Finding the Good in Obamacare

December 27th, 2009 at 8:28 am | 59 Comments |

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Anyone afraid of big government has plenty of reasons to dislike the “Obamacare” healthcare reforms likely to become law sometime early next year.  Like any massive program or policy, here however, the revisions of the American healthcare system that the House and Senate have passed will create winners and losers. The new legislation has plenty of downsides but an honest look at it from a conservative, free market perspective reveals a few bright spots too. Five that stand out follow:

1. Electronic medical records will become more widespread.

Everyone who deals with healthcare—left, center, and right—agrees that medical record keeping needs serious improvement. Nearly two decades after every other industry computerized its databases, most medical records still get kept on paper in filing cabinets. Those computer systems that do exist usually can’t exchange data.  As a result, many patients fall through the cracks. Literally millions of unnecessary tests get run each year simply because nobody can find records. Drug prescription errors, likewise, kill thousands.   Entities like the Department of Veterans Affairs’ system, Utah’s Intermountain Health, and Kaiser Permanente that make widespread use of electronic records tend to get better results. Dated anti-trust statutes and recalcitrant medical professionals have delayed widespread electronic medical records standard setting for too long. Along with money from the “stimulus,” however, the new healthcare laws should speed the long-overdue adoption of electronic medical records.

2. More people will pay something for medical care.

The current American medical system encourages freeloading and, in some respects, this may decline under the new laws. Plenty of people—including many who probably don’t need them—will get taxpayer subsidies under the laws.  Even if the total number of people receiving explicit subsidies increases (it will), many people who don’t currently pay for medical care will find it attractive to start paying something to buy a basic insurance policy under Obamacare. (Hardly any of the new subsidies provide entirely “free” care.) As individual mandates and subsidies reduce the number of people without any insurance, hospitals and doctors have more resources to go after those individuals that still genuinely want to freeload.

3. Medicare Advantage subsidies, a form of corporate welfare, will shrink.

Since 1997, Medicare has encouraged beneficiaries to pick “private” plans through a program now called Medicare Advantage (Medicare Part C in the statute) as an alternative to “plain vanilla” Medicare. This sounds good in theory—and probably benefits some of the individual participants—but a noble experiment has turned into a corporate welfare bonanza.  While they provide only minor additional benefits like (e.g. routine dental coverage), a variety of “private” taxpayer-financed plans receive larger subsidies than the “plain vanilla” Medicare. If these nominally “private” plans provided better care, then maybe one could justify this. But there’s no hard evidence that they do and some that they don’t. The current law’s numerous restrictions on private decision making—the  participating providers have very limited ability to design their own benefit packages—probably lies at the root of its problems. But there’s still no excuse for the size of the subsidies. If it’s to accomplish its goals, Medicare Advantage needs an overhaul. The big subsidies need to go and, under almost any circumstances, they’ll be cut significantly.

4. More people will get health insurance away from the workplace.

Employer-based health coverage is a bad idea. It discourages anyone from taking responsibility for healthcare costs, decreases choice, and sometimes leads people to stay in jobs they’d rather leave simply to keep the benefits. New “employer mandates” in House and Senate bills seem likely to keep this broken system in place at least in the short term. But even if not a single employer decides to drop coverage, raise wages, and encourage its employees to shop for insurance in the private market, new “exchanges” and mandates will almost certainly increase the absolute number of people buying insurance on their own.  Significant problems (particularly price controls) exist with the mechanisms the legislation uses to encourage private health insurance purchase, but if individuals end up getting better care and being more satisfied than those who receive care through their employers, it may result in a shift away from workplace provided care on a broader scale. And that would be a good thing.

5. Moderately sick people will be better off all-around.

The American medical system is probably the best in the world for two groups of people: the well  and the very sick.  Well Americans can find primary care doctors without much trouble, get all sorts of expensive tests if they feel a bit down, and do it all without a lot of waiting around or bureaucracy.  They rarely pay more than a little out of pocket. Very sick Americans, on the other hand, can rely on quick access to high tech diagnostics, no waiting lists for new, high-tech treatments, and hospitals that treat them pretty well. While overall costs may be high, even those without insurance can almost always sign up for a public program (Medicare or Medicaid) or get charity care.

