Healthcare

I am baffled by the idea that giving the government a greater role in our health care will yield greater efficiency and affordability, so I decided to look closely at Sen. Barack Obama’s health care plan. What I found was a plan that costs the government—and therefore, taxpayers—a lot of money without really solving the drivers that are pushing health care costs up.

The first part of Obama’s three-tiered plan is “providing affordable, comprehensive and portable health coverage for every American.” He divides this part of the plan into six categories:

(1) He proposes a new national health plan, similar to Medicare, for individuals who aren’t covered by employer plans or who cannot afford to buy private insurance. If you don’t qualify for Medicaid or SCHIP but need assistance, the federal government will offer income-specific subsidies. No one could be turned away from the public plan for pre-existing medical conditions, which means that taxpayers would carry what would likely be a hefty financial burden. Additionally, Obama does not address how he would tackle problems such as doctors’ increasing reticence to accept Medicare patients, thanks to cuts in reimbursement. Doctors don’t seem eager to do business with the government.

(2) Better yet, Obama would like to establish what he calls the National Health Insurance Exchange, which will “act as a watchdog and help reform the private insurance market by creating rules and standards.” Through the Exchange, Americans could enroll in the public plan or evaluate and enroll in an approved private plan. The irony here is remarkable: We’re going to incur the cost of another government-run group so that we can have more affordable care? How many bureaucrats, exactly, will the Exchange employ, and how much will it cost to operate? Obama doesn’t say.

(3) Obama wants employers “that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage” to contribute a percentage of payroll toward the costs of the national plan. Here’s the problem: If employers are paying for part of the national health plan, they have fewer dollars for salaries, meaning fewer jobs.

(4) Parents would be required to buy insurance for their children, though he doesn’t explain how this part of his plan would be enforced. In similar state-run plans, such as the one in Massachusetts that requires all citizens to have health insurance, the penalty is a loss in the personal tax exemption and fines. Is Obama prepared to fine parents? He doesn’t say.

(5) Next, Obama would like to expand eligibility for government programs, such as Medicare and SCHIP—new entitlements that will mean higher taxes.

(6) Finally, Obama says he would allow flexibility for state plans, as long as the plans meet the minimum standards of the national plan.

The bottom line is that Obama’s first move would be to get everyone in the U.S. covered—to the tune of about $100 billion, most analysts agree.

The second component of the Obama plan is to “modernize the U.S. health care system to contain spiraling health care costs and improve the quality of patient care.” One major idea here is a reinsurance plan: The government would reinsure employer health plans for a portion of the catastrophic costs above a certain (unstated) amount. Obama would argue that this policy is a cost-saving one, as it would require employers to use their savings to reduce employees’ premiums. In truth, it simply shifts the costs from the private sector, which has the tools and motivation to manage them, to the government, which has no incentive to keep them under control. And remember: When the government incurs a cost, the taxpayers pay it.

Obama says that his plan will reduce premiums by as much as $2,500 a year for a typical family, more than half of which will come from savings linked to the use of electronic records. Obama’s campaign likes to cite a RAND study that concluded that widespread use of electronic health records could save up to $77 billion a year in health care spending. What he fails to mention is that the study says this number is possible when about 90 percent of doctors and hospitals are using electronic records, which likely won’t happen until 2019.

Other problems: The $77 billion doesn’t reflect net savings, so the actual amount would be lower. And it reflects savings that would not necessarily trickle down to consumers: Because electronic records can help reduce medical errors, harmful drug interactions and duplicate tests, insurance companies stand to benefit the most financially. There is little incentive for them to share these savings with the consumer.

In short, Obama hangs his hat on a number that does not reflect actual savings for the American consumer.

Many of the other ideas in this section are not new, per se. In fact, many of them are similar to ideas that are already at work in the health care arena: disease management programs, coordinated care, greater transparency about quality and cost of care, and incentives for high-quality care.

He does pay lip service to rising medical malpractice laws, saying he would “strengthen antitrust laws to prevent insurers from overcharging physicians for malpractice insurance.” He says nothing, however, about limiting jury awards in malpractice cases. Wouldn’t want to upset the attorneys.

The last leg of the Obama plan is “promoting preventing and strengthening public health, to prevent disease and protect against natural and man-made disasters.”  He sounds a lot like nearly every other politician, addressing employer wellness programs, childhood obesity and community-based initiatives to teach Americans to make healthier lifestyle choices. The language describing most of these plans sounds expensive: increased funding for programs, programs and more programs. The truth is that these issues are best addressed at local levels by community groups and families, not by government bureaucrats.

Here’s the bottom line: Obama’s cost-containment strategies aren’t enough to cover the large influx of public dollars into the system and could drive up the rate of inflation, making health care costs greater. The result? A more expensive health care system, marred by government intervention. No doubt Obama’s solution would be to step up the government’s role once again and boost public spending—a plan that is doomed to fail, but not before it costs Americans hundreds of billions of dollars, drives up costs and weakens the health care system.