Here's how I understand what Obamacare is all about.
I'll divide this post into three parts. First, I'll begin with a bird's-eye view of our health care system. Next, I'll talk about Obamacare itself. Finally, at the end, I'll venture my opinion on Obamacare, although it'll be an abbreviated opinion.
I'll try to be as politically neutral as possible insofar as essential facts are concerned (i.e. parts 1 and 2).
Please feel free to correct me if I'm wrong about any of the facts or if I've left out anything. I don't claim to know or understand how it all works.
What's more, I'm sure there are many others who could comment on the topic of health care far better than I can. If they'd like to weigh in, I'd appreciate it.
1. As mentioned, I'll just offer a quick overview of our health care system before we talk about Obamacare.
a. At its most basic, we have people seeking health care (aka patients), physicians and other health care professionals who take care of our health (aka providers), health insurance companies (aka insurers), business that employ workers and pay them which includes purchasing health insurance for those who work for them (aka employers), and state and federal governments which fund some parts of our system (aka gov't). So: patients, providers, insurers, employers, and the gov't. These are the key players in our health care system.
b. A patient who is ill will go to a physician to seek health care. The physician needs to be paid for his or her services. How does this happen? Well, the patient could pay the physician himself, straight out of his own pocket.
However, if the patient is employed, then he will likely use his health care insurance which his company agreed to purchase for him when he signed up to work for the company. Health insurance plans vary quite a bit. But in one way or another, health care insurance companies will pay the physician, although the patient may need to pay for some of it, depending on the plan.
If the patient is unemployed, then he can purchase his own health insurance. If he can't afford to purchase his own health insurance, the gov't offers health care coverage. The patient can apply for Medicaid if he is poor enough. Or he can use VA health care if he is a veteran. Or he can apply for Medicare which primarily covers senior citizens if he is old enough.
c. What about HMOs and PPOs? One way to think about HMOs and PPOs is the following. HMOs are an attempt to integrate insurers and providers into a single entity to take care of the health care needs of a patient. A sort of one stop shop. Kaiser Permanente is a well-known HMO, at least where I'm from. A patient can buy health care coverage from Kaiser, and Kaiser employs their own various types of doctors and other health care professionals to take care of a patient. A patient can only pick and choose from Kaiser employed doctors. They cannot use other doctors and expect health care coverage under Kaiser.
In a sense, PPOs likewise attempt to bring together insurers and providers. However, PPOs aren't as extreme as HMOs in this integrative sense. PPOs maintain a list of providers. These providers will accept a particular insurance plan. If the patient has purchased this particular insurance plan, then they look at the list of providers who are in the network, and make an appointment with whichever provider they want in the network. The patient's insurance plan is accepted by all the providers in the network. Unlike an HMO, though, if the patient wants a provider outside the PPO network, then their insurance plan will usually still cover them for a non-member, but there will be reduced benefits.
d. Finally, there are some terms which people might be interested in:
- Deductible. This is the amount of money a person must pay each year to their insurer before they can start using their health insurance plan. Say the deductible is $250. After $250 is paid each year, then patient can begin to use his health insurance plan.
- Co-insurance. After the deductible is paid, there is co-insurance. Co-insurance is shared between a patient and their insurer. Co-insurance is a percentage that a patient pays for their health care and a percentage the insurer pays for the same patient's health care. Say the co-insurance is the patient pays 10% while the insurer pays 90% to the physician. If a physician or other provider in a hospital has charged $5,000 for a service rendered, then the patient would pay $500 while the insurer would pay $4,500.
- Co-payment. This is a flat fee that the patient pays for a health care service. Say $20 for a visit to the doctor's office. Anything beyond the co-pay is paid by the insurer. Co-pays can be subject to deductibles and co-insurance, depending on the plan (and sometimes no co-pays are required).
- Out-of-pocket limit. This is the maximum amount of money a patient will ever have to pay for their health care in a year. Anything after this out-of-pocket limit has been reached will be paid by the insurer. Say the out-of-pocket limit is $100,000. Any medical costs beyond $100,000 would be paid by the insurer until the patient reaches the annual coverage limit.
