Hal Scherz

By now, most people have concluded that the Patient Protection and Affordable Care Act (ACA, Obamacare) does not reduce the cost of healthcare for the majority of Americans, and certainly does not protect them. Healthcare costs - both insurance and out of pocket expenses - have more than doubled for many and will continue to increase. What is difficult and confusing to most of us is attempting to understand how this all fits together and why.  

Just a few months ago, the Obama administration had serious concerns regarding formation of state health insurance exchanges. This vital component of the ACA is necessary to move it forward, yet only 17 states agreed to build exchanges. The federal government pivoted and approached this problem from a different direction. They offered to pick up the tab on an expansion of Medicaid for 2 years, and then 90% thereafter… forever. That was enticing enough to persuade eight GOP Governors, who previously wanted no part of the health insurance exchanges, to accept this “gift”. They viewed this as separate from Obamacare, but is it really? Unfortunately, it is not. It is all tied together.

To understand what is happening, it is necessary to examine this issue historically. For over a century, Progressives have unsuccessfully tried to pass bills in Congress which would establish single payer, government run healthcare. For them, this has always been the “holy grail”. Realizing that success could only be achieved incrementally, they settled for passage of Medicare in 1965. By controlling the healthcare of senior citizens, and then the poor through Medicaid, the federal government gained a foothold into healthcare that for decades they had sought. Over the next 50 years, our Federal government slowly assumed a greater role in healthcare through regulation and legislation. Then, in 2008, the most progressive president in history was elected and the goal of a single payer, government run system was closer than ever.

To make the leap from where we are today to a single payer system, things have to get so bad that the federal government will be left with no “viable alternative”  other than stepping in to rescue the American health care “system”. The myriad and still not fully understood regulations in the ACA makes this outcome inevitable.

Insurance premiums are soaring. This is the result of insurance mandates in the ACA to provide “free” care- free screening, free wellness programs, and free contraception. These costs are passed along to their customers. Insurance companies cannot deny coverage based on pre-existing or high risk conditions. They cannot charge the sickest patients more than three times as much as the healthiest patients. Consequently, premiums rise for everyone. However, beginning in 2014, HHS Secretary Sebelius has oversight over these charges, and insurance companies will no longer be able to pass along these costs to customers; they will have to absorb them. Eventually it will become unprofitable to remain in the health insurance business and they will stop writing policies. Companies such as The Principal foresaw this and moved out of the health insurance business, dropping millions of patients in the process.

When the number of insurance companies reaches a critically low threshold so that patients cannot obtain healthcare coverage, the federal government will have to step in and offer patients a public option, which will likely be Medicaid for everyone.  The GOP Governors who are expanding Medicaid at the behest of the federal government are helping to facilitate and accelerate this process, paving the way for full government run healthcare. Insurance companies will be unable to compete with the federal government, which is acting as both a player in the insurance market and also as the referee in the system, until private insurance companies cease to exist in healthcare.

Another piece of the puzzle is hospitals. Their powerful lobby made sure that very favorable provisions were included in the ACA, giving them an unfair market advantage. They are consolidating, merging with other hospitals and  purchasing physician practices, leaving some areas of the country short of physicians in private practice. They are creating entities called Accountable Care Organizations-similar to the capitated HMOs of the 1990s, only much worse. Anti-trust laws are being relaxed or ignored entirely to accelerate this process. The ACO is better suited to deliver government run healthcare because physician behavior is easier to regulate. The hospital is the employer and the government writes a single check to the hospital, which distributes the money to everyone involved in the care of a patient.

Many people mistakenly believe that a government run healthcare system will be the solution to our current health system dysfunction, however, countries like England, with its National Health Service, are moving away from this failed model just as we rush to embrace it. Such systems are not compassionate.  By their very design they must force rationing, decided by “experts”, instead of you and your physician.  Everyone will receive the care that the government chooses for society, not for an individual.

All Americans need to connect the dots quickly, before it is too late to matter.

Hal Scherz is the President & Founder of Docs4PatientCare. He is a full time pediatric urologist at Children’s Hospital of Atlanta and a clinical associate professor of urology at Emory University.


Hal Scherz

Dr. Hal Scherz is the Founder and President of Docs4Patient Care.
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