Top Ten Reasons ObamaCare Are Based On
False Information
Tuesday, March 10, 2009 George Bernard Shaw warned “Beware of false knowledge; it is
more dangerous than ignorance.” The
major overhaul of American health care pursued by President Obama and his supporters
is based on many false premises and is excessive and likely to do more harm
than good. Tuning up and improvements
already always dynamically occurs.
Instead, ObamaCare is aimed at dramatically changing one-sixth of the
US economy in ways that are untested or tested and found wanting, primarily
involving huge increases in government direction of health care. The details of ObamaCare are largely being left to Congress, the
same body that stuffs the federal
budget with earmarks, waste, and other programs that are not requested. ObamaCare is premised on claims for
drastic changes in health care and major increases in government programs
being necessary. Those claims are
largely specious. The top ten specious premises for ObamaCare are discussed: 1. Comparing US
Health Care To Other Developed Countries (More could be added, such as
that government restraints on prescription drug prices will not impede
incentives for innovations, but they are so transparently false that the list
below dwells on other ObamaCare premises more misleading.) 1. Comparing US
Health Care To Other Developed Countries: Those pushing for government-run health
care are fond of comparing the US unfavorably to other developed countries
with heavier government-run or directed systems. Actually, the US is more successful on comparative costs,
efficiency of resource use, and outcome. Typical of misleading statistics, a US advocate of government-run health
care touts a report from the
Organization for Economic Cooperation and Development (OECD), comprised of
the 30 most developed economies, favoring universal coverage as exists in
most of the other OECD countries. The
OECD report is actually
titled a “working paper” by the three researchers. The encyclopedia defines a “working paper”
as “a document created as a basis for discussion rather than as an
authoritative text.” This OECD
“working paper’s” statistics are misleading. More accurately, a January 2009 analysis of the data gathered from the OECD points at
life expectancy as the single best measure of outcomes. Excluding deaths by injury, to focus on
health related outcome, “the US does the best of all the OECD countries”
having the longest life expectancy. Even the OECD “working paper” has to admit that the US’ higher
infant mortality rate is misleading: “Even if there were uniform reporting
standards of infant mortality across countries, a second limitation to using
it as an indicator for health outcomes is the potential effect of certain
interventions on the likelihood of a live birth. It is conceivable that additional health care provided in the
second or third trimester causes a pregnancy that would almost assuredly be a
stillborn to become a pregnancy with an improved chance of a live birth but
also an above-average likelihood of dying within the first year. These interventions increase health care
expenditures and result in the birth of more low-weight- and very low-weight
babies, with significantly greater health problems.” The “working paper” does not address the
moral issues or that most such babies go on to productive lives: “43% of children had survived
without any impairment. Minor
impairment was diagnosed in 39% and major impairment in 18% of assessed
children.” This OECD analysis also corrects per capita health spending to
use price parity (comparative purchasing power) instead of oscillating
currency exchange rates. The decline
of the dollar compared to the Euro in the past decade did not increase the
US’ comparative costs per person by 55%.
In fact, other OECD countries’ health spending is understated by 56%,
and “the US is no longer the highest [spending] country. France and Norway exceed the US in real
health care consumption.” Still,
other OECD countries’ spending on health care is lower than in the US. The OECD analysis accounts for this, “because many health care
systems use price controls to some extent….that systematically understate the
economic cost of the health care system.
The first is the hidden cost of nonprice rationing, while the second
is the hidden cost of informal, black market co-payments.” Long waits, reduced access to advanced
drugs and treatments, shifting development costs on to US consumers,
traveling abroad for care, untracked side payments to providers are among the
hidden costs. The “working paper” admits that high US tort rewards drive up US
health care costs via defensive medicine. “[P]rofessional liability reforms
do indeed reduce the practice of defensive medicine.” Defensive medicine increases
US health care costs by about 10%. Lawyers lead all groups in political contributions. In 2000, 86% of contributions from tort
lawyers went to Democrats, one periodical calling them the
“Cash Bar” for Democrats.” In 2008 the percentage was 95%.