- Annual coverage limit. This is the maximum amount an insurer will pay for all medical expenses incurred by a patient in one year. Say a patient goes to the hospital 10 times in a year. Say each time he goes his visit costs him $10,000. Hence his insurer has paid out $100,000 to providers. Say the annual coverage limit is $1 million. The patient still has $900,000 to use. If the patient exceeds $1 million, then he is responsible for paying the rest of the medical costs for the year.
2. Now, what is Obamacare? What does it do?
Obamacare says health insurance companies (1) must not deny insurance to anyone based on pre-existing conditions, (2) must not cancel their insurance (unless they commit something like fraud), (3) must not have a limit on annual expenses (no annual coverage limit), (4) must not have a limit on lifetime expenses, (5)must permit parents to keep their children on the parents' health insurance plan until age 26, and (6) must provide free preventative care services like mammograms for breast cancer screening and colonoscopies for colon cancer screening (no co-pays are permitted for preventative care services).
Obamacare also has what's called (7) the individual mandate, which is that all Americans who can afford to buy a health insurance plan must buy a health insurance plan. Originally Obamacare was going to penalize anyone who refused to comply and buy health insurance. However, the Supreme Court (due to Chief Justice Roberts' tie-breaker in a 5-4 vote) ruled the individual mandate as Constitutional, though not as a penalty but as a tax. So the federal government can tax those who do not comply and buy health insurance. By 2014 the tax will be either $95 or 1% of an individual's income, whichever is more. By 2016, this will rise to either $695 or 2.5% of an individual's income, whichever is more.
If an individual or family makes over $250,000 per year, then the individual or family (8) must pay additional taxes on all income over $250,000.
For people who cannot afford to purchase a health insurance plan, there's already Medicaid which is a joint federal and state government funded health plan to provide health care primarily for the poor. But Obama thinks Medicaid needs to be expanded to cover more of the poor. Medicaid is managed by the states, not the federal government. Thus, Obamacare also says (9) states must expand Medicaid to provide more coverage for more of the poor or else the federal government will cut off funding for states. However, the Supreme Court ruled that it was unConstitutional for the federal government to cut off funding to the states. Instead, states can opt-out of the Medicaid expansion bit of Obamacare.
Moreover Obamacare has what's called (10) health insurance exchanges, which is that all insurance companies in a state have to provide their various health insurance plans side by side with other health insurance plans in the same state so people can see all the various health insurance plans in a state side by side with one another and pick the one that's best for them.
Next, Obamacare requires all employers excepting houses of worship (e.g. churches) but including religious hospitals, religious charities, and religious universities to include in their health insurance plan (11) coverage for contraceptives.
Finally, Obamacare has established (12) the Independent Payment Advisory Board (IPAB). This is an unelected panel of 15 bureaucrats tasked to make sure Medicare costs are kept at affordable rates.
I should note not all these provisions are currently in effect. There is a timeline for each of these to become effective. Most of them should be in effect by Jan. 1, 2014 though. If people want further info, check out the Obamacare implementation timeline here.
3. Assuming all this is a correct representation of Obamacare, here's my quick take on Obamacare.
On the one hand, of course, many Americans want to see affordable and high quality health care available to everyone. Further, many Americans think health insurance companies shouldn't have as much power as they currently have in our health care system or over our health.
On the other hand, it's quite arguable Obamacare will actually drive health care costs up, reduce the quality of our health care, and even if Obamacare might diminish the role health insurance companies play in our health care system, it appears to do so at the cost of increasing federal authority over insurance companies and, even more distressingly, over American citizens. But many and perhaps most Americans want neither the federal government nor health insurance companies to have such authority over our health.
So while there are arguably good ideas involved in Obamacare including the need to reform our health care system, Obamacare doesn't seem like the best way to do it. Indeed, it seems like a worse way to do it than what existed prior to Obamacare. It seems to me Obamacare is compelling individuals to buy health insurance even if individuals don't want to. Obamacare is compelling insurance companies to provide health insurance even if insurance companies don't agree to the terms. Obamacare is compelling certain religious institutions to offer contraceptives in their health care plan even if it violates their consciences. Obamacare tried but has evidently failed to compel states to provide greater health insurance coverage. Obamacare's IPAB could effectively ration Medicare health care provision according to what the IPAB considers best. Plus, who watches the watchers? And so on and so forth.
