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Health Care Fiasco

The Role of Politicians and Non-Politicians in this Debacle

Part One

By Gary F. Zeolla

      This two-part article will investigate the reasons for the Republican-controlled Congress’ inability to pass health care legislation. This first part will consider the role Congress itself, along with President Trump, are playing in this fiasco and the reasons for the health care crisis in the USA. Part Two will then consider the role non-politicians have in this debacle and possible solutions to it.

 

Background

 

      On May 4, 2017, the Republican-controlled US House of Representatives passed a health care bill, they dubbed the American Health Care Act (AHCA). It was designed to replace the Affordable Care Act (ACA), better known as Obamacare. But the AHCA was passed only after much debate and controversy, with many members of the House objecting to some of its provisions and not every Republican member of the House voting in favor of it. But Republicans have a sufficient majority in the House that the bill passed despite the defections. The bill then went to the Senate for approval.

      However, the Senate did not actually consider the House bill. They instead tried to write their own bill, which they called the Better Care Reconciliation Act of 2017 (BCRA). It had many different provisions from the House bill. But on July 18, 2017, the Republican-controlled Senate announced it would not be able to pass the BCRA. They were unable to do so as Republican’s only have a 52-48 majority in the Senate, and at least three Republican Senators are refusing to vote for the Senate bill. Then on July 26th, the Senate voted to have an open debate on the bill. The next day, the Senate voted on a “repeal only” bill. It would have repealed major parts of the ACA without a replacement. But it went down in flames, with seven Republican Senators voting against it. As a result, the fiasco continues.

 

Politics not People

 

      Underlying these problems with passing a health care bill in both Chambers of Congress is that not one Democrat voted for either the House or Senate bill, nor was any Democrat expected to. In fact, Republicans in both Chambers never even tried to get a single Democratic vote, as they knew it would be a futile effort. The reason for that is not a single Republican in either the House or Senate voted for the ACA when it was passed back in 2009, being signed into law by then President Obama on March 23, 2010.

      Since then, Republicans have been campaigning on a promise to “repeal and replace Obamacare.” They passed dozens of bills to  do so, most recently in 2015. But the fiasco in both the House and Senate shows many Republicans really did not know why they disliked the ACA, other than it was passed by a Democratic-controlled Congress and signed into law by a Democratic President and that many really had no intents of repealing it, making their previous votes to do so nothing but “show votes” knowing Obama would veto their bills.

      Meanwhile, the Democrats’ main objection to the ACHA and the BCRA are that they are both prepared by Republicans and would be undoing many of their own health care efforts. In other words, this fiasco has been about politics, not about what is best for the American people.

 

Philosophical Differences

 

      There are philosophical differences underlying this fiasco. The liberal congressional Democrats and former President Obama believe in government involvement of all aspects of people’s lives. They think people need the government to protect them from themselves and to provide for them.

      Conservative Republicans, on the other hand, believe in individual responsibility, with the best way the government can help people is to get out of their way.

      Moderate Republicans are hallway in-between these extremes, wanting the government to be involved in people’s lives, but with some private responsibility. These differing philosophies lead to different ideas on what our health care system should look like.

      When the ACA was passed, it was doomed to fail. Everyone knew that—the Republicans, the Democrats, even Obama himself. But that did not bother the Democrats nor Obama as the long-term goal was not the ACA but “single-payer” health care, which is to say, government control of all aspects of health care. In the liberal’s mind, this utopian idea would mean health care would be funded by taxes, mostly by soaking the rich, with all people being covered by virtue of living within the borders of the USA, both legal and illegal residents of the USA.

      In this fantasy world, everyone would get great health care for every aspect of their lives, with every imaginable procedure being covered, of whatever kind of care they want, and for whatever they want, including coverage for alternative treatments that have little or no scientific support, with no one having to pay a penny for any of it, Just line up and receive whatever health care you want for free on demand.

      Conservatives, on the other hand, believe in a free market. People should be free to choose what type of health care insurance they want or none at all. They should be responsible for their own health and health care choices and for paying for their own health care. The government should only step in for the small percentage of people who cannot afford basic health care.

      Moderates are in-between these two philosophies, believing in public-private partnerships in health care. Thus there should be some government mandates and some government control and free health care for many residents of the USA, except of course for the rich. The rich should fully pay for their own way and for that of everyone else.