ObamaCare proposals do not include tort reforms. Another health care result: malpractice premiums are two to
three times higher for gynecologists delivering babies, leading many to cease, and the
resulting medical care is lessened. Finally, the OECD analysis measures the personnel inputs to
health care, finding “it is clear that the US health care system is not a
particularly high user of health care resources….the US resource use is 6th
of 12, slightly below the mean.” The
higher pay for doctors and nurses in the US “creates a large bias towards
inaccurately portraying the US system as inefficient in producing health with
health care resources,” and further ignores the US attracting its own and the
best providers from other countries to benefit US health care. 2. US Health
Care Spending Is More Than We Can Afford: As it has become more evidenced that the
US does not compare unfavorably, the push for heavier government involvement
has shifted toward saying we can’t afford the current and future costs. The
affordability claim is exaggerated.
We can afford more than previously, have chosen to, and benefited. Our ability has greatly increased to pay for and enjoy a higher standard
of living, allowing a shift in priorities. From 1901 to 2003, the percentage of
personal expenditures on the necessities of food, clothing and housing
declined by half from 79.8% to 50.1%, while the quality and amount has
increased. Home ownership increased
from 19.1% to 67%. Other personal
discretionary spending was able to increase from 20.2% to 49.9%, including
all the modern conveniences and pleasures.
Voluntary sharing of the bounty has also increased as the percent
given to charities has doubled.
Personal spending for health care increased from about 2% to almost
5%. Although some may be pressed to
spend on health care, the overwhelming majority can and do. The US’s per person Gross Domestic Product (GDP) is 5.4 times
larger in 2008 than 1929 and disposable personal income 6.7 times larger, in
inflation adjusted dollars, according to the US Commerce Department’s Bureau
of Economic Analysis. The share of GDP spent on personal consumption has decreased from 74.7% to
70.5% during that time. Defense spending went from 9/10ths of a
percent of GDP in 1929 to over 40% during World War II, in the teens during
the 1950”s declining to about 6.6% by the end of the Cold War, further
dropping to 3.8% prior to 9/11/2001 and rising to 5.2% in 2008. Nondefense federal and state and local
spending has near doubled from 8.2% in 1929 to 12.7% of GDP in 1966’ Great
Society expansion to an even larger 15.1% in 2008 and climbing rapidly under
the Obama administration. The Share of GDP spent on health care, per the US Department of
Health and Human Services, has nearly tripled from 5.2% in 1960 to
16.2% of GDP in 2007. The
primary cost driver is new technologies.
The government share of that has almost doubled to 46.2% from
24.7%. By 2018, it is projected to rise to 20.3%. This primarily reflects the increased spending by government on
added coverage for more, and the vast improvements enjoyed by all from new
drugs, technologies and treatments delivering significantly better
prevention, relief and cures. The
main competitor for this spending is the further large expansion of other
social programs favored by liberals.
Inflation-adjusted government spending has increased by a multiple of 58
times since 1929, by over 5-fold since 1946, and is sharply
escalating now. 3. Reform
Overhaul Will Yield Major Savings: Price Waterhouse analyzed
the primary cost drivers in health care.
Leading the pack are new technologies, public demand for broader
coverage and access, and defensive medicine.
ObamaCare is not proposing restraints on lawsuits, tort lawyers being
a major constituency. Health care
consumers’ demands for fast access to the latest and best is not
contradicted. The Lewin Group is the leading consultants to government and
private groups on health plan costs. Lewin says the two
closest Congressional proposals to Obama’s stated design, from Senator Baucus
and from Senators Wyden and Bennett, would increase National Health
Expenditures, while dramatically increasing
employer costs. It is
reported that Senator Baucus is expected to be the “architect” of the
emerging detailed plan, and the Wyden-Bennett proposal enjoys major support,
the Obama administration saying it will hand off detailing to Congress. Senator Baucus, reported to be the main “architect” of the
emerging detailed ObamaCare, is already pressuring the Congressional Budget
Office to be “creative,” otherwise known as cooking the books. 4. Increased
Evidence-Based Medicine And Health Information Technology Will Significantly
Improve Care and Reduce Costs: ObamaCare proposes major increases in the use of evidence-based
medicine. There is a strong case for
increased analyses of the effectiveness of alternative treatments to have
more evidence-based (also called performance-based or
comparative-effectiveness) medicine.
