By: Dr. Frank MacMillan – July, 2015
The US Supreme Court recently ruled in King v. Burwell that the health insurance subsidies written into the Affordable Care Act (aka Obamacare) not only applied to insurance exchanges run by the State, but also to exchanges run by the Federal Government. Ruling otherwise would have thrown the government into chaos and probably the economy as well.
The political trap set up by the architects of Obamacare made this law more or less bulletproof from the moment it was signed into law. The trap was so simple. Of course it would cost a lot more money to get everyone insured, though the political class kept repeating the big lie that it would cost less.
The people already with insurance were going to pay more, which was never in doubt. Subsidizing new purchasers of health insurance made it politically impossible to take away those subsidies once enough people had them. The reality is that because health insurance has become so much more expensive than even the architects of Obamacare imagined, the only possible outcome is for subsidies to continue to expand until government controls the entire economic sector.
Like many small businesses, I purchase health insurance benefits for my office employees, and we renew our contracts every year on July 1. I have been in business 11 years, and this year’s 20% premium hike is the largest ever. Despite paying more, the insurance product is more restricted than ever. Higher deductibles and copayments, ever increasing premiums, and fewer choices on doctors and hospitals who are “in network”, the future is here.
On the delivery side, my overhead costs have exploded. Information technology is eating up a larger and larger share of my practice revenues for products that are miserably obsolete, and would not be tolerated in any other industry. My electronic health record is on proprietary software that I am stuck with, probably forever. It is government “certified”, which means that I don’t take a payment penalty on my services that I perform for people with government insurance (Medicare and Medicaid), as long as I report my services in a way the government wants, and repeatedly demonstrate that I use the software “meaningfully” (also known as the meaningful use program).
The “meaningful use” rules have become so complicated that by the end of next year, it was estimated that most doctors would just stop using the program, jeopardizing many Medicare and Medicaid beneficiaries’ access to health care, as the already inadequate government payments would be below the cost of providing the service.
It turns out that there are only a few large national insurers remaining. They all have expertise in the private employer based market. Over the past few years, they have become more and more dependent on the Government payers. . Companies like Anthem, Aetna, Cigna, Humana, Blue Cross are in the process of massive consolidation because of the changes enacted in the Affordable Care Act. I believe that we will soon morph into a regulated utility model of insurance in the near future. The insurer will be nominally independent like the electric company, but otherwise highly regulated by government bureaucrats.
We have seen entire health systems consolidate in Massachusetts and there is more of that on the horizon. While the Attorney General stopped Partners from buying Hallmark and South Shore, still Beth Israel Deaconess and Lahey have discussed merging, and so have BMC and Tufts. They are talking because their survival depends upon them having enough market power to not be left behind, and they need to be able to spread the actuarial risk over a broad population as they are being asked to manage financial downside just like an insurance company.
The basic lessons of economics teaches us that when industries consolidate and monopolies rule, that the sacrifice we pay is higher cost, fewer goods and services, and less innovation.
Unfortunately, I believe that the process in place is largely unalterable for the remainder of this generation. It will take another political revolution to undo what has been done, even though the answer is plainly staring us in the face. Do we really want our health care system run like the telephone company in the 1970s? Its time to stop drinking the kool aid.
Dr. MacMillan specializes in Gastroenterology and Liver disease and is a member of the North Andover Board of Health. Dr Macmillan was recently elected by his peers to be vice Speaker of the House of Delegates at the Massachusetts Medical Society and alternate Delegate from Massachusetts to the American Medical Association. Dr MacMillan is on staff at Holy Family Hospital Haverhill and Methuen, Anna Jaques Hospital in Newburyport, Lawrence General Hospital, and Parkland Hospital in Derry, NH and is the President of the Massachusetts Gastroenterology Association. Dr MacMillan also serves as Massachusetts Governor of the American College of Gastroenterology and is a Fellow of the College.