Health care in the next decade: Big government is watching

by Douglas W. Jackson, MD

The recently passed health reform legislation represents a further extension of government and bureaucracy involvement in our lives and careers. It seems that our personal and patient responsibility as well as accountability are being further supplanted by safety nets, mandates and entitlements.

Nobel Prize-winning economist Gary Becker and others say this bill does not address many of the major weaknesses in our current system and will add layers of taxation and regulation to an already burdened structure. It is projected that we will see rising health costs while our national debt increases. Amazingly, this vast new entitlement has been sold to the American public as fiscal responsibility. As the new legislation emerged, data from the “nonpartisan” and “independent” Congressional Budget Office (CBO) was used repeatedly to validate the projected costs of this new bill.

Congressman Paul Ryan (R-Wisc.) challenged the accounting methodologies used by the CBO saying its calculations and projections were based on accounting gimmicks. Congress has repeatedly demonstrated they have not been able to deal with the complex issues of deficit reduction and cost containment. This new health care entitlement will be just like other programs that are failing fiscally.

Who runs health care?

According to the CBO, the U.S. public debt could approach 100% of our gross domestic product (GDP) by 2020 — it is currently around 53%. It says a major basis for the increase in the national debt will be the spending and subsidies needed to maintain entitlement programs such as Medicare, Medicaid and Social Security. Note: This new health reform bill will probably be one of the largest entitlement programs of our lifetimes.

Douglas W. Jackson

I remember a campaign promise: “I will not sign a plan that adds one dime to our deficits either now or in the future.” I wonder if the president has considered other entitlement programs such as Social Security, Medicare, Medicaid, Fannie Mae and Freddie Mac, and how they have been fiscally managed and how many times they have increased our national debt. They all have and will continue to require subsidization through taxation. Government bureaucracies and Congress have not demonstrated the fiscal wherewithal and cuts to keep many of these programs solvent for the long term.

Funding

There have been many proposals on how to fund health reform. One example was the 40% tax on “Cadillac” health care plans that was deferred until 2018 as a result of union pressure. I doubt the elected officials of 2018 can or will stand up to the unions when that deferral runs out.

Another example of real deception and failure to explain costs was moving the “doc fix” out of health care reform. The doc fix would have solved the annual fiscal dilemma that ends each calendar year with threats of deep cuts to Medicare reimbursements and Congress coming in at the last minute to remedy the situation. The scheduled Medicare physician payment cuts, which are currently projected to be 21% and subsequently even more, were removed from the cost of health care reform. These costs, if deferred or rescinded, could account for increasing the costs of health care by a quarter-billion dollars over the next decade.

These are just two examples of issues that will erase the projected savings of the first decade of reform. Also, there are many costs associated with mandates that will be incurred at the state level — and not enough funds were appropriated to cover these costs. This additional concession and costs were to help to all the states and was part of the effort to rescind the Nebraska deal.

We must get serious about our deficit

Health care accounts for approximately one-sixth of our economy and its costs have been escalating out of control. We are now turning the future fiscal success of cost containment over to the government.

The real disappointing part of this new legislation is how it was promised in the presidential campaign and how it was enacted: It was not an open debate; there was no advanced Internet posting or access to the proposed new legislation; the passage did not allow time to understand and read it, had many back room deals made and it was not of bi-partisan scope. In addition, it did not include any meaningful cost controls to address our spiraling health care costs.

There is no doubt that much of the responsibility for the escalating costs we were experiencing were the fault of the private sector practicing medicine and marketplace exploitation by the insurance industry greed. Much of the push for the reform was to control the excess utilization and wasted spending in the current system. In addition, during the weeks when reform looked unattainable, the insurance companies announced raises in premiums so significantly high they enraged many policy holders. Something had to be done, however, many now wish there had been a more incremental health care reform enacted. Going back is not an option.

Beware of promises

When something is too good to be true, beware. My understanding of some of the new bill’s promises include: subsidies for the middle class; lower insurance premiums for many consumers; large reductions in overall health care spending; and reducing our federal budget deficit — mostly in the second decade. At the same time, the reduced costs and burdens for businesses will allow our country to have a more competitive economy. In addition, there will be no reductions in Medicare benefits; those pleased with their current insurance plans can keep them at no increased costs; and insurance companies will no longer have the right to deny coverage for pre-existing conditions.

Before we celebrate too much, look at Massachusetts as an example of health care reform and controlled costs. It appears the regulators in the commonwealth will approve premium increases in their mandatory coverage ranging from 8% to 32% for small businesses and individuals. That isn’t far from the unpopular increases that many insurance companies have adopted.

With all the subsidized and additional coverage proposed for health care reform, the costs will most likely continue to rapidly increase. Congress will most likely be unable to provide significant cost control because of the unpopularity of deficit reduction measures and cutting back entitlements. Initially, they will raise taxes as much as they can and as much as the public will tolerate. They will continue to try to control costs through reducing reimbursements, mandates and rate controls on companies. When those attempts don’t work, they will resort to care rationing — a mechanism that appears to be in place in the new bill through an “Independent Payment Advisory Board.” Its role would include making cuts in physician and other providers’ reimbursement. This has occurred elsewhere in countries with state-supported health care and similar commissions currently exist in Europe. Not only do they control costs by reducing reimbursement, but through coverage denials, spending limits on certain treatments, slowing down the introduction of new technology and drugs, limiting costs spent during end-of-life care and making patients wait longer for access and certain treatments.

Politicians governing costs

Once again, we have to look no further then Massachusetts to see the early stages of similar price-control commissions trying to slow down their significant cost overruns. Massachusetts insurance regulators have rejected the vast majority of insurance company requests for premium increases. That will mean insurance companies will have to offer less coverage, decreased access to care and lowered reimbursement rates to providers. The commonwealth has decided that rate setting and price controls are necessary to try to decrease their increasing costs. They have the highest rate of insured individuals of all the states, but also the nation’s highest state individual and business health insurance premiums. We may see many private insurance companies exiting Massachusetts and the resultant care rationing that may occur. Remember, health care delivery will be different when politicians govern costs and the market forces are eliminated. It appears we are moving from one failing extreme to another.

Time will tell how these new changes and more government control will impact patient care and the health care delivery in this country. As a community, we need to speak out as we see these changes negatively affect our patients and the care we know they deserve.

Enigmatically, our elected officials and the current party system remain at the root of our current problems, and at the same time our only hope of solving this ongoing fiscal situation. This next decade will see changes many of us have not experienced nor anticipated.

• Douglas W. Jackson, MD, is Chief Medical Editor of Orthopedics Today. He can be reached at Orthopedics Today, 6900 Grove Road, Thorofare, NJ 08086; e-mail: OT@slackinc.com.