The above Price Waterhouse report cites a study that estimates as much
as 30% of health care spending is excessive due to overuse, misuse and
waste. It cites another study that
defensive medicine increases health care spending by 10%. However, if major benefits are to emerge,
they will be very expensive to find, seriously troubling and possibly
dangerous to administer, and a long time coming. We should move very carefully and not faddishly rush pell-mell
into this sphere. At the American Legislative Exchange Council of about 2000
legislative members in all 50 states and 80 in Congress, a lengthy analysis raises many caveats about evidence-based
medicine. Not only will it not guard
against frivolous lawsuits, laudable sounding evidence-based medicine is
scientifically and statistically ill-defined and ill-definable when it comes
to actual clinical practice and individual variations in needs and
efficacies. Also, the “integrity of
medical decisionmaking” is not protected, leading to “cookbook” medicine. Further, for a variety of largely
irremovable reasons, “[i]n fact, ‘evidence-based’ research results can
strongly contradict each other.”
Lastly, there is very little such “gold standard” analyses available
due their huge cost and time consumption. In a February 2009 New York Times article by a leading specialist,
who supports increased evidence-based medicine, she “began searching for
clinical trials on pay-for-performance plans” finding “most disturbingly,
very few high quality studies on efficacy.
Looking for a few good studies, it turned out, was like searching for
a needle in a massive haystack of social experimentation.” Further, with good reason, there is considerable expectation that
such evidence-based medicine, with all its weaknesses, is intended or will
inevitably lead to rationing that may be as harmful to many’s health as it is
beneficial to costs. President Obama chose his Chief of Staff’s brother, Dr. Zeke
Emanuel, to be counselor on health care costs and coverage to Obama’s budget
director. In his former position at
the National Institutes of Health, Dr. Emanuel told the Bloomberg
interviewer he “focused on the ethics of conducting research and
clinical trials as well as allocating medical resources – de facto rationing,
he said.” Dr. Robert Wachter, professor and Associate Chair of the UCSF’s
Department of Medicine, Chief of Hospital Medicine at UCSF Medical Center,
widely published peer reviewed author on quality, safety and health policy,
wonders if “we are mature enough to make use of
comparative effectiveness research?” He says, “I worry that we’re
not.” He is critical of our excessive
spending. But, his wide experience
tells him, there’s “cautionary tales”
from Britain’s efforts (typically in governmentese, acronymed NICE -- National Institute for Health and Clinical
Excellence). To me, NICE’s experience shows that rationing based on
cost-effectiveness can be done, but we can count on it being about ten times
harder in the United States (with our fragmented healthcare system, our
sensationalist media, our hypertrophied legal system, and our tradition of
individual benefit trumping the Good of the Commons) than it has been in the
UK. Dr. Wachter concludes with sheer hope, “But let’s not be naïve
about it – one person’s ‘cost-ineffective’ procedure may be a provider’s
mortgage payment, a manufacturer’s stock-levitator, and a patient’s last hope
for survival.” Without repeating the litanies of
individual stories of critical health care denied in Britain, or elsewhere,
by rationing, one need only recall Americans’ retreat from the far more
lenient restrictions in our HMOs to be skeptical of the prospects for or
outcomes from increased restrictions. A close companion of evidence-based medicine is health
information technology (HIT) to collect and carry individual’s records and
tell providers the practices recommended or imposed. The promise is to reduce medical errors
and costs. That promise seems remote.
