Monday, May 5, 2014

OBAMACARE: Repeal (What?) and Replace (With What?)

By Jane M. Orient, M.D.  -  Published May 1, 2014

Repeal_ObamaCareThe Republican “repeal and replace” slogan sounds simple and appealing, but gets very complicated when you get to the next step.

“Repeal” generally means “repeal ObamaCare,” which is often immediately qualified: “except for the parts we like.” The problem is that the parts you like depend on the parts you, or your fellow Americans, don’t like.

For example, you may like not being denied coverage because of pre-existing conditions. But you may not like having to pay more to cover other people’s pre-existings. You might like the “free” contraceptives, but not like the mandates that force you to pay for “free” care for other people’s children.

Then what do we replace it with? Republicans have a bunch of competing ideas. Each would replace the ObamaCare centrally planned system of subsidies, thresholds, and mandates with a different system of government dictates. The Republican mandates might be milder, at least at first. Call it ObamaCare Lite.

We’ve seen them do it before. We already have ClintonCare Lite: the so-called Health Insurance Portability and Accountability Act (HIPAA). That was supposed to solve the problem of pre-existings and insurance cancellation. It didn’t. What it did accomplish is to establish a pervasive web of federal controls over medical practice that becomes more expensive and onerous every year.

Republicans might use a different term, such as “refundable tax credits” instead of “subsidies,” but it’s still forced redistribution of wealth. The cut-off points (thresholds) constitute a cliff where marginal tax rates leap upward, punishing those who increase their income, and thus creating a poverty trap.

So how do we solve the problem?

The basic problem is this: medical care costs too much. The basic solution is: get the federal government out of medicine, and replace the third-party payment system with the only honest ways of paying for medical care: cash, catastrophic insurance, and charity. Simple—but extremely difficult.

ObamaCare didn’t create the problem. It just made it a whole lot worse, destroyed much of the system that people depended on, and created vast new dependencies.

The tax code, Medicare, Medicaid, the HMO Act, HIPAA, the Stimulus bill, and other laws created our situation. Obviously, we can’t just repeal Medicare.

Obama’s phone and pen cannot make doctors any smarter or more efficient. But even making them perfect wouldn’t begin to solve the problem.

Some estimate that at least 40%—possibly much more—of the $2.7 trillion poured into the “health care system” does not buy a single doctor visit, x-ray, aspirin, wheelchair, hospital meal, or anything else recognizable as medical care. It buys compliance officers, planners, form filling, paper shuffling, coding, insurance and hospital executives—and a lot of graft and corruption. It’s an attractive target for fraudsters, even organized crime. And a lot of this is paid for with pre-tax dollars.

This hemorrhage is hidden by complex accounting designed to game the system, and facilitated by the absence of honest pricing. Nobody seems to know what anything actually costs, with all the backroom deals, secret contracts, and insurance “re-pricing” scams.

People don’t care too much because it appears that somebody else is paying. People have come to believe that it is terribly unfair to be sick and have to pay for medical treatment—but perfectly okay to force other people to pay, and at greatly inflated prices.

Government can’t fix the “health care system” any more than Obama can take out your tonsils. But it can refrain from tying up or tripping those who are trying to take care of patients.

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