, including the fact that the law fails to control costs as calculated by the government itself. The major objections to Obamacare rest on four of its fundamental features, all of which represent a marked shift of authority and control of health-care decisions to the government: 1) mandating insurance coverage while eliminating insurance options such as high-deductible plans with health savings accounts (HSAs), which people increasingly prefer; 2) shifting millions more into already unsustainable public health-insurance programs; 3) directly or indirectly limiting access to technology by reducing payments for specialty medical care and limiting patient-driven options on available care; and 4) significantly increasing taxes to pay for the plan. While stopping short of the overt single-payer system openly desired by our president and many Democratic congressional leaders, the PPACA inarguably moves dramatically toward many of those same endpoints.

The government is allocated overwhelming authority over most medical care and has an increasing influence on every medical decision and available option for patients. To control the physician-referral pattern, the government manipulates payments to doctors in specialties of its choosing. To limit the use of medical technology, government declares reimbursement rates for its use. To control the use of diagnostic tests and therapies, the government dictates collected charges. To control availability of innovative drugs, government decides what to pay for and what not to. To limit the use of chronic care, government subsidizes end-of-life “discussions” with elderly patients. And by crafting requirements about the composition, structure, and breadth of the health insurance that employers may offer, government restricts your choice of doctors and plans.

All of these may be rational activities of government when it is a direct payer, because government — as insurer — has the motivation to reduce its own payments for medical care. But none of these are in the interest of the patient — they are calculations often based more on economic than medical reasons.

Beyond that, the federal government faces massive budget deficits, and no one disputes that the costs of Medicare and Medicaid have spiraled out of control. In light of the financial train wreck of government health-insurance programs — they now cost almost $1 trillion per year and are projected to go bankrupt as Baby Boomers become seniors — it seems reasonable to ask this fundamental question: Why does the federal government have to be a health-insurance company? The answer is obvious: It does not.

For virtually every other product or service in America, we rely on the private sector. For the dozens of other types of insurance, we look to private companies to compete for our business on the basis of price and value. We even look to the private sector to make up for deficits in public health programs, such as drug coverage in Medicare. And there is little veracity to the argument that government insurance is needed to increase competition, given the thousands of insurance plans from the hundreds of insurers nationwide — not to mention the fact that government often erects barriers to competition, such as the ban on interstate insurance purchases.

Moreover, Medicaid and Medicare do not provide nearly as much “security” as is commonly thought. Medicaid patients are already refused care by almost half of doctors in metropolitan areas across America, according to 2009 data from Merritt Hawkins & Associates, with some cities far exceeding that figure. And despite the administration’s vilification of private health insurers, Medicare has a higher rate of claim refusals than the major private insurers, according to the AMA National Health Insurer Report Card of 2008.

Clearly, government insurance does not equate with access to care; given that it is also an unsustainable financial disaster, expanding it seems nonsensical. We all must realize by now how government influence on the “reimbursement” for medical care, the basis for the vast majority of charges regardless of public or private insurer, has already distorted health-care decisions, yet failed to rein in costs.

Most agree that the government should help Americans too poor to buy health insurance — and there are ways to accomplish that without limiting choices and inserting government between the doctor and the patient. Government can assist poor and low-income families with refundable tax credits, or vouchers, or other cash-equivalent aid. Providing money to consumers, instead of providing insurance itself, empowers American citizens to buy the products and services they value most. The private sector will respond to consumer demand for lower-cost health plans, such as high-deductible plans for catastrophic coverage with HSAs, or specialized disease-based insurance and other innovative products.

Also, while government should regulate the insurance industry to protect consumers from fraud, that regulation does not need to include the more than 2,200 mandates specifying coverage that many Americans simply do not want — such as for acupuncture, massage therapy, in vitro fertilization, and chiropractic care. These government mandates currently generate up to 50 percent of insurance costs and account for the bulk of the variation of health-insurance prices between states. Is it any surprise that 9 million Americans who can afford insurance go without it?

Many of the key goals for health reform in America are generally agreed upon: reducing health-care spending, expanding access to affordable coverage, preserving personal choice and portability in health care coverage, promoting competition in health-insurance markets, and maintaining the excellence of medical care and innovation in the U.S. None of these require the government to be an insurance provider. To the contrary, it seems obvious that government insurance has set up a multitude of intrusive conflicts of interest, whereby an extremely powerful government can constrain competition and restrict patient choice, insurance options, and medical care itself. The public has already acknowledged the fiscal reality and the potential of losing choice and access to the world’s best medical care. Let’s hope our elected officials have the courage to enact policies that do the same.

— Scott W. Atlas is a senior fellow at the Hoover Institution, a professor at Stanford University Medical Center, and editor of Reforming America’s Health Care System: The Flawed Vision of ObamaCare.

Scott W. AtlasScott W. Atlas, MD, is the David and Joan Traitel Senior Fellow at the Hoover Institution, and senior fellow by courtesy at the Freeman Spogli ...

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