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Health Care Reform Status

By March 15, 2010Commentary

The Administration and Congress appear to be determined to push through a health care “reform” bill that according to the polls, most Americans don’t want and that all knowledgeable experts, including those who are very supportive of the Administration, will likely exacerbate the cost issues we face and do less than advertised to improve access or quality. The Congressional Budget Office continues to estimate very minor reductions in the federal deficit in future years as a result of the Senate Bill, but that is a farce because properly including the cost of the physician SGR fix alone would turn it into a deficit-adder.  (CBO Letter)

Whatever the ultimate political ramifications of passage may be, it will likely create great uncertainty for the various segments and organizations involved in health care and health care coverage.  Most of the provisions don’t go into effect for several years.  Attempts to repeal or significantly modify the bill, if it passes, are almost certain and at least some of those changes will probably be enacted.  This uncertainty will be disruptive to private attempts to address core health system problems, many of which have been caused or inflamed by prior government actions.

Two other items are worth noting.  One is the Administration’s and Democratic Congressional “leaders'” enhanced assault on private insurers and premium increases.  Any objective analysis shows that these increases are largely caused by providers’ price hikes, but politically it is easier to villainize the insurers.  It is hard not to suspect that the Administration and its allies don’t really care what happens to the private insurers, they would just as soon see them go away.  It is possible they are attempting to intentionally cause that by making them unprofitable, through having to ensure individuals and groups at government controlled rates which do not adequately cover the undoubtedly continually rising provider prices.  Private insurers would then either go bankrupt or stop issuing coverage and the people who want more and more public coverage would declare that the private market didn’t work and we need a public option or single payer, which is what they wanted all along.  There can be little question at this point that this is the real aim of the Administration’s treatment of private insurers–put them out of business.

Although providers may be thankful that policymakers continue to ignore research conclusively demonstrating that they are the source of our cost problem, that thankfulness won’t last long.  Massachusetts may be an instructive first wave.  As spending has continued to grow rapidly in that state in the wake of  its “reform”, suggestions are being advanced that not only insurance premiums, but provider pricing as well, need to be controlled.  Historically, the only way public payers like Medicare and Medicaid have attempted “cost control” is by fixing provider prices by fiat.  More of the same is in store for providers.  Its going to be ugly, as government attempts to address fundamental economic problems almost always are.  Distortions and unintended consequences galore will create more patient and provider dissatisfaction, less choice and probably worse quality.  Regulation only works when its purpose and effect is to enhance the functioning of private market decisions, not supplant them.  That’s not what we are getting in the current health reform bill.

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