There has been a lot of discussion about the Affordable Care Act (Obama-Care) and its implementation. Much has been said about the less than exemplary role out of the HealthCare.gov site but that is to be expected when the government does anything. Where my issue lays is that I do not see where the ACA actually helps lower health care costs.
The ACA was sold to us as being able to do the following:
From what I can see it does not do many of these things. Let's take a look one by one.
Provide Health Insurance for those who could not get it before
The law does stipulate that no insurance plan can be sold that does not allow for coverage of preexisting conditions. This promise has been fulfilled. The question is - will these plans be affordable?
From what I have seen the plans for most people are to expensive even with the tax incentive for those who fall within a certain level of the poverty limit. In the example used for on the Minnesota premium tax credit handout: Jane Smith, age 45, no children, annual income of $22,000 (just over 200 percent of poverty)... She will have to pay the $6,000 per year but will receive a tax credit for anything she pays over $1,386 ( delta of $4,614). However - If Jane makes $22,000 per year then her total tax burden would be $1,354 considering a standard deduction. So - if she received a tax credit then this would only decrease her taxable income from $22,000 to $17,386 thus reducing her tax burden to $739 resulting in a true relief of $615 in real dollars. This after spending $6,000 for insurance. Seeing as how she will still need to come up with the $500 per month to pay for the insurance and will not see any money until she files her tax return at the end of the year she will have been forced to add a $500 per month line item to her monthly budget roughly accounting for 27% of her monthly expenses and only receive $615 back come tax time. I cannot figure how this is a good deal for Jane Smith? How in the world is Jane Smith going to come up with a way to add a $500 per month line item to her already tight budget? She would be better off paying the $95 penalty in 2014, $325 Penalty in 2015, and even the $695 penalty in 2016 and after.
My contention with this act is that it does not provide health insurance for those who did not have it before because it looks like to makes health insurance non-affordable for those who were not able to get it before. There will be some who have the money to afford the health plan but had a preexisting condition that stopped them from getting insurance in the past. This will increase the number of people who can get insurance but then this will also raise the costs incurred by the insurance companies thereby raising premiums without seeing the money from those who will not cost as much. All in all this will create a glut in the insurance companies costs and raise premiums.
Reduce the overall cost of Health Care
Obama said, "As part of the health care reform law that I signed last year, all insurance plans are required to cover preventive care at no cost. That means free check-ups, free mammograms, immunizations and other basic services. We fought for this because it saves lives and it saves money –- for families, for businesses, for government, for everybody. That’s because it’s a lot cheaper to prevent an illness than to treat one."
This statement is not in concert with the CBO estimates which state, "The evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall," CBO director Douglas Elmendorf wrote in an Aug. 7, 2009, letter to Rep. Nathan Deal, the top Republican on a congressional subcommittee involved in the debate.
Elmendorf explained that while the cost of a simple test might be cheap for each individual, the cumulative cost of many tests adds up:
"But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. ... Preventive care can have the largest benefits relative to costs when it is targeted at people who are most likely to suffer from a particular medical problem; however, such targeting can be difficult because preventive services are generally provided to patients who have the potential to contract a given disease but have not yet shown symptoms of having it."
In fact, a government policy to encourage prevention could end up paying for services that people are already receiving, including breast and colon cancer screenings and vaccines, Elmendorf said.
Other studies backed up the CBO's analysis, including a Feb. 14, 2008, article in the New England Journal of Medicine that was written in response to campaign promises for more preventive care.
"Sweeping statements about the cost-saving potential of prevention ... are overreaching," according to the paper. "Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs." They write that "the vast majority" of preventive health measures that were "reviewed in the health economics literature do not" save money.
"Some preventive measures save money, while others do not, although they may still be worthwhile because they confer substantial health benefits relative to their cost," the authors write. "In contrast, some preventive measures are expensive given the health benefits they confer. In general, whether a particular preventive measure represents good value or poor value depends on factors such as the population targeted, with measures targeting higher-risk populations typically being the most efficient."
Meanwhile, a separate study conducted by researchers from the American Diabetes Association, American Heart Association and the American Cancer Society concluded that, while interventions to prevent cardiovascular disease would prevent many strokes and deaths, "as they are currently delivered, most of the prevention activities will substantially increase costs."
To make sure that the data hadn’t changed dramatically since we last looked at this issue, we contacted Peter J. Neumann, director of the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center. He was one of the three co-authors of the New England Journal of Medicine article.