 

Car Insurance Comparison

 

      It is stated above that the ACA was doomed to fail. The reason for this two-fold. The first is coverage mandates, meaning various types of preventative care and treatments must be covered. The second is mandatory coverage of pre-existing conditions. The AHCA and BCRA also have these provisions. As such, they would also be doomed to fail.

      This is where the even the conservatives Republicans are inconsistent in their belief in individual responsibility, forgetting that individual responsibility includes having the right to make dumb choices and suffering the consequences thereof. The idea of coverage mandates and mandating coverage of pre-existing conditions eliminates both of these aspects of individual responsibility.

      Let’s be clear, for health insurance to work, the well pay for the care of the sick. That is just how insurance works. Those who do not use the insurance pay for those who do. And those who want a greater number of things covered need to pay more than those who want bare-bones insurance coverage.

      By way of example, car insurance works as most people do not get into car accidents every year. Therefore, in any given year, those who do not get into accidents pay for the car repair bills and medical expenses of those who are involved in accidents. Since the number of people paying into the system who do not get into accidents far outweighs those who get into accidents in any given year, there are sufficient funds to cover the expenses of those who do get into accidents.

      Moreover, some people are better drivers than others. Therefore, those who do get into accidents see their insurance rates go up, and if they get into frequent accidents, their insurance rates go up significantly. But those who are good drivers and do not get into accidents get rewarded by having their rates do down. Those who do not drive very much also get a discount, as they are at less risk to get into an accident than who drive a whole lot.

      Insurance companies also know what groups of people tend to get into the most accidents and which groups tend to get into the fewest accidents. Therefore, they charge these differing groups different rates, so an 18-year-old male pays more than a 35-year-old female.

      In addition, people have the choice of how much coverage they want. As a result. one person might choose to have a $100 deductible and pay higher rates, while another might choose a $500 deductible and pay lower rates. One person might choose to get tow truck and rental car insurance while another might not, leading to differing rates.

      What this means is, everybody pays a different rate, and different people have different types of coverage. Some are covered for one thing and some for another. Car insurance companies are able to do this as there are not government regulations requiring that everyone pay the same for the same coverage.

      Moreover, car insurance companies do not cover basic car care bills that every driver incurs. Oil changes, new wiper blades, new tires, and inspections and emissions tests are not covered. Since everyone who owns a car incurs these expenses, there would not be more people paying into the system than taking out of the system. Therefore, to cover such basic items would mean the car insurance companies would simply add the cost of these items to the premiums, providing no benefit to the consumer.

      In addition, car insurance companies are not mandated to have to pay for pre-existing car problems or car repair bills. A person cannot get into a wreck on Tuesday, then buy car insurance on Wednesday and expect their car repair bills from the accident the day before to be covered. If someone gets into a wreck who does not have car insurance, they are expected to pay for their own car repair bills. That is just what happens when someone makes a bad choice—they suffer the consequences.

 

Health Insurance Doomed to Fail

 

      But this is all turned on its head with health insurance. That is the case for both Republican proposals but more so with the ACA. And it would most especially be the case with a single-payer system. The ideal in each of these systems to one degree or another is that everybody gets the same coverage for the same price. Every possible preventative health care practice and health care treatment is covered, no matter that not everyone needs these treatments. And people who do not need or want a particular type of treatment must still have that coverage and pay for it.

      For instance, everyone should get a yearly physical, so yearly physicals are mandated to be covered. Every man over 40 should get a prostate exam every year, so prostate exams are mandated to be covered. Every woman over 40 should get a breast exam and pap smear every year, so breast exams and pap smears are covered. But mandating all of these items to be covered would be like mandating oil changes to be covered. The cost of these tests are just added to the premiums for the insurance, driving up the cost of the insurance.

      To try to make this untenable system work, people who by their very nature do not need a type of service are mandated to pay for its coverage nevertheless. This is to help to pay for those who do need such services. Consequently, men are forced to buy maternity coverage. Those under 40 are forced to pay for coverage for prostate exams, breast exams, and pap smears, with both men and women being forced to pay for all of these sex specific tests. Young people are mandated to buy end-of-life care coverage. Teetotalers and those who do not use illicit drugs must purchase alcohol and substance abuse treatment coverage.

      But most of all, people can wait until after they get sick to purchase coverage, and they will have that pre-existing condition covered. As such, they take out of a system they never paid into.

