November 27, 2013
ObamaCare's Looming Land Mine
By Lewis Dovland
Those who wrote the PPACA legislation were much more brilliant than most conservatives have given them credit for. They have hidden a landmine in the way it all works that will ensure an eventual takeover of the entire health care industry by the government.
Let me first clarify my professional interest. I have been a vendor of software and services to both insurance companies and providers, and therefore have a deep understanding of the health care industry and what the ACA will do to it. I do not work for any insurance companies or medical providers, nor do I own stock in any such entities, so my views here are those of a concerned citizen who, because I see the industry up close and personal on a daily basis, know what the ACA will do to us all. And therefore, I am concerned.
We've all heard the "if you like your doctor, you can keep your doctor" statements -- statements that now are being admitted to even by the administration as knowingly false when first made. We all know about the much higher premiums and deductibles faced by individuals, due in large part by the coverage mandated by the law.
What is being overlooked is the new and higher deductibles and total annual out-of-pocket expenditures, especially in the Bronze and Silver plans. The amount of these greatly exceeds the ability of most individuals and families to pay, thus providing the real possibility of personal bankruptcies due to medical bills and high losses for providers who cannot collect.
Here is an example from the American Cancer Society's Cancer Action Network:
The Peters a family of four earns $100,000 a year. They're all pretty healthy, so they purchase a bronze plan because the premiums are relatively low, $700 per month. However, in April their son Carl is diagnosed with a rare form of leukemia that requires aggressive treatment and hospitalization. The bronze plan requires a deductible of $7500, as well as co-insurance on cancer drugs of 20%. During the course of the year the Peters exhaust their deductible and reach the out-of-pocket limit ($11,900) imposed by the law. Over the course of the year, the Peters spend $20,300 on premiums, deductibles and other out-of-pocket costs - over 20% of their income.
While this example is for cancer, it applies to any serious illness or hospitalization. Heart attack in a previously healthy person, serious accident or fall, even the ER costs of treating the 12-year-old who breaks an arm falling off his bicycle.
As the example says, the medical expenses would represent twenty percent of their gross -- probably more like 25% of their after-tax income. This is impossible for most families to bear in our current economy.
So what will happen? The family, being responsible citizens, will initially try to pay the bills, but that will soon prove impossible. They will ultimately default. And in any case, they will most likely end any college planning or retirement savings they were working toward.
But -- and this is the big but -- the entity chasing them for the money is not the government. Rather, it is the provider -- the doctor, hospital, lab, radiologist, etc. This permits the government to stand on the sidelines and shrug at the dastardly situation that government itself caused in the first place.
Once enough patients face this crisis, the provider will be painted as the devil, hurting all these working Americans and their finances. First there will be restrictions on how much the provider can ultimately collect. Eventually, providers will be eating a large portion of any of the money they don't collect at the point of service.
The government will neatly sidestep the mess they've set up on purpose, will be able to demonize the providers (who end up not getting paid), and can step in to "save the day." And saving the day means taking over the now-bankrupt assets of the provider side of the health care delivery system. Bingo: a full single-payer and provider system, under government control, without even having to fire a shot.
This is a main reason why the PPACA law is so bad. It is health insurance reform, not health industry reform. It does nothing to fix the cost problems we have in the delivery of health care. It addresses a nonexistent problem (lack of insurance) instead of the real problem (making health care affordable for all). All planned with an eye to wrecking the system from the bottom up.
There is a better solution -- one that uses the free market, transparency, HSA accounts and other tools -- that neither space nor topic permits me to review here. The first step is to stop this runaway train, then put in place the real reforms needed to ensure a stable and affordable health care delivery system for all.
But beware the landmine that is hidden in the current law. It is there not by accident.