In any case, speaking for myself, I do think we need health care reform, even though I disagree Obamacare is the way to do it. Various peoples and groups including physician-politicians have proposed health care reform ideas. For example, I appreciate a lot of Sally Pipes' recommendations (e.g. see her books Miracle Cure and The Pipes Plan). I don't know if I entirely agree with all her ideas, but I think they're far better than Obamacare. I'm sure there are other alternatives (e.g. I've heard good things about the French health care system, but I don't know enough about it to evaluate it let alone evaluate whether it'd be something we could realistically adopt as a model given our history, society, culture, and the like).
A couple of things about the individual mandate:
ReplyDelete1) It was originally a Republican idea. If you go back and look at the legislative history, when the Democrats proposed a single payer, govt run system, the Republicans came back and proposed the individual mandate which kept private insurance companies still in the loop. So it's kind of strange now seeing Republicans now opposing their own original idea.
2) If you want people to be able to get insurance when they have pre-existing conditions (and still have private insurance companies in the picture), then you have to have a individual mandate. Otherwise people won't buy insurance until they need it which would bankrupt the system (and defeats the whole purpose of insurance). I don't see any way around if you want to make sure all Americans have access to ongoing medical care without a single payer system.
3) If there's another way to get universal coverage of Americans, I'm open to it. But so far the only two choices I've read about are a single payer govt system or an individual mandate that still retains private insurance companies.
I'll have to reply quickly for the moment since I have other more pressing duties to attend to: check out Sally Pipes' work.
DeleteWhy suppose that we *ought* to get "universal coverage of Americans" in the first place?
DeleteThat's my belief given the importance of medical care to the lives of people. Having taken into my home a person in my church who lost his job and was subsequently without insurance for over two years as he worked up to three part time jobs and had chronic health conditions which required treatment certainly served to open my eyes as to the problems of the uninsured. I don't believe people in 21st century America should go without health care any more than they should go without food.
Delete1. I'm certainly quite sympathetic to people like this. Heck, I've seen people like this in the hospital. I'm not unaffected by it.
Delete2. Various health care systems have their problems. There's no perfect health care system in the world. Even the best ones have their horror stories. For example I've heard France has one of the best. But if you dig around there are French people who have shared their rather unhappy experiences to put it mildly.
3. A key question here is who ultimately foots the bill (particularly in light of our exorbitant health care costs)? The individual? But that might drive someone broke.
Friends or family? What if it drives them broke too?
The state or federal gov't? But how would the gov't pay for this (e.g. taxes)? Is health care one of those things maybe like the military where it's legitimate for the gov't to use public money to fund services for others? And would the gov't do as good a job as say private charities?
Where's the place of religious institutions like the church to help those in need?
These questions are just the tip of the iceberg too.
4. Patients aren't alone in their suffering. Although no one makes a big deal about it, there could very well be injustice against physicians. But no one likes to think doctors are somehow financially hurt or perhaps otherwise hurt because doctors supposedly make good money, they're among the rich, so why can't they pitch in and give some of their money to help others less fortunate than them? Well, this raises a whole host of other issues. Anyway, perhaps we can agree there's injustice against patients in our health care system. But let's not forget there could be injustice against physicians and other health care providers as well.
5. Let's take a more real world scenario.
DeleteIf I remember correctly, California's version of Medicaid (Medi-Cal) reimburses a doctor $11 for a visit. Say a patient has a 15 minute visit with their doctor. (Most patients do not have just one quick and easy medical problem, but rather they often have multiple medical issues.) Anyway, say a doctor sees four patients per hour. That's $44 per hour. If the doctor works 40 hours per week, then that's $1760 per week. Say he works 50 weeks a year. That's $88,000 per year.
All this is before taxes too. Don't forget the doctor has to pay for his office space, his staff (e.g. nurses, admin), office expenses, malpractice insurance, and so forth before he can see any earnings from that.
If he works more hours, then he can make more money. But that can be quite draining for the physician.
Or if he sees more patients per hour, then he can make more money. But most patients don't want to be ushered right back out the door of their doctor within say 5 minutes. Most want quality time with their doctor.