      All of this together makes it impossible for health care insurance companies to remain solvent. They are mandated to pay out more than they take in. Such an untenable business model would lead to bankruptcy for any other business. All of this together also inevitably makes health insurance premiums prohibitively expensive for many people.

      The liberal answer for these built-in and inescapable problems with government mandates on health care is government subsidies. The government will soak the rich via taxes and use that money to pay for subsidies to health care companies to keep them solvent. The government will also use taxes to subsidize the premiums for those who cannot afford the exorbitant premiums.

      It must be pointed out that anything can be made to be solvent or affordable if the government props it up via taxation money. For instance, the government could decide the horse and buggy industry should make a comeback and provide subsides to the companies to make up for the fact that no one is buying their outdated product. Or the government could go the other way and mandate that everyone should own a Ferrari. Those who cannot afford one are simply given subsidies so that they can buy one.

      But what happens when the government runs out of rich people to soak? This could happen due to the rich leaving the country or due to them no longer being rich due to being so highly taxed, or they simply stop working, since they do not get to keep the fruits of their labor anyhow. However it happens, when it happens, and it will happen, the whole system collapses.

      This is what happened in Greece in recent years and is now happening in Venezuela. The governments ran out of tax dollars to keep providing all of the government-mandated free stuff, and the economies of those countries collapsed, with the people suffering immensely. Greece is now looking to the other member countries of the European Union (EU) to bail it out, while Venezuela is crying out to the United States for help. But when the economies of the EU and the USA collapse, there will be no one to bail them out, and everyone will suffer.

 

Skyrocketing Health Care Costs

 

      Going back to my car care analogy, when you need new tires for your car, you probably don’t just buy the first tires you see. You will most likely do some product and price comparisons first, seeing who has the best tires for the best price. And if a tire shop that is farther away from you has better tires at a better price than one closer to you, you will travel the extra distance to get that product and price.

      When your car needs repairs apart from an accident, after you explain to the mechanic the problem with the car, the first thing you ask is, “How much is this going to cost?” You do so as you will be paying for the repairs out of pocket, since car insurance does not cover repairs that are not related to an accident. And if the price seems exorbitant, you will hold off on the repairs at that garage and check the price for the repairs elsewhere. Then after comparing prices, if another garage has a lower price, you will to take your car there to get it repaired.

      Your comparing of prices for new tires and care repairs forces the tire and repair shops into a price war. When the first shops realize they are losing business to the other shops, they will lower their prices. Then those shops will need to reevaluate their prices to stay competitive.

      But once again, when it comes to health care, this is all turned on its head. When it is time for your annual physical, you just make an appointment with your regular doctor, never thinking to price compare, to see if another doctor will give you a physical for a lower price.

      If you need to get say a colonoscopy done, you just take your prescription and go to the nearest hospital. When you do, you never think to ask, “How much is this going to cost?”

      The reason you do not concern yourself with the price of a physical or of a colonoscopy is you are not going to be paying for it. As such, the price does not matter to you, since, both are “free.”

      But of course, these procedures are not free. Your insurance company will be paying for them. Now maybe the insurance companies will set a limit as to how much they will reimburse a doctor or hospital for physicals and colonoscopies. But it will be same amount for all the doctors and hospitals in their network. And since doctors and hospitals have no competition, there is no incentive for them to control their prices for physicals and colonoscopies.

      This all leads to the price of physicals and colonoscopies skyrocketing at a much faster rate than the costs of tires and car repairs. That in turn leads to the health insurance companies being forced to raise premiums and deductibles. But then with the ACA, the government steps in and provides subsidies to the insurance companies and to consumers who cannot afford the skyrocketing premiums.

      But all that does is to artificially infuse more capital into the system, leaving health care providers and insurance companies with even less incentives to control costs. As a result, the costs of both health care and health care insurance continue to spiral upward.

      Eventually, even with the subsides, insurance companies cannot stay solvent, so they pull out of the system. And when they do, there is even less competition, as now there is only one insurance company in a given area. Insurance companies are fleeing the system, and consumers are left with no choices in health insurance. And with a monopoly, the lone remaining insurance company can jack up prices as much as it wants, knowing the government will simply give more subsidies to the consumer to pay for their skyrocketing premiums.

