ObamaCare reduces choice in both insurance and medicine

ObamaCare reduces choice in both insurance and medicine

The difference between health care and health insurance is often lost – or deliberately obscured – in our ongoing national medical debate. (We should be suspicious of anyone who claims a particular government program can “settle” the medical debate, because technology and demographics are always changing.  It would be wiser to acknowledge that we’ll always be arguing about the best way to make health care as affordable and available as possible – it’s good that we have such a perpetual argument, and our government policies should be written to allow the American people the greatest possible latitude to conduct it.)

That sure as hell isn’t what we’re getting under ObamaCare, which is destroying not just the health insurance marketplace, but also medicine itself.   The New York Times finally paid official Paper of Record attention to the growing reports of medical choices restricted by ObamaCare’s regulations and perverse incentives:

Federal officials often say that health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers.

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.

When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers.

Not only is this bad news for people who liked not just their insurance plans, but their doctor, and were fooled by Barack Obama into thinking they would be able to keep both, but it’s not going to “drive premiums down for long” either.  It is irrational to believe that restricted choices lead to lower costs.  Choice and competition are the only things that reduces cost in medicine, or any other product, in a sustainable manner over a long period of time.

The phenomenon described by the New York Times is essentially a regime of price controls.  Do we really need one more agonizing lesson in how those work?  There might be some short-term, illusory reductions in cost at first, but ultimately price controls reduce quality.  Yes, your price-controlled government-mandated plan might look a bit cheaper at first, but the quality of care becomes poor… and the power of government is deployed to ensure your complaints about lousy quality are pointless.  You’ll take what ObamaCare gives you, and you’ll like it, because the competitive marketplace that could give you better alternatives has been laid waste.

Another common consequence of price controls is reduced supply – in this case, fewer doctors, clinics, and medicines.  Price-controlling bureaucrats respond to these failures by imposing strict rationing, generally accompanied by stern rhetoric that dissatisfaction with your State-mandated ration is unpatriotic and immoral.  The ObamaCare IPAB “death panels” will come in handy when the hard-core health care rationing begins.  Everybody’s got “coverage,” but nobody gets to see a doctor.  The ruling class will, of course, be exempted from this rationing.

The Times touches on this problem, then tries to brush it aside with some weapons-grade wishful thinking:

Some consumer advocates and health care providers are increasingly concerned. Decades of experience with Medicaid, the program for low-income people, show that having an insurance card does not guarantee access to specialists or other providers.

Consumers should be prepared for “much tighter, narrower networks” of doctors and hospitals, said Adam M. Linker, a health policy analyst at the North Carolina Justice Center, a statewide advocacy group.

“That can be positive for consumers if it holds down premiums and drives people to higher-quality providers,” Mr. Linker said. “But there is also a risk because, under some health plans, consumers can end up with astronomical costs if they go to providers outside the network.”

Insurers say that with a smaller array of doctors and hospitals, they can offer lower-cost policies and have more control over the quality of health care providers. They also say that having insurance with a limited network of providers is better than having no coverage at all.

That might be how it works at first, but that will not be how it works over the long run, as anyone familiar with Medicaid knows.  The incentives to increase the supply of medicine have been removed.  That’s not going to result in a high-quality network of doctors offering low-cost care.  It’s going to result in poor quality and painful shortages.

The other thing that happens under price control regimes is that bureaucrats scramble to hide the true costs from as many voters as possible.  The Times concedes this is already happening, noting that the illusion of lower anticipated premiums from some health care plans is offset by higher out-of-pocket expenses.  Of course, the really huge expenses will be paid out of the federal treasury, adding to our growing national debt… and eventually leading to fresh demands for higher taxes.  The Sainted Middle Class, now helplessly dependent on government support to purchase health insurance, will nod obediently when promised that the Evil Rich will be paying those higher taxes.

Obfuscation is a big feature of ObamaCare.  It blows insurance premiums through the roof… and then gets the middle class hooked on soothing subsidy infusions, turning millions of formerly independent people into welfare junkies.  It’s like a drug dealer who can give his captive “customers” a painful ailment, then get them hooked on the sedatives they need to manage the agony.  It’s not a business model that leads to higher quality and reduced costs.

On the contrary, once the subsidy addiction is firmly in place, the ruling class will soon lose interest in touting the alleged “quality” of health care.  All that matters will be a) the public desperately needs health care, which is b) too expensive to afford without government welfare payments.  The political power derived from this formula should be enough to crush complaints about long waiting lines, scarce treatment, and poorly trained physicians pumped out of government-subsidized doctor mills to cope with the tidal wave of demand.

Chris Conover at Forbes tears back the veil on all that hidden cost by doing a little basic math with estimates from the Medicare actuary:

It was one of candidate Obama’s most vivid and concrete campaign promises. Forget about high minded (some might say high sounding) but gauzy promises of hope and change. This candidate solemnly pledged on June 5, 2008: “In an Obama administration, we’ll lower premiums by up to $2,500 for a typical family per year….. We’ll do it by the end of my first term as President of the United States.”

Unfortunately, the experts working for Medicare’s actuary have (yet again[1]) reported that in its first 10 years, Obamacare will boost health spending by “roughly $621 billion” above the amounts Americans would have spent without this misguided law.

$621 billion is a pretty eye-glazing number. Most readers will find it easier to think about how this number translates to a typical American family—the very family candidate Obama promised would see $2,500 in annual savings as far as the eye could see. So I have taken the latest year-by-year projections, divided by the projected population and multiplied the result by 4. Simplistic? Maybe, but so too was the President’s campaign promise. And this approach allows us to see just how badly that promise fell short of the mark. Between 2014 and 2022, the increase in national health spending (which the Medicare actuaries specifically attribute to the law) amounts to $7,450 per family of 4.

Naturally, the Left will try to hide those exploding costs from voters as long as possible, beneath a thick blanket of tax and deficit dollars.  When that little game becomes impossible to sustain – probably around the time this ten-year Medicare projection ends – it will be too late for surprised and enraged voters to do anything about it.  Indeed, the faster ObamaCare can pump up the deficit, the better for “progressives”… because they’ll be able to portray every effort at spending reform, and every bit of resistance to tax increases, as an assault upon the very health of the Sainted Middle Class.

But it’s not all bad news, because as Conover notes, Obama’s lousy economy has caused health care spending to decline – that’s a natural consequence of economic slowdowns – and there’s every reason to believe the sort of economic boom that would increase medical spending lies far beyond the horizon.  As long as Americans are satisfied with a New Normal of flaccid growth, rising government debt, and low-quality medicine, ObamaCare should hold up for ten or fifteen years.

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