Or if he joins together with other doctors then they can perhaps share the work. But this means they share the costs and earnings too. This may or may not work out well for the doctors depending on how the practice is set up and run.
Another option is the doctor can stop taking Medi-Cal patients because Medi-Cal doesn't pay well enough. Maybe he can accept private insurance instead. But health insurance companies are on the ropes with Obamacare. It's quite possible private insurance reimbursements will likewise go down for doctors under Obamacare.
Not to mention under Obamacare there will be, what, like nearly 50 million people who were previously uninsured now insured? Sure, it sounds like a nice thing that everyone is insured now. But how is this going to play out in practical terms?
For one thing, it means 50 million patients could be waiting to see various doctors. That sounds well and good since it means more patients for doctors and more patients means more money, right? Well, a doctor can only see so many patients per hour so there's a ceiling here.
And, BTW, Obama hasn't expanded residency spots to train more doctors. Not under Obamacare or any other legislation that I'm aware of. Med schools have been expanding enrollment a little bit to meet the projected tremendous shortfall of physicians in coming years. But the bottleneck is at residency. If we graduate more doctors, but they can't do residency, then they can't practice medicine.
Further, a big chunk if not the vast majority of these 50 million patients will pay doctors only at Medicaid or Medicare rates.
Plus, if private insurance reimbursements drop, and a big fear is they'll drop close to Medicaid or Medicare rates, can physicians even afford to see patients anymore?
Granted I've been talking about primary care physicians. But primary care physicians get reimbursed at different rates than specialists. Indeed, specialists tend to get paid a lot more than primary care physicians. But if primary care physician reimbursements will be effected by Obamacare, then certainly specialist reimbursements will too. Actually, many reimbursements have already gone down.
And why wouldn't all this drive more med students away from primary care and toward specialties where they can make more money and not have to work as hard just to eek out a living? That's what almost everyone I know is thinking anyway. Yet where we most need doctors, particularly doctors to see these 50 million new patients, is at the primary care level. We need specialists too, but primary care physicians are by definition the first point of contact for patients (with some exceptions).
I suppose most of the older doctors will probably be fine. They can continue to thrive since they've already established well-running practices in their communities. But I think younger doctors looking to establish themselves have a lot more to be concerned about.
BTW, I'm not opposed to a single-payer system, per se. There are various ways to implement a single-payer system. It depends what's on the table.
DeleteMainly what I've been saying here is I think Obamacare is a bad idea.
Thanks for posting this Patrick.
ReplyDeleteIt seems that this is not the most efficient way to "pay for" health care. The most cost-efficient would be:
Patient pays provider.
Then you have patient-pays-for-health-insurance-which-takes-a-profit.
And now we have patient-pays-for-health-insurance-company-profit-plus-government-bureaucracy.
At first this seems like a windfall for health insurance companies, who will end up getting lots more customers. However, it would seem as if one of the longer-term effects of this plan is to actually phase out the health insurance companies in favor of government-payment.
For example, fast food restaurants are already cutting back on employee hours to avoid paying for health insurance. Employees who can't afford health insurance are going to be forced to purchase insurance from health insurance exchanges governed by strict federal standards.
Right now, that's a no man's land but who thinks that the government is going to want less, rather than more control over time?
You call the IPAB a panel of 15 "unelected bureaucrats" like that's a bad thing. These are supposed to also be made up of medical and health care experts. Would you rather have a panel of medically ignorant politicians who receive bribes, uh, I mean political contributions, from the AMA, big pharma, and the insurance companies? I'm not certain that the former is really worse than the latter.
ReplyDeleteYou're reading into what I wrote. The phrase "unelected bureaucrats" doesn't in and of itself have a negative connotation.
DeleteAlso, at least from what I've seen, practicing physicians can't serve on IPAB. Nor can health care providers make up a majority on IPAB.
Sorry, those that usually use that term (at least when I've heard it used) mean it as a disparaging term. As far as IPAB, a practicing physician can't serve because IPAB membership is a full time job as near as I can tell, paying $165k per year. According to the law, no member of the IPAB can be involved in any other business, vocation or employment. And it certainly makes sense that health care providers can't make up a majority of the board since if that occurred the foxes would be guarding the hen house.
