Sunday, November 6, 2016

Why the Affordable Care Act "Obamacare" is failing....

In business, if we want to lower costs, we need to eliminate waste and drive efficiencies. We have incentive to do that to remain profitable. We cannot endlessly increase prices and expect to keep our customers. In order to stay profitable, we have to keep a healthy balance that ultimately provides value to our customers and keeps them coming back.
Some industries are guaranteed customers. A prime example is health care. If they eliminate waste, drive efficiencies AND increase costs, they won't loose a large percentage of their customer base. We have witnessed this for decades. Long before the ACA, hospitals have consistently cut staff, consolidated, and raised prices. Drug companies have consistently increased the prices of nearly all drugs and related products. Insurance companies have consistently increased rates and lowered the types of services they insured. Deductibles and co-pays consistently rise.
The ACA didn't help because it failed to address the underlying causes of these increases. It failed to address systemic waste and inefficiencies. The ACA tried to address the cost of health care with a market driven approach. Drive more consumers into the system and the costs will go down. Indeed, 13 million more people entered the health system but insurance companies are saying those are not enough. Costs have still gone up. Now, everyone, including those 13 million are questioning how they can possibly afford those additional costs. They are asking why or blaming the ACA.
One part of the logic is entirely correct. If everyone in the country is paying into the health care system at a sufficient amount, there would be sufficient funding for everyone to have the health care needed. Currently, every working person pays into the Social Security, medicare and medicaid fund. Most of us won't benefit from that until we reach age 65.
Because the costs of health care keep rising, there's alarm that these programs (medicare and medicaid) are not properly funded. We often hear congress talk about eliminating or cutting these "entitlement" programs. Once again, they are failing to address the underlying issues that are causing these increases and resulting in underfunding.
The health care industry is profit driven. Unlike other free market endeavors that are customer driven - consumers have choices about whether to purchase or not - consumers of health care have little choice. If you have a broken and shattered leg, you can't decide NOT to seek health care. If you're in a serious car accident, have a stroke or heart attack, you will be taken to the hospital. If you need insulin to survive, you can't simply decide not to get it. The health care industry is guaranteed consumers. Consumers are guaranteed what?
If we want health care costs to go down, we need to take a systemic look at all the areas where costs are going. The insurance companies and their shareholders are taking a share. Profit driven hospitals and their shareholders are taking a percentage. Pharmaceutical companies and their shareholders are taking a percentage. The legal system and constant lawsuits at all levels are taking a percentage. What does that leave for actual direct health care?
There are certain areas of society where free market is simply not going to work. Health care is a prime example. What's sick in the United States health care system is the percentage of money going into the system that is going to profiteers. That's the largest area of waste that we need to address. The only way that can happen is with a single payer system, just like medicare and medicaid. We have to remove costs from the system and the largest areas of cost are going to profits.
The reason we have not heard about a substantive replacement for the Affordable Care Act, is that there is no other way to lower health care costs. Most of the rest of the industrial world has realized this but we're so stuck on the idea of "free market" capitalism that we'll spin our wheels for a while yet.


  1. American health insurance is so high because we pay people to be sick. If we were more on WELLNESS programs and more on prevention, our health care costs would drop significantly. Let me give you a REAL LIFE example. I was 30 lbs overweight. Borderline diabetic, high cholesterol, high blood pressure. Not ONE doctor suggested that I lose weight. Being that I am very skeptical of modern medicine and feel that doctors and pharmacies like to keep us sick for job security (think of all the side effects of most medications you are taking). I joined weight watchers for $45/month. My YMCA family membership that is good for anywhere in SC is $72/month. Cost of entering my last 5K was $25...Perfect attendance at work--priceless. We get incentives for perfect attendance and this month I selected two tickets to the Clemson/Pitt game (valued at $130) that didn't cost me one cent!!!
    Even with a generous healthcare package at work, there is no better benefit than good health practices. The problem is that we want surgeries and pills that will fix it instantly. The reality is that those things will not fix it in the longterm if it is broken before that. Physicians are trained to find illness not prevent them. Until we fix this mindset, our health and the cost to fix it will continue to rise.
    It is a fact that we will all die. We spend so much of our lives preventing death instead of living life. Change your focus, change your life.

    1. side bar: all of the players in the article make money on people being sick. Insurance costs are based upon the number of people who use the service. It's too bad we can't chose Health Insurance much like we do automotive. I go with an insurance company who will not insure bad drivers, bad employment history or any other criteria that drives our rates up. You know them: the people who can't wait 6 hours for the Walmart Minute Clinic to open but rush to the emergency room (remember when you only went to the emergency room because your leg was about to fall off, or you were unconscious)? Some of this we have to take responsibility and quit feeding the pig if we don't want it getting any bigger.

  2. you are right the system is broken we have health care now that encourages wellness. but it is nor realistic yet because they still don't try to look at the most cost effective just the easiest fix for a problem. they will have you come in every month if you agree to get pills or proceedures to fix a problem when a change in diet and exercise or an over the counter not on the insurance plan would do as well. some of the old school drugs are as effective and are much less expensive to both the consumer and the insurance but the new drugs are advertised and prescribed. so it will take everyone to change the system and fix the problem as a consumer we need to live better, and talk to the doctor about using the least reactive medicine and the most proactive healthcare. (yes I remember the days of there better be blood to go to an emergency room and carying you in on a streatcher.)
    Some things do require health care but every ache does not require a test and a prescription a proceedure and 10 followups and therapy and yada yada because you have insurance. If every person used their insurance as if it was their money and every Doctor prescribed as if they had to pay for every proceedure and every pill and every pharmacutical company charged what the actual cost of manufacturing (and deliver of ) medications the system would be a bit healthier. we would still need to address the litigation issues that skyrocket costs as well as the facts that none of this system should be on a for profit basis when lives are in the balance.

  3. Great comment. I especially like your comment about using insurance like it was your own money...

  4. Still the issue remains the same. You identify an area of waste. Repeated, unnecessary treatment. Why? Because the shareholders get great value from "consumers". We have to remove the profit motive from health care.