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Calm Down, America: ObamaCare Is Far From A Revolutionary Change In Our Health System



October 10th, 2013

Three and half years after passage of President Obama’s Patient Protection and Affordable Care Act (ACA), the law is about to reach an important milestone.  On January 1, 2014, millions of Americans will no longer be uninsured and a new system for obtaining coverage will be put in place throughout the country.  Yet controversy remains about how the law will impact individuals, businesses, and the US health system.  Opponents call it revolutionary.  They declare it “socialized medicine” and a “government takeover of the health care system.”

The truth is the law will have limited impact on how most Americans receive medical care and pay for it.  Far from a radical change, the ACA (or “Obamacare”) builds on parts of our health care system that have evolved over the last half-century.

As the law was being debated, approximately 47 million Americans were uninsured, with millions more having limited coverage against the high costs of care.  It was expected that the ACA would reduce the numbers of uninsured by over 30 million. The Supreme Court ruling that allows states to opt out of expanding their respective Medicaid programs will reduce the number obtaining coverage to 23 million.  That millions of Americans will now have access to good and comprehensive health care is something we should all be proud of.

Much criticism has been directed against the requirements that all Americans must have acceptable insurance coverage and that businesses with over 50 full-time employees must provide insurance and pay a portion of their workers’ coverage.   Without such requirements, millions more Americans would remain uninsured and those of us who are insured would continue to pay for much of the care that these uninsured people do receive.

The ACA added new measures to improve the private health insurance system, including the establishment of state-based “Health Insurance Exchanges.”  These exchanges are designed to simplify and improve the way individuals and small businesses purchase health insurance.  Although simple in concept, insurance exchanges are complex to construct and initial glitches were inevitable.  But such obstacles can be overcome, and will not have a meaningful long-term impact on the health system.

Much has been made of the cost of adding so many to the insurance rolls.  Initial estimates put the costs of the added coverage at about $1 billion per year. A large number, yes, but not in comparison to the $4.5 trillion that is expected to be spent for health care in 2019. To pay for the added spending, most sectors of the health system that will see sizeable increases in revenue from the newly insured will be required to accept some lowering of future payments, and some will pay higher fees or taxes.  High-income individuals and families will pay a somewhat higher Medicare tax and have their non-wage income subject to this tax.

Some of this new revenue will extend the life of the Medicare trust fund to help secure the future of the program.  Medicare beneficiaries will also see an added benefit of the gradual elimination of the lack of coverage (the “doughnut hole”) for moderate drug expenditures.

With health care spending already exceeding $2.7 trillion and consuming more than 17 percent of the US GDP, many believed health reform needed to include a plan to reduce future spending growth.  Instead Obama and the Democratic leadership followed the plan adopted by Massachusetts that focused initially on expanding access rather than controlling costs.  It was in later legislation that Massachusetts made controlling costs a top priority.  The ACA does, however, include opportunities for experiments with new approaches to delivering care in a more efficient manner.

The US has embarked on a unique experiment in how to create a universal health insurance system while preserving a dominant employer-supported private insurance system.  Obamacare will reduce the numbers of uninsured and underinsured by half.  It will require some to pay more for expanded coverage, and it will add a mandate for individuals and large firms to obtain and pay for insurance.  Far from a revolution, under Obamacare most Americans will not experience any change in their health insurance; they will continue to receive coverage through their job and visit a physician or hospital as they have in the past.

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1 Trackback for “Calm Down, America: ObamaCare Is Far From A Revolutionary Change In Our Health System”

  1. Viewpoints: Health Law’s Threat To Privacy; ‘Catastrophic’ Debut Of Marketplaces Should Signal Need For Delay; In Budget Impasse Can Either Side Accept A Compromise? | Health Care
    October 11th, 2013 at 9:31 pm

2 Responses to “Calm Down, America: ObamaCare Is Far From A Revolutionary Change In Our Health System”

  1. byrondennis Says:

    It’s hard to believe that people with such impressive academic bios and some apparent knowledge of Massachusetts as the authors could write such illogical and inaccurate material.

    1. The authors say:

    “Without PPACA’s individual and employer mandates “… millions more Americans would remain uninsured and those of us who are insured would continue to pay for much of the care that these uninsured people do receive.”

    We pay either way, through state free care pools and higher premiums (which I assume is what they mean) or we pay with higher income taxes or a bankrupt Treasury (from borrowing). If the left would have a reasonable debate about why their approach of giving millions of people free insurance is better than the current free care pool approach, it would be useful. Simply claiming that it is better — when it just appears to be a good deal for insurers and a way for the left to assert more control over those of us who are nonpartisan — is counterproductive.

    Then the authors move from concept to implementation:

    “Although simple in concept, insurance exchanges are complex to construct and initial glitches were inevitable.”

    Again, this is an incredible statement. Have the authors never used Amazon or Travelocity? Medicare beneficiaries have had a fully functional exchange — but not of Amazon quality — for eight years. I am told Federal employees have had one for more than a dozen years. There are many private health insurance exchanges.

    Then the authors move on to explain who pays for the free insurance and inept implementation. They say it’s all OK because most

    “of the… sectors of the health system that… will be required to accept some lowering of future payments, and… pay higher fees or taxes (just need to suck it up) High-income individuals and families will pay a somewhat higher Medicare tax and have their non-wage income subject to this tax.”

    Now the authors have moved from illogical to a total deception. The money to pay for the free insurance is not coming from taxes on high-income individuals. It is coming mostly
    (1.) from reducing Medicare benefits earned by the middle class through 50 years of payroll and income taxes,
    (2.) from the Part B and Part D premium surtax via increasing the number of seniors affected by the surtaxes from 5% of the senior population before PPACA to 15% in 2018 under PPACA to — if Obama’s budget plan is approved — 25% of the senior population, and
    (3.) by increasing taxes on all kinds of healthcare-related products and services used disproportionately by seniors (not the least of which is a tax on Medicare insurance itself — that’s right the authors are not only in favor of cutting Medicare benefits but are also in favor of taxing it).

    In conclusion and contradicting the Medicare actuaries, the authors say:

    “Some of this new revenue will extend the life of the Medicare trust fund to help secure the future of the program.”

    But of course anyone being intellectually honest knows you can’t spend the same money twice.

    The authors also repeat a series of lies about the Medicare donut hole, the plan adopted by Massachusetts (claiming Romneycare was not intended to control costs), and experiments with new approaches to delivering care in a more efficient manner (HMOs? –really new idea, there).

  2. leetocchi Says:

    While I agree there will be little impact on most users of healthcare there will be huge impact (already occurring) for those who provide care. When the president held one of the final discussions of the health reform bill in the rose garden late 2009 there were all the stakeholders present. He paid tribute to Ted Kennedy and after hearing from many in the room he wanted to get the arranged YEA from the then head of the family practioners in the group. I thought the president was going to say “is there a doctor in the house” as his introduction. I seems the forgotten group in this whole mess was and is physicians. No fix for SGR ( another congresses program), no discussion of tort reform, and no discussion about how this bill changes the already changing face of medicine in the US. Individual and small group practices are dead. ACO’s and multispecialty groups are the mandated choice. No data, no discussion. That’s the real experiment.

    As opposed to comments made recently by Obama and ACA supporters who have gotten notices from their insurance co. that they either have a much higher premium or have to find an new plan that complies. They say they are glad that the ACA would help the uninsured but they didn’t think they would have to personally pay for it. Physicians know we will have to pay for it, and you guy may be on the wrong side.

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