DeleteSorry, those that usually use that term (at least when I've heard it used) mean it as a disparaging term.
Delete1. Well, I could simply reply those that usually use that term (at least when I've heard it used) mean it as a descriptive term.
2. For the record, I didn't say "unelected bureaucrats." That's what you said I said. I said IPAB is "an unelected panel of 15 bureaucrats tasked to make sure Medicare costs are kept at affordable rates." I didn't juxtapose the two terms into a single phrase. It's a subtle but I think important difference in terms of things like tone and intention, which are relevant.
3. Of course, I can't help it if you want to take what I said disparagingly despite the fact that I tell you that's not my intention, and despite the fact that I prefaced my post with my intention about being "as politically neutral insofar as essential facts are concerned (i.e. parts 1 and 2)."
Sure, I think IPAB is problematic. But in context I wasn't venturing my opinion on IPAB. I was simply describing it. I later do voice my opinion on IPAB but that's not until the third part of my post.
4. Is there anything wrong with calling someone a secretary if they are a secretary? Some people take offense at the term, others don't. The intention of the person using the term would matter in such a case.
As far as IPAB, a practicing physician can't serve because IPAB membership is a full time job as near as I can tell, paying $165k per year.
1. Really now? Is IPAB a full time job? Source please.
2. If it is a full time job, then why is it a full time job? Does it take that much time to be in an "advisory" role?
3. $165K per year sounds like a better deal than what some physicians make.
4. At any rate, a lot of physicians can and do work like 80 hours per week in various roles. There are many physicians in a med school who work these sorts of hours practicing clinical medicine, seeing patients, filling out paperwork including paperwork for Medicare, teaching med students, researching, publishing, etc. I don't think it's beyond the ability of some physicians.
5. Besides, a practicing physician can work part-time in clinic and still be considered practicing. That's precisely what a lot of physicians I see and know do. Part-time can be quite variable too.
So why can't a practicing emergency physician work part-time in emergency (maybe take no more than two or three shifts per week), and then also be on IPAB? That would seem ideal. After all, practicing physicians see the medical, ethical, legal, and even financial implications of health care on patients firsthand. Isn't this better than a non-practicing physician who is removed from clinical medicine?
According to the law, no member of the IPAB can be involved in any other business, vocation or employment.
DeleteSince Obamacare is the law that brought IPAB into existence, then, if this is a problem, it's a problem for Obamacare. In other words, why doesn't Obamacare allow an IPAB board member to be involved in another vocation at the same time like medicine? Conflict of interest? But this cuts both ways. Why assume a practicing physician on IPAB would not want to reduce Medicare spending? Congress is allowed to vote on its own salary, isn't it?
And it certainly makes sense that health care providers can't make up a majority of the board since if that occurred the foxes would be guarding the hen house.
1. How so? What's wrong with physicians (since physicians are obviously health care providers) making up a majority of IPAB, so long as they're also trained in public health or have other relevant education or qualifications?
An actuary may be able to crunch the numbers far better, but an actuary is unlikely to have the medical and clinical knowledge and experience. Why can't it be physicians guiding actuaries rather than actuaries or the like guiding others?
2. Of course, all this assumes IPAB is a good idea in the first place, which I don't grant.
Of course you can't have doctors setting their own rates, the mere appearance of ethical conflicts should disqualify them. One of the ethical standards for most professions (I'm a CPA btw) requires you to avoid any appearance of conflict because the questions that arise in such situations. As for Congress setting it's on salary, do you really want to use them as your standard of ethical conduct? :)
DeleteHere's all you want to know and more about the IPAB:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3702
Regarding the full time job statement I made and you questioned above:
"IPAB membership will be a full-time position, and members will be compensated at the rate for level III of the Executive Schedule, currently $165,300 a year."
(At the end of the second paragraph from the bottom)
Of course you can't have doctors setting their own rates, the mere appearance of ethical conflicts should disqualify them. One of the ethical standards for most professions (I'm a CPA btw) requires you to avoid any appearance of conflict because the questions that arise in such situations. As for Congress setting it's on salary, do you really want to use them as your standard of ethical conduct? :)
Delete1. Do you think it's realistic to expect doctors will set their own Medicare rates upwards given IPAB's current task to reduce Medicare costs?
