May 5 2014
The ObamaCare Squeeze
Rachel DiCarlo Currie
To make an obvious point that is frequently neglected by government officials: Health insurance and health care are two very different things, and access to the first does not guarantee dependable access to the second. This can be seen in “universal” health systems around the world.
Take Sweden. As Swedish economist Per Bylund, a professor at Baylor University, discussed in a recent Wall Street Journal piece, the biggest health-care problem in his native country is not a lack of quality medical services. In fact, “The overall quality of medical services delivered by Sweden’s universal public health care consistently ranks among the world’s very best.” No, the biggest problem in Sweden is accessing those medical services via the government-run system. “According to the Euro Health Consumer Index 2013,” wrote Bylund, “Swedish patients suffer from inordinately long wait times to get an appointment with a doctor, specialist treatment or even emergency care. Wait times are Europe’s longest, and Swedes dependent on the public-health system have to wait months or even years for certain procedures, or are denied treatment.”
Thus, it is not surprising that Sweden now has a burgeoning private health-insurance market. According to Bylund: “Insurance Sweden, the country’s national insurance company trade organization, reports that in 2013 12% of working adults had private insurance even though they are already ‘guaranteed’ public health care. The number of private policyholders has increased by 67% over the last five years, despite the fact that an average Swedish family already pays nearly $20,000 annually in taxes toward health care and elderly care, including what Americans call Medicare.”
Here in the United States, ObamaCare has made millions more people eligible for Medicaid, and has therefore given millions more people access to insurance -- but it has not necessarily given them reliable access to care. Indeed, Medicaid has long been notorious for its low reimbursement rates, which have limited patient access. For that matter, the recent Oregon Health Insurance Experiment found that Medicaid coverage actually worsened the problem of excessive emergency-room usage, suggesting that one of ObamaCare’s core assumptions (that expanding Medicaid would reduce ER costs) was wrong.
In a larger sense, writes Hoover Institution fellow Dr. Scott Atlas, a longtime radiologist, ObamaCare is fostering “a decidedly unequal, two-tiered health system.” As Dr. Atlas explains in the Journal:
The hidden truth is just around the corner -- those more dependent on public insurance, mostly the poor and middle class, will have limited access to medical care. About one-third of primary-care physicians and one-fourth of specialists have already completely closed their practices to Medicaid patients. Over 52% of physicians have already limited the access that Medicare patients have to their practices, or are planning to, according to a 2012 survey by Merritt Hawkins for the Physicians Foundation. More doctors than ever already refuse Medicaid and Medicare due to inadequate payments for care, and that trend will only accelerate as government lowers reimbursements.
At the same time, ObamaCare is squeezing out the middle class from affordable private insurance that correlates with far better disease outcomes than government insurance. By bloating coverage requirements and minimizing the consideration of risks fundamental to pricing insurance, the law has already increased premiums by 20%-200% in more than 40 states, according to a 2013 analysis by the Manhattan Institute’s Avik Roy and others.
Less widely known is that inadequate reimbursement by government insurance to doctors substantially increases private-insurance prices. According to a December 2008 Milliman report presented by Will Fox and John Pickering, a shortfall of more than $88 billion in payments from Medicaid and Medicare beneficiaries added more than $1,500 extra a year in premiums and $1,800 extra in total out-of-pocket costs to every family of four with private insurance. With increasing enrollment into government insurance, private premiums will undoubtedly rise even more.
Even inside Medicare, two-tiered access will occur. Under political pressure in advance of this fall’s midterm elections, the administration backed off from the ObamaCare plan to eliminate affordable private drug-coverage options inside Medicare, options that all Medicare beneficiaries enjoyed before the law. These substantial cuts will likely return post-election, limiting those choices to more-affluent seniors.
Dr. Atlas notes that concierge medicine has become an increasingly popular option for those who can afford it, and he expects this trend to continue. “Just as in the U.K. and other countries where governments take an outsize role in dictating health-care policy,” he concludes, “only the lower and middle classes in America will suffer the full consequences of ObamaCare.”