People with moderate problems—everything from a serious but not-life-threatening physical injuries to chronic diabetes—don’t get a very good deal under the current system. People with any sort of chronic condition often find coverage virtually unavailable in the private market. Since the hospital system focuses mostly on the well and the very sick, furthermore, people with moderate problems often get shunted aside, wait too long for necessary care, and end up with very hefty medical bills if they don’t have insurance.  The changes to the healthcare system may very well hurt care for the well and very sick. At least in the short term, however, the moderately sick will probably get better care and pay less for it.

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59 Comments so far ↓

  • balconesfault

    yeah yeah – there’s the debt

    I don’t understand the bar chart, however – our national debt hit 11 trillion in March 2009. The numbers for 2008 look wildly low.

    Granted, it’s a serious problem – but it has resulted from our overstripping during the last decade the ability of domestic capital sources to primarily fund the debt

    which happened in no small part thanks to two things – the Bush tax cuts, and the Middle Eastern wars.

    that said – do you remember this?

  • balconesfault

    by the way – when one talks about the “budget”, it is proper to talk about deficits. Debt plays a part in that it contributes to the deficit (via debt servicing) – but if you’re going to talk about “busting budgets” that refers to an annual deficit. Debt is an accumulation of deficits.

  • WillyP

    i know the difference in terminology between a deficit and (total) debt. i was correcting myself, as i incorrectly pointed you towards the deficit while calling it debt.

    you’re exactly right – we have not paid for 2 wars, and were under the false illusion of prosperity created by a credit boom that forced us to eat out savings. we’re in that pit now.

    instead of creating the mother of all entitlement programs – obamacare – when clearly the rest we’ve created are already going broke – we should be SLASHING government spending, reducing taxes, and leaving the damn money supply alone.

    clearly, we are not only getting some of it wrong, but literally all of it. i would recommend reading a book on the 1930s, because that’s how we’re positioning ourselves. the only saving grace is the 22nd amendment.

    and, as predictable as ever, the corporate interests do get their way after being coerced by government – health insurance execs will make off like bandits.

    sometimes i wish i were wrong more often!

  • balconesfault

    we should be SLASHING government spending

    Had we done that in late 2008 as a response to the economic collapse, we’d be sitting around with a 25% unemployment rate by now.

    And yes, you are right, the health insurance execs will make off like bandits. For that we can largely thank Joe Lieberman, Ben Nelson, Blanche Lincoln, and the entire Republican caucus. They served their constituency very well.

  • WillyP

    Maybe unemployment would have spiked at 20%. It’d also be on its way down now, rather than stagnating. It will rise again because the commercial real estate market is about to go belly up, and the Fed’s easy money policy is funding unsustainable ventures. Hey, let’s add on the largest entitlement program the world has ever conceived. Seems like a prudent time, right?

    Ah, the Obama recovery!

  • balconesfault

    Hey, let’s add on the largest entitlement program the world has ever conceived.

    Seriously? About 650 million Chinese belong to the New Rural Co-operative Medical Care System, which is heavily subzidized by the Chinese government.

    Have you no sense of reality?

  • WillyP

    balcones, relative to what we spend now on entitlement programs, what the estimated obamacare program will cost, and especially what it will actually cost, the Chinese program is SMALL:

    From Wikipedia:
    “On January 21, 2009, the Chinese government announced that a total of 850 billion yuan will be provided between 2009 and 2011 in order to improve the existing health care system.”

    A yuan is about $0.15 on the dollar, so ~130 billion U.S.D. over 2 years – pitifully small compared to what our plan would cost.

    Social security paid out $612 billion alone in 2008. $682 billion for Medicare in Medicaid in the same time period. And you want to add a public plan, which will rival these costs AT LEAST.

    To answer your question: Yes, unfortunately I do have a sense of reality, which makes your denialism that much more unstomachable.

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