2. You're suggesting it's unethical for practicing physicians to serve on IPAB due to conflict of interest since they could somehow be setting their own rates (according to you). Say this is true. Okay, given IPAB is only for Medicare, why can't we have practicing physicians who don't accept Medicare serve on IPAB then? There are already plenty of practicing physicians who don't take Medicare.
3. Anyway, as I said, all this assumes IPAB should even exist in the first place, which I don't grant.
4. BTW, aren't you a libertarian? If so, how does your support of Obamacare square with your libertarianism? Say the individual mandate. What happened to individual liberties, the free market, etc.?
Here's all you want to know and more about the IPAB:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3702
CBPP is hardly non-partisan. This could be relevant given its claims about IPAB.
Regarding the full time job statement I made and you questioned above:
"IPAB membership will be a full-time position, and members will be compensated at the rate for level III of the Executive Schedule, currently $165,300 a year."
(At the end of the second paragraph from the bottom)
CBPP doesn't provide a source for this.
Another point: You say that "For people who cannot afford to purchase a health insurance plan, there's already Medicaid which is a joint federal and state government funded health plan to provide health care primarily for the poor."
ReplyDeleteThat's not totally correct. Medicare will pay for care for families with children, and children for those below a certain income level. However, Medicare will not pay for coverage for single men, single women, or couples without children (at least in my state that is true - I checked but I also believe it is true in most if not all other states).
In addition, you can be over the Medicare income limit and still be unable to afford regular insurance. If you work in a low wage job and your company does not provide health care insurance, you will probably be above the income limits but given the cost of health care still be unable to afford insurance. The people who really suffer under the current system are the "working poor". They make too much for Medicare but can't afford insurance if their employer doesn't cover them.
That's not totally correct. Medicare will pay for care for families with children, and children for those below a certain income level.
DeleteI suspect you mean Medicaid, not Medicare.
Maybe it'd help if I tried to clarify Medicaid vs. Medicare.
Okay, here goes.
At the top, we have the Executive Branch. As a subset, we have the Secretary of Health and Human Services (HHS). As a further subset, we have the Centers for Medicare and Medicaid Services (CMS).
Medicare and Medicaid are both insurance programs. Medicare is primarily for citizens 65 y/o and older (as well as for people with disabilities). It's federal. Medicaid is for lower income populations. It's federal and state. Some people qualify for and receive both, but that's not so common.
Medicare has four parts: A, B, C, and D.
A covers hospitals. There's a co-pay though. There are few restrictions to which hospitals patients can attend.
B covers doctors. Medicare pays for 80%, whereas the patient pays for 20%. There's a monthly premium as well. There are few restrictions to which doctors patients can see.
C is Medicare Advantage. The federal gov't helps subsidize private insurance for Medicare patients via Medicare-approved health insurance companies (mainly HMOs and PPOs).
D covers drugs.
Medicaid can vary depending on state. Medicaid is divided into mandatory eligibility groups and optional eligibility groups. Broadly speaking, eligibility groups are determined based on their income relative to a percentage of the Federal Poverty Level (FPL), which is updated each year.
BTW, there's also the Children's Health Insurance Program (CHIP), which I intentionally didn't mention in my post. Pediatric health is important, but I wanted to focus on adults since there's already quite a bit to discuss.
Bottom line, it's Medicaid that pays for families with children and children below a certain income level. Not Medicare, which is for senior citizens and those with disabilities.
However, Medicare will not pay for coverage for single men, single women, or couples without children
I'm not defending Medicare. But most single men, single women, and couples without children are able to purchase their own health insurance. True, there are some who aren't. But there are complex factors involved including a lot of the stuff I alluded to above.
If you work in a low wage job and your company does not provide health care insurance, you will probably be above the income limits but given the cost of health care still be unable to afford insurance. The people who really suffer under the current system are the "working poor". They make too much for Medicare but can't afford insurance if their employer doesn't cover them.
Again, please see my original post as well as subsequent comments.
Certainly we can do a better job as individuals, families, communities, a nation.
But my opinion here is mainly that Obamacare is not a good solution.
However, as I also said in my original post, I do think we need health care reform.