The Obama ‘stimulus” bill included $20 billion to develop a
national HIT system, with tens of billions more to be invested. In Britain, with a small fraction of our health
care providers and facilities in a far less diverse health care system than
ours, they’ve already spent over $18 billion, and it doesn’t work. It would not be unrealistic to expect US
costs to well exceed $100 billion to reach a possible prototype. There are advantages to a fully developed, interactive HIT. However, most medical providers will not
reap rewards anywhere commensurate with the very high costs, requiring either
far more government spending or imposed costs on providers driving up their
expenses and charges. A few tightly
controlled institutions, like Mayo and Kaiser, have expended great resources
in developing highly customized HIT for themselves, but their utility or
applicability to others is very limited. One of the key disadvantages of a
national HIT is the increased ease with which rationing practice regimens can
be imposed upon individual health care. 5. Present
Administrative Costs And Insurer Profits Are Too High: The above Price
Waterhouse analysis finds 86% of premiums being paid out for claims and an
additional 5% for consumer services like prevention, wellness, care
coordination, education, and information systems. Government compliance and reporting requirements cost another
6%. That leaves 3% for profits and
reserves needed to generate added investments. Indeed, in 2008, Fortune
Magazine’s compilation of industry
profitability had health care insurance and managed care well
behind some commonly assumed to have low profits such as railroads (12.4%). Discretionary entertainment (12.4%) is more
profitable than necessary health insurance. 6. US Consumer
Dissatisfaction Requires Drastic Health Care Changes: There are numerous polls with many
Americans expressing dissatisfaction with the US health care system, usually
asking general questions like “would you like to see major
improvements.” However, more careful
polling reveals quite the opposite in reality. For example, Gallup’s annual polls are summarized
by Gallup thusly: Gallup's annual Healthcare survey, conducted Nov. 11-14, [2007]
finds 57% of Americans saying they are satisfied with the total cost they pay
for their healthcare, while 39% are dissatisfied. These percentages have been
quite stable in recent years…Americans are quite happy with their health plans.
Eighty-three percent of Americans rate the quality of healthcare they receive
as excellent or good, while only 15% say theirs is poor. Slightly less, 70%,
say their healthcare coverage is excellent or good. These ratings have been fairly stable in the seven years in which
Gallup's Healthcare survey has been conducted. Similarly, votes on drastic
overhauls have consistently lost.
There is no public mandate for drastic health care changes. 7. Health Care
Costs Are So High They Are A Major Cause Of Personal Bankruptcy: President Obama
publicly claimed last week that “The cost of health care now causes a
bankruptcy in America every thirty seconds." ABC News Director of Polling examined that claim and found it
“simply unsupportable.” Examination of the basis for Obama’s claim and of
other studies found the numbers vastly overstated.
The suspect Harvard research professor from whom Obama drew his
claim cofounded an advocacy group to push for government-run, single-payer
health care. Another professor with
concerns for the impact of high medical costs on the uninsured says, “It
stinks to be uninsured. I don’t want to be quoted saying anything else. But
there are correct studies, and incorrect studies. For academics, the validity
of the research methods matters.” It
should for Presidents as well. 8. The
Number Of Uninsured Is So Large That Drastic Health Care Changes Are
Necessary: That about
16% in the US are uninsured is repeated as cause for universal coverage
schemes to cover them that at the same time grossly changes the health care
system and costs affecting the other 84%.
Even if the other 84% were not negatively affected, the uninsured
count is actually an overblown statistic. The definition of uninsured includes all
those lacking coverage any time in a year.
Those lacking coverage for more than a year is 11%.
The long term uninsured is primarily among working-age adults
with low education. The Kaiser Foundation offers a recent analysis of the uninsured. 19% can afford coverage but
don’t purchase it. 25% are eligible
for current programs but don’t enroll.