Decrease the burden on our hospitals for treating those without insurance
I have been told by many that the ACA lower costs by insuring those who were not insured before and thus limiting the costs the insured have to pay for the uninsured. However I cannot see this plan increasing the number of insured. Now if people like Jane Smith (used in the example above) choose no insurance and to pay the penalty but they do go to the emergency room the cost will still be absorbed by the hospitals.
According to the American College of Emergency Physicians the costs of providing health care to the uninsured is $176 billion dollars her year and the hospitals and physicians shoulder this financial burden as bad debt or "uncompensated care". By their data collection, 55% of emergency care foes uncompensated. In the past, hospitals shifted uncompensated care costs to insured patients to make up the difference. However, cost shifting no longer is a viable option because managed care and other health plans have instituted strict price controls, leaving little margin to shift costs. More than one-third of emergency physicians lose an average of $138,300 each year from EMTALA-related bad debt, according to a May 2003 American Medical Association study. The Emergency Medical Treatment and Active Labor Act, or EMTALA, was passed in 1986 to ensure public access to emergency services regardless of ability to pay.
I WANT EVERYONE TO PAY ATTENTION TO THIS NEXT PORTION!!!!
All hospitals who accept Medicare or Medicaid patienst are forced to abide by the EMTALA and THERE IS NO REIMBURSEMENT PROVISIONS as part of the EMTALA.
That is important to remember - the hospitals are required to accept patients that they know cannot pay and they must incur this as bad debt. The government does not reimburse them for their expenses. This is the #1 reason hospitals are closing their emergency rooms.
The ACA says that the individual mandate charged as a tax on those who do not have insurance is to help offset the costs of the uninsured going to emergency rooms. However - there is not a single portion of the ACA that allows for a mechanism for hospitals to make claims to any part of government to receive reimbursement for those claims.
With projections that health care costs will double and the number of uninsured will increase, the nation is faced with how it will continue to provide care for all Americans, not just the disadvantaged. Emergency departments provide an essential community service, similar to fire departments, police departments, and public utilities. The nation cannot afford to allow the emergency care system to collapse because of a lack of funding. It is too high a price to pay in terms of public health effects and human suffering.
So - the penalty will be paid to the government and not to the hospitals and will be a great revenue stream for the federal government to transfer towards the treasury and fund other programs.
The ACA was sold to us as being able to do the following:
- Provide Health Insurance for those who could not get it before
- Reduce the overall cost of Health Care
- Decrease the burden on our hospitals for treating those without insurance
From what I can see it does not do many of these things. Let's take a look one by one.
Provide Health Insurance for those who could not get it before
The law does stipulate that no insurance plan can be sold that does not allow for coverage of preexisting conditions. This promise has been fulfilled. The question is - will these plans be affordable?
From what I have seen the plans for most people are to expensive even with the tax incentive for those who fall within a certain level of the poverty limit. In the example used for on the Minnesota premium tax credit handout: Jane Smith, age 45, no children, annual income of $22,000 (just over 200 percent of poverty)... She will have to pay the $6,000 per year but will receive a tax credit for anything she pays over $1,386 ( delta of $4,614). However - If Jane makes $22,000 per year then her total tax burden would be $1,354 considering a standard deduction. So - if she received a tax credit then this would only decrease her taxable income from $22,000 to $17,386 thus reducing her tax burden to $739 resulting in a true relief of $615 in real dollars. This after spending $6,000 for insurance. Seeing as how she will still need to come up with the $500 per month to pay for the insurance and will not see any money until she files her tax return at the end of the year she will have been forced to add a $500 per month line item to her monthly budget roughly accounting for 27% of her monthly expenses and only receive $615 back come tax time. I cannot figure how this is a good deal for Jane Smith? How in the world is Jane Smith going to come up with a way to add a $500 per month line item to her already tight budget? She would be better off paying the $95 penalty in 2014, $325 Penalty in 2015, and even the $695 penalty in 2016 and after.
My contention with this act is that it does not provide health insurance for those who did not have it before because it looks like to makes health insurance non-affordable for those who were not able to get it before. There will be some who have the money to afford the health plan but had a preexisting condition that stopped them from getting insurance in the past. This will increase the number of people who can get insurance but then this will also raise the costs incurred by the insurance companies thereby raising premiums without seeing the money from those who will not cost as much. All in all this will create a glut in the insurance companies costs and raise premiums.
