Healthcare for All Americans, Part Two - Con

By: Scott Hoffman, CIS Senior Associate
scotthoffman@cis-partners.com

Disclaimer: This is Part Two of a two part article on Healthcare Reform. This article represents a position against healthcare reform, yesterday’s article presented a position for universal healthcare. We would love to hear your (constructive) feedback, so feel free to post a comment responding to either position, or both.

I would also like to start this article with a disclaimer for the readers. Healthcare reform is a very complex issue that impacts a wide spectrum of individuals, ranging from manufacturers to insurers to the general public. The information I am going to present in this article is only a high level summary of a few arguments opposing healthcare reform. The reasons I am opposed to government-backed healthcare reform are the failure of the Massachusetts reform, the shortcomings of Medicaid and Medicare and, lastly, the prospective cost to taxpayers.

The first issue I would like to highlight is the failure of the healthcare reform enacted in Massachusetts in 2006. To provide a brief background, on April 12, 2006, Massachusetts passed bipartisan legislature requiring all adults to purchase health insurance. If the individuals did not purchase a plan, fines of up to 50 percent of the cost of a health insurance plan would be levied [1]. Additionally, employers employing 11 or more individuals were required to provide health insurance coverage for their employees, or pay a contribution of up to $295 annually per employee [1]. The other key component of the plan was the provision of government-funded subsidies to low-income individuals to assist with the purchase of health insurance [1].

Three years after the passing of the plan, the healthcare situation in Massachusetts has not improved. First, universal healthcare is still not universal (although roughly half of those previously uninsured have subsequently become insured), and more importantly, surveys show that individuals have “substantial problems in access to care” in the state [2]. The state plan has failed to ensure the availability of comprehensive plans at affordable prices and has actually negatively impacted some individuals by requiring high co-pays that the low income individuals subscribing to the plan cannot afford. [2].

The second issue is that the legislation does nothing to control administrative costs and wasteful spending (it has actually increased healthcare costs), and does nothing to address the key drivers of high health care costs, the overuse of high-technology care and the underdevelopment of primary care [2]. In addition (and in support of my third argument), the plan has cost more than originally estimated, resulting in charges to taxpayers of $1.1 billion and $1.3 billion in 2008 and 2009 respectively, resulting in cuts to other state sponsored programs [2]. To summarize, healthcare costs continue to increase, co-payments are still high and Massachusetts’ budget is a mess, which, to me, represents a clear failure.

After reading the above argument some will say that the government now has a blueprint of what areas it should focus on to make healthcare reform successful; as well as a guide of what not to do. My next point is meant to illustrate that whenever the government gets involved, all you get is a very expensive, poorly forecasted, inefficient program full of “bureaucratic politics.” To illustrate, you only have to look at the government’s last foray into healthcare for the public; Medicare and Medicaid. Since most people reading this are familiar with these two programs, I am going to take a stance on why they are not effective. My main point in bringing up Medicare and Medicaid is not that the programs aren’t beneficial, because I believe they do help their intended targets. However, I feel that the government has not properly forecasted the cost and growth of the programs and, on top of that, they have mismanaged them, resulting in huge deficits.

To illustrate the above point, Medicaid currently represents 7% of the federal budget, and is projected to account for roughly 8.5% by 2013. Total Medicaid expenditures on benefits were $329.4 billion in 2007, and according to the Office of the Actuary, they are predicted to increase at an average of 8% to 9% per year for the next 10 years, reaching $735.2 billion by 2017 [3]. The effects of these cost increases on states already experiencing budget deficits could be significant. Plus, the federal government won’t be able to bail them out because according to the Congressional Budget Office (CBO), the government is currently projected to have a deficit of $7.1 trillion by 2019 [4]. Take a second to consider that amount of money, and then assess whether the government understands how to effectively manage and budget money. Personally, I think the answer is pretty clear.

I will keep my final argument brief because this is only a personal argument opposing government healthcare reform. The government has a deficit of approximately $7.1 trillion dollars and is planning on spending roughly $1 trillion on healthcare reform. Where is the money going to come from? The costs are almost assuredly going to be passed to you and I: the taxpayers. I know there was an agreement with the Pharma industry for $80 billion, but when was the last time any industry just gave away $80 billion (and sponsored a $150 million advertising campaign)? In my research and experience, this has never happened. That means Pharma is planning on not only recouping the $80 billion, but also turning some semblance of a profit (after all, profit is the fundamental principle of business), which means eventually the tax payer is going to be on the hook. I don’t know how you personally feel, but I would like to keep the money I work hard to make, and not give it away to the government.

In closing, I understand the “humane and sympathetic” argument for offering healthcare to all Americans. I also understand that not all Americans are in the same position I am, of having a good job, which allows me to afford healthcare. However, healthcare is not going to help people if the government goes “bankrupt” due to complete financial insolvency. It is not going to help the working class individual who begins to lose large percentages of their earned wages. Why not work to fix Medicare and Medicaid? Why not work on initiatives to increase the number of doctors in this country, to help eliminate access issues?

More importantly, why does reform have to be a government run insurance plan? My main opposition for government-backed and sponsored healthcare is that it will not bring about the changes needed to provide access for those who need it. Any government plan will almost assuredly be mismanaged and full of waste, which will not successfully provide affordable access to healthcare for everyone who needs it. I believe that if the government wants reform, it should avoid offering healthcare plans, and should instead work with private insurers to ensure that affordable plans are offered. From my perspective, government oversight is a significantly better option, both short-term and long-term, than government ownership.

Sources:
[1] Massachusetts Health Care Reform Plan: An Update
http://www.kff.org/uninsured/upload/7494-02.pdf
[2] Massachusetts’ Plan: A Failed Model for Health Care Reform
http://pnhp.org/mass_report/mass_report_Final.pdf
[3] This Is Going to Hurt, August 12, 2009
http://pharmexec.findpharma.com/pharmexec/Web+Exclusives/This-Is-Going-to-Hurt/ArticleStandard/Article/detail/618558?contextCategoryId=47505
[4] Projected Deficits and Surpluses in CBO’s Baseline
http://www.cbo.gov/ftpdocs/105xx/doc10521/budgetprojections.pdf