The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers

With the Republican Senate failing to repeal the Affordable Care Act last week, the administration and Congress should consider paying greater attention to the healthcare problems of 2009.

When I graduated medical school in 2009, as the nation debated healthcare reform and the future of our healthcare system, the main challenges impeding doctors and patients were obvious to me. They included a rigid and perverse physician reimbursement system, a labyrinth of increasingly complicated, costly, and sometimes contradictory mandates and priorities, and a runaway malpractice system.

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In Part 1, we learned that real per capita health spending saw a 25-fold increase the 8 decades starting in 1929 even as real per capita GDP grew only 5-fold during the same period.

Whereas the previous post looked at cost trends in broad 20-year snapshots, today’s post looks at that extraordinary growth in health spending in much finer annual-level detail. Looking at real per growth has the advantage of removing general inflation so that we get a clearer picture of what’s going on, as well as telling us what is happening to the average U.S. resident.

With that in mind, I examined the difference in annual growth rates for real per capita health spending vs. all real non-health GDP per capita over the full period for which such data are available: 1929 to 2015. Doing the comparison in this fashion has the advantage of not letting the health sector’s ever-increasing size distort our picture of how much the rest of the economy is growing.

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With Republican repeal-and-replace efforts temporarily sidelined, now is a good time to step back and take a big picture view of exactly how we got into the mess we are now in regarding health care.  What should be clear to people of all political persuasions is that Obamacare did not solve America’s health care woes.

If we take a long-term view (i.e., remembering that 90% of the nation’s population was uninsured back in 1940), the law has modestly reduced the number of uninsured. Most other promises made for the law were broken, most notably that a) if you like your plan, you can keep your plan (PolitiFact’s 2013 Lie of the Year); b) the law would lower premiums for the average family by $2,500 per year; c) the law would not add one dime to the deficit; and d) there would be no new taxes on the middle class. The jury is still out on another huge promise, but at this point I see no overwhelming evidence that the law has bent the cost curve as promised.

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The federal share of national health spending grew by about one-eighth between 2008 and 2016 and by the year 2025 is projected to have increased by nearly one-fifth. By 2025, federal, state and local taxpayers will be financing fully two-thirds of American health care . Some might say “not bad for government work.”

Careful readers might also note that the state and local government share of national health spending shrank slightly during the same period–a reflection of President Obama’s vision to give Uncle Sam a bigger role in health care, displacing decisions formerly made by stat and local governments and the private sector in the process.

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Despite the surge in enrollment and spending—or perhaps because of it—Medi-Cal, California’s Medicaid program, has failed to fulfill its stated goal of improving health-care access for the indigent and disabled. A recent report from the Santa Clara County Civil Grand Jury highlighted the conundrum many of the state’s Medicaid enrollees face: “You’ve Got Medi-Cal, but Can You Get Medical Care?” By extending Medi-Cal to younger, healthier people—many of whom could be better served by the kind of bare-bones private insurance that ObamaCare outlawed—California has made it harder for those who most need low-cost care to get it.

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A decade after the nation’s top hospitals used all their advertising and lobbying clout to keep their tax-exempt status, pointing to their vast givebacks to their communities, they have seen their revenue soar while cutting back on the very givebacks they were touting, according to a POLITICO analysis.

Hospitals’ behavior in the years since the Affordable Care Act provided them with more than 20 million more paying customers offers a window into the debate over winners and losers surrounding this year’s efforts to replace the ACA. It also puts a sharper focus on the role played by the nation’s teaching hospitals – storied international institutions that have grown and flowered under the ACA, while sometimes neglecting the needy neighborhoods that surround them.
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The Medicaid status quo is not effectively serving the health care needs of the disabled, elderly, children, and pregnant women in poverty. Policymakers should ignore hyperbolic political rhetoric claiming that conscientious reforms to secure and improve the safety net for Medicaid’s core populations and to provide better options for coverage and care to others will result in a situation in which “thousands will die.” Obamacare expanded the poorly performing Medicaid and claimed success for doing so. These new recipients can fare better under a new system that broadens their access to quality care. A Medicaid premium support program can accomplish that worthy end.
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Sioux Falls Specialty Hospital in South Dakota is regularly full. Its doctors and nurses often have to work longer hours or perform elective surgeries such as hip or knee replacements on weekends.

“In many cases, patients have to wait forever,” said Dr. R. Blake Curd, an orthopedic surgeon and the hospital’s CEO. “We don’t have the physical capacity to take care of them.”

He would like to expand the hospital by adding beds or rooms, but he isn’t allowed to do so because of the Affordable Care Act, or Obamacare. The law largely bans the expansion of hospitals such as Curd’s, which are partly owned by doctors. New physician-owned hospitals also cannot be set up unless they forego government reimbursement from Medicare or Medicaid.

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Democrats loudly complain that people will lose health insurance if the Affordable Care Act is repealed. They never mention those who lose jobs because the ACA remains.

The ACA includes a penalty on employers that fail to provide “adequate” insurance for full-time workers. Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits.

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Health insurance cannot really be insurance because human health is un-insurable: human beings are not machines or buildings whose function or condition can be ascertained objectively. Yet, an objective assessment of damages and costs is essential for any contractual arrangement to function in a sustainable manner.

Consider, for example, that medical care is based on the legal principle of “medical necessity.” Medical necessity is invoked when, presumably, there is an impairment in the patient’s health that could be remedied by a medical intervention. But medical necessity is a perniciously elastic concept that cannot possibly satisfy the precise contractual requirements of insurance.

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