“For example,the AMA complainsthat hundreds of millions would be atrisk of losing “coverage.” In fact,only a net 1.7 million people gained private coverageunder ACA, after subtracting the nearly 6 million who lost it, at a shocking cost of $341 billion or $200,000 per newly insured person. Most of the claimed increased coverage came from expanding Medicaid to childless, able-bodied adults.This reduced access to services by the sickest patients, and at least 21,904 patients died on Medicaid waiting listsaccording to a 2018 report.
Without ACA and its unaffordable requirements, Americans would have many more options to buy affordable insurance. Instead of paying as much as a mortgage payment for “coverage” they are unlikely to use, they might join a DPC (direct primary care) practiceand get preventive care and routine medical treatment for at as little as $50/month. They might buy catastrophes-only major medical insurance that ACA outlaws for persons over 30 years of age. Congress might enactHealth Freedom Accounts as proposed by Rep. Chip Roy(R-Tex.) and liberalize Health Reimbursement Accounts.”
It all began with a concept known as “Roemer’s Law.” If you ask anyone who has studied health economics or health policy in the last 50 years, “What is Roemer’s Law?” each will be able to tell you in an instant: “That means a built bed is a filled bed.”
Milton Roemer, MD, was a researcher and professor, mostly at the University of California-Los Angeles, who spent a lifetime (he died in 2001) advocating for national health systems around the world. He was involved in creating the World Health Organization in 1951 and Saskatchewan’s provincial single-payer system in 1953. His “law” was based on a single study he did in 1959 that found a correlation between the number of hospital beds per person and the rate of hospital days used per person. That’s it. That is the whole basis for “Roemer’s Law.”
“A built bed is a filled bed.” This little bumper sticker slogan has been the foundation of American health policy for 60 years. Hundreds of laws, massive programs, thousands of regulations at the federal, state, and local levels of government, all have been based on this slogan. It is the source of such concepts as “provider-induced demand,” and has resulted in centralized health planning, Certificate of Need regulations, managed care, and everything else currently on the table. Yet this “law” is both verifiably untrue and illogical.
There is a kernel of truth to it. When third-party payers pick up the tab, the usual tension between buyer and seller doesn’t exist. The buyer has no reason to resist excessive prices if someone else pays the bill.
But the believers in Roemer’s Law take that core idea to Alice-In-Wonderland proportions. They argue that, therefore, whenever a health-care provider wants to make more money, it simply has to sell more — more capacity equals more sales without end. So, the only way to reduce this endless consumption is to limit the capacity — place strict controls on the availability of services. But the notion fails for several reasons:
Hats off to John C. Goodman again! His work in leading the effort for market-based healthcare reform over the past 4 decades, and highlighting the government’s role in the dysfunctional mess we labor in, is second to none.
This Forbes article lays out a most concise and accurate rendering of what healthcare has become and why…and what to do about it.
If you’re tired of the hearing healthcare pundits wax feverishly about their favorite villains and how more regulations are the answer; or if you’re just a novice starting to explore the Healthcare conundrum, Dr. Goodman’s work is required reading. I recommend starting here and then circling back to some of his earlier work. The book “PRICELESS” is a recommended next step!
The assumptions on which our modern era healthcare third-party payer systems are based, including Medicaid/Medicare, ignore the economic disincentives that plague its continued use. It creates a wide-spread Public Choice Theory dilemma on the demand side and way too much rent seeking behavior on the supply side. The result being an ever-increasing cost curve.
Public spending for healthcare flooded the market after 1965 and was FOLLOWED by precipitous increase in consumption, utilization and the unit costs (as supply did not keep up) and then rapid fall off of the percentage of out-of-pocket payments as % of expenditures. Public spending came first, and was a major cause (not a reaction) in accelerating healthcare inflation.
Third-party financing drives up utilization and drives up unit costs. Ironically, this creates even more dependency on a system that by its nature pushes costs further out of reach of many Americans.
Third-party financing mechanisms have become both arsonist and fireman, and we are having trouble distinguishing who is who.
Why would an industry support and bankroll an initiative to give more of their money to government?!?
It turns out that the industry isn’t filled with masochists (like theneurotic trust fund leftistswhoposture in favor of higher taxes). Instead, the special interests such as the hospital lobby viewed a couple of hundred million of taxes as an “investment” that will generate about $1 billion of taxpayer-financed loot.
Within many of the posts regarding the challenges facing healthcare, someone – usually out of frustration – will inevitably pose the following: “So what is the solution?”
Well, the answers won’t be found in repeating partisan talking points. Especially the ones based on economic fallacies and socio-economic myths, so often repeated they have become dogma for the healthcare surrogate we call a “health plan”, despite its sub-par effect on mortality and health when compared to other socio-economic factors. This industrialization of healthcare has been orchestrated to be over-priced by pundits and politicians, on the right and the left, who pander for influence, money and votes. They claim that we need more of it, covering more items for more people. By design, it crowds out more cost-effective alternative sources of funding. It is the ultimate healthcare inflation machine.
The solution is to utilize different financial strategies for different segments of healthcare, using tools to maximize their effectiveness. This begins with the deflationary & stabilizing effect that real prices have when they are known in advance for the vast majority of healthcare services exchanged between buyers and sellers, most of which takes place in a non-emergent scenario.
“Notably absent from Sanders’ proposed single-payer system was a detailed plan to pay for it. The senator said he would lay out the tax hikes necessary to fund his new system in separate legislation.
That may be because enthusiasm for single payer tends to die down pretty quickly once people get a sense of what sort of tax increases would be necessary to fund it. An Urban Institute analysis of a previous version of Sanders’ plan estimated that it would cost $32 trillion over a decade.
It promises huge overall savings along with coverage that would be far more expansive, and far more expensive, than Medicaid for all, with no clear way to pay for it, and no specific strategy for driving costs or spending down.
In 30 years of political advocacy, Sanders has not solved any of the fundamental problems with single payer. He has merely opted to pretend they do not exist.”
[Note: On annualized basis, that would more than double the amount we currently spend annually on healthcare. And past projections related to the costs of gov’t programs always vastly underestimate the actual costs, as evidenced below. – The Sovereign Patient]
“The House Ways and Means Committee estimated that Medicare would cost only about $12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly “conservative” estimate. But in 1990 Medicare actually cost $107 billion.” http://reason.com/archives/1993/01/01/the-medicare-monster
A big part of the problem, as Cato’s Tanner pointed out earlier this year is that “Americans want widely contradictory things from health-care reform. They want the highest-quality care for everyone, with no wait, from the doctor of their choice. And they want it as cheap as possible, preferably for free.” Promising, as Sanders and Warren do, to give everybody high-quality health care without regard for ability to pay will always find an enthusiastic audience. But delivering on that promise is likely to give us not the illusion of Medicare for All, but rather its awful, unsustainable reality.
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