Reduce the overall cost of Health Care
Obama said, "As part of the health care reform law that I signed last year, all insurance plans are required to cover preventive care at no cost. That means free check-ups, free mammograms, immunizations and other basic services. We fought for this because it saves lives and it saves money –- for families, for businesses, for government, for everybody. That’s because it’s a lot cheaper to prevent an illness than to treat one."
This statement is not in concert with the CBO estimates which state, "The evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall," CBO director Douglas Elmendorf wrote in an Aug. 7, 2009, letter to Rep. Nathan Deal, the top Republican on a congressional subcommittee involved in the debate.
Elmendorf explained that while the cost of a simple test might be cheap for each individual, the cumulative cost of many tests adds up:
"But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. ... Preventive care can have the largest benefits relative to costs when it is targeted at people who are most likely to suffer from a particular medical problem; however, such targeting can be difficult because preventive services are generally provided to patients who have the potential to contract a given disease but have not yet shown symptoms of having it."
In fact, a government policy to encourage prevention could end up paying for services that people are already receiving, including breast and colon cancer screenings and vaccines, Elmendorf said.
Other studies backed up the CBO's analysis, including a Feb. 14, 2008, article in the New England Journal of Medicine that was written in response to campaign promises for more preventive care.
"Sweeping statements about the cost-saving potential of prevention ... are overreaching," according to the paper. "Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs." They write that "the vast majority" of preventive health measures that were "reviewed in the health economics literature do not" save money.
"Some preventive measures save money, while others do not, although they may still be worthwhile because they confer substantial health benefits relative to their cost," the authors write. "In contrast, some preventive measures are expensive given the health benefits they confer. In general, whether a particular preventive measure represents good value or poor value depends on factors such as the population targeted, with measures targeting higher-risk populations typically being the most efficient."
Meanwhile, a separate study conducted by researchers from the American Diabetes Association, American Heart Association and the American Cancer Society concluded that, while interventions to prevent cardiovascular disease would prevent many strokes and deaths, "as they are currently delivered, most of the prevention activities will substantially increase costs."
To make sure that the data hadn’t changed dramatically since we last looked at this issue, we contacted Peter J. Neumann, director of the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center. He was one of the three co-authors of the New England Journal of Medicine article.
Decrease the burden on our hospitals for treating those without insurance
I have been told by many that the ACA lower costs by insuring those who were not insured before and thus limiting the costs the insured have to pay for the uninsured. However I cannot see this plan increasing the number of insured. Now if people like Jane Smith (used in the example above) choose no insurance and to pay the penalty but they do go to the emergency room the cost will still be absorbed by the hospitals.
According to the American College of Emergency Physicians the costs of providing health care to the uninsured is $176 billion dollars her year and the hospitals and physicians shoulder this financial burden as bad debt or "uncompensated care". By their data collection, 55% of emergency care foes uncompensated. In the past, hospitals shifted uncompensated care costs to insured patients to make up the difference. However, cost shifting no longer is a viable option because managed care and other health plans have instituted strict price controls, leaving little margin to shift costs. More than one-third of emergency physicians lose an average of $138,300 each year from EMTALA-related bad debt, according to a May 2003 American Medical Association study. The Emergency Medical Treatment and Active Labor Act, or EMTALA, was passed in 1986 to ensure public access to emergency services regardless of ability to pay.
I WANT EVERYONE TO PAY ATTENTION TO THIS NEXT PORTION!!!!
All hospitals who accept Medicare or Medicaid patienst are forced to abide by the EMTALA and THERE IS NO REIMBURSEMENT PROVISIONS as part of the EMTALA.
That is important to remember - the hospitals are required to accept patients that they know cannot pay and they must incur this as bad debt. The government does not reimburse them for their expenses. This is the #1 reason hospitals are closing their emergency rooms.
The ACA says that the individual mandate charged as a tax on those who do not have insurance is to help offset the costs of the uninsured going to emergency rooms. However - there is not a single portion of the ACA that allows for a mechanism for hospitals to make claims to any part of government to receive reimbursement for those claims.
With projections that health care costs will double and the number of uninsured will increase, the nation is faced with how it will continue to provide care for all Americans, not just the disadvantaged. Emergency departments provide an essential community service, similar to fire departments, police departments, and public utilities. The nation cannot afford to allow the emergency care system to collapse because of a lack of funding. It is too high a price to pay in terms of public health effects and human suffering.
So - the penalty will be paid to the government and not to the hospitals and will be a great revenue stream for the federal government to transfer towards the treasury and fund other programs.
Comments