      This is one way in which Obamacare is failing. In some areas, there are no remaining companies in the ACA exchanges, so consumers are unable to purchase insurance through it. This is the “death spiral” that Republicans in Congress and President Trump keep talking about. But neither the AHCA nor the BCRA will fix the root problem—consumers not being concerned about how much procedures cost. As long as insurance continues to pay for basic services, consumers will not ask “How much does this cost?” and prices will continue to rise.

 

Coverage ≠ Care

 

      Going back once again to the car analogy, when you purchase your new tires or get your car repaired for non-accident related problems, you do not give the tire or repair shop your insurance card. You pay for it with cash, a check, or a credit card. Thus at best, the shop only has to file the normal paperwork for processing a check or credit charge. The only time you use your insurance card is when your car has been in an accident.

      As a result, most repair shops take most major car insurance cards. In other words, you can pretty much get your car repaired after an accident anywhere you want. It is worth it for the repair shops to take most any car insurance, as car repairs bills are usually rather high, so the cost of the paperwork involved and the time it takes to file it is worth the effort, as their reimbursement will more than cover their time and expenses.

      But once again, it is a far different situation with health care providers. Since insurance plans are forced by the government to cover even basic health care and preventative procedures, every time you go to the doctor, you use your insurance card. Even if all you are getting is a flu shot, you use your insurance card. As a result, doctor’s offices spend a whole lot of time filing paperwork to be reimbursed from insurance companies. And since many of those are small charges, after a while, the reimbursements do not justify the time and expense of filing the paperwork.

      Consequently, many doctor offices and hospitals reduce the number of insurance cards they will accept. This then leads to the insurance card you have not being accepted at the doctor’s office or hospital you want to go to.

      If enough doctors and hospitals drop out of receiving your insurance in your area, that leads to you having coverage but nowhere to actually receive care. This is another way in which Obamacare is failing. Many people now have an insurance card through the ACA exchanges, so they are counted as having coverage, but they are not able to get care anywhere with that card. As such, the number of people covered under the exchange is bloated, as many of the people having coverage are not able to get care.

      Former White House Press Secretary Sean Spicer would harp on this point time and again, but the press just ignored it and never reports about it. As a result, the only people who know about this growing problem with the ACA are those who are suffering.

      But once again, neither the AHCA nor the BCRA will fix this problem, as they still cover basic services. Therefore, those systems would eventually suffer from the same death spiral as the ACA.

 

Trump’s Role

 

      President Trump has announced to Congress that he has pen in hand, ready to sign any health care bill Congress sends to him. That might sound noble, but it actually shows a lack of leadership and a lack of direction on his part. But Trump is not to be disparaged too much, as he is in the same position as most members of Congress.

      President Trump knows Obamacare is failing and needs to be repealed and replaced. But just like Congress, he doesn’t really know why. As such, he is unable to give any direction to Congress as to what should be in their health care bill, other than generalities like: everyone is covered, lower premiums, and better care. But how to provide those? That is the questions that is not being answered by any Republican or Democratic proposal.

 

Conclusion to Part One

 

      The reason the health care system in the USA is in such a mess is it is being run in a manner completely different from any other business in our capitalistic society. If we bought car insurance and maintained and repaired our cars in the same manner as we do our bodies, then the car repair industry would be in a mess as well.

      At the root of the health care crisis is government mandates preventing the free market from operating. Yet the politicians seem to think more government control is the answer.

      However, the best solution to our health care crisis comes from Ann Coulter. Like her or hate her, she is totally right when she says Congress’ health care bill should consist of one sentence, “There will be a free market in health care.” That’s it. But that is not even close to being the case now with the ACA nor with either of the Republican’s proposals.

      Now Ann correctly goes on to say there needs to be a safety net for the tiny percentage of people who cannot afford health insurance. But we will see in Part Two that there are problems with the extent and operation of that safety net.

      Moreover, we will see in Part Two that politicians are not alone in being at fault for our health care crisis, as many Americans do not really want a free market health care system either. There are also other ways in which many average Americans and other entities are contributing to our health care crisis. These non-political contributors to our health are crisis will be addressed in Part Two of this two-part article, along with possible solutions to this mess.

Health Care Fiasco - The Role of Politicians and Non-Politicians in this Debacle - Part Two

Health Care Fiasco - The Role of Politicians and Non-Politicians in this Debacle - Part One. Copyright 2017 by Gary F. Zeolla.

The above article was posted on this website July 27, 2017.

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