That leaves 56% for whom affordability is considered too difficult,
needing assistance. About 5 million,
over 10%, of the uninsured are illegal immigrants, who tend to have low
educations. About 19% of those needing assistance are illegal immigrants. In short, less than half of those
bemoaned as uninsured are legal residents in need of additional financial
help. 16% becomes less than 8%. The negative impact of low-skilled illegal
immigrants is most directly felt among low-skilled Americans, as a National Bureau of Economic Research analysis shows,
low-wage competitors illegally in the US adding to low-wage/low-educated
citizens’ difficulty in affording insurance. Two related issues need addressing in
updating the uninsured statistic. The
large expansion of the federal SCHIP program just enacted will expand
government coverage to more people and at higher incomes. Analysis shows that while reducing the number of
uninsured, as many as 50% of those newly enrolled will be substituting
previously affordable private insurance for low to no cost government
coverage. Their taxpayer cost is
larger than the entire present SCHIP program’s. Another related issue is that some of
the uninsured can afford coverage but are rejected for coverage or are priced
out due to health conditions. The
National Conference of State Legislatures offers useful information about
these high risk, high care cost uninsureds. Over 200,000 are enrolled in state high risk pools,
but there aren’t good numbers on how many more there are, which is surely
much higher. The association of health insurers reports that about 11% of those applying for
individual private insurance – by which there are about 25 million covered --
are rejected. About 11% of those
offered policies is at above-standard premium rates. The insurers propose to cap surcharges at
50%. That may help some. For others,
the 35 state high risk pools are frequently underfunded and have limited
benefits. Some will be helped by the
SCHIP expansion, but much more funding for high risk pools is needed. I guesstimate the annual cost at $12
billion (Double the average individual premium/cost of health care to
$500/month and multiply by 2 million people.) Imposing this cost on private health plans through guaranteed
enrollment will price others out of affordable coverage. It will also attract
those who delay coverage until needing it, which imposes their costs on
others and prices more out of coverage.
Properly funding high risk pools will limit this coverage to those who
more genuinely need it and not have the extra costs created by guaranteed
enrollment for private plans. 9. More Preventive Care Will Better Serve Consumers And Save Costs: The February 2008 New England Journal of Medicine
contains a review of 599 peer-reviewed articles between
2000-2005. The conclusion:
“Studies have concluded that preventing illness can in some cases
save money [and health] but in other cases can add to health care
costs….[and] also sidesteps the question of whether such measures are generally
more promising and efficient than the treatment of existing
conditions.” The effectiveness of
wellness programs is difficult to measure but are less costly than extensive
additional testing of the population for rarely occurring illnesses. More early diagnosis uncovers some treatable illnesses but
leads to more avoidable interventions, side effects, discomfort,
and overuse of resources. Further,
extended life health care costs are estimated to cost more, particularly for
the aged. Ironically, but consistent with a
one-size-fits-all approach to health care, the Obama administration is
eliminating subsidies to Medicare Advantage plans from private providers. Medicare Advantage plans offer additional
benefits, care management and coordination.
About 20% of Medicare enrollees have chosen Medicare Advantage plans,
57% of whom have incomes between $10-$30 thousand, 35% more of whom are
minorities, and poorly provided rural area residents enrollment has increased
over four-fold. A third as many Medicare Advantage members report delaying
care due to costs as among traditional Medicare members. Aside from added benefits, Medicare
Advantage members have lower out-of-pocket costs. The Congressional Budget Office estimates a savings of $157
billion over the next 10 years by eliminating this subsidy. Given the imminent financial collapse of
Medicare, this economizing may be necessary, but given some of the other
spending in Obama’s budget that may be seen as lower priority this subsidy
may not be seen as high a priority to save from. Interestingly, AARP generally supports ObamaCare but its
members benefit from and AARP profits from selling Medicare Advantage plans,
so AARP is not in favor of this trimming. 10. Health
Care Consumers Are Being Served By Drastic Health Care Changes: News reports of
Obama administration health care parleys say that consumers are at the
table. In fact, there are various
interest groups each protecting the interests and costs of their members,
usually at odds with each other. The
interest groups’ before and behind curtain maneuvering is intense and complex,
and much of what they’re telling the public misleading of intent or
outcomes. Not nefarious in a free
country, but each is angling to profit and enlarge from a bigger pie of
spending. The only reliable measure
of consumer preference is in general polling which, as shown above (point 6),
has consumers not dissatisfied with their present arrangements. Posted by Bruce Kesler in Medical, |