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Bill Black: Why the Republicans Cannot “Replace” Obamacare

Yves here. One possibility discussed elsewhere is the Republicans making changes that appear to preserve Obamacare features while actually degrading them. For instance, one proposal is to link the coverage of pre-existing conditions to maintaining “continuous coverage”. Without going into details, that is made difficult enough for many patients to achieve, for reasons of bureaucratic difficulty and rigidity. Many are sure to be unable to comply and be forced to obtain insurance at the applicable rates for individuals with that ailment or go uninsured because there is no policy available.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

I have just listened to Lawrence O’Donnell’s program on Friday, January 27, 2017. It was a strong program, but I offer these friendly amendments on his discussion of the Washington Post story titled “Behind closed doors, Republican lawmakers fret about how to repeal Obamacare.” O’Donnell and his guests spoke exclusively of how difficult it was for the Republicans to come up with a plan to replace Obamacare and making the point that the leaked transcript of the closed Republican meeting proved that the Republicans had no plan. The thrust of the comments was that the explanation for the difficulty was the technical complexity of the issues and differences of policy views among congressional Republicans. Neither explanation is accurate. The problem is much more basic, and explains why Republicans did not use their exceptional leverage to amend the draft Affordable Care Act that would have improved it, why they have not come up with a replacement plan in seven years, and why they will not be able to come up with a replacement plan in the future.

People have forgotten that President Obama and Democratic Senators made extraordinary efforts to get Republican support for the bill in the Senate. The “gang of six” (three Democratic and three Republican Senators) deliberations stalled the bill for months. Had even a single Republican Senator been willing to support a superior health insurance plan, Obama would have leaped at the opportunity to support his or her amendment improving the bill. Senators knew that Obama was desperate to attract even a token Republican Senator to support an Affordable Care Act bill. Senators knew that this meant that every Republican Senator had unprecedented political power to amend the bill by adding superior provisions – in return for supporting the amended bill. No Republican Senator took advantage of that power because any change to the health insurance bill that would have improved it was anathema to Republicans.

The problem is not that Obamacare is such an excellent program that it has no superior replacement. The problem is that the superior programs are unacceptable to the Republicans on ideological grounds. Indeed, the Congressional Republicans detest the superior alternatives because they are superior. The superior programs would have a far broader governmental role than does Obamacare. The Republicans do not want effective domestic governmental programs because it would discredit their claims that the government programs invariably fail.

Obamacare’s model is a far-right Heritage Foundation plan that Mitt Romney convinced Massachusetts to adopt when he was governor. Heritage’s design deliberately, for ideological reasons, minimized the governmental role and cost containment. The price of President Obama’s deal with the health insurance companies not to use their lobbying power to kill his Obamacare proposal was his willingness to minimize the role of the government and not include effective cost controls in the bill. The Republicans will not increase the role of government for political and ideological reasons. The Republicans will not impose effective cost controls on insurers and medical providers for the same reasons that Obama refused to do so. They fear the insurers and medical providers’ lobbying power and fear the loss of campaign contributions.

Experts anticipated the problems Obamacare is experiencing. The weak cost controls, limited competition, and the small numbers of participating insurers will continue to lead to premium increases and high deductibles that will make coverage illusory for many working class Americans. Cost increases under Obamacare are smaller than anticipated. The Great Recession’s severity led to many years of minimal inflation.

The Republicans could create a superior system by offering a public option that would create competitive pressures to contain cost, extending Medicare to all citizens to reduce the cost of providing care through private insurance, or providing a national health system. Each of those options, however, is unacceptable to them on ideological grounds. That self-inflicted restraint means that there is no superior alternative to Obamacare. That is why the Republicans have not developed, much less proposed, much less enacted a “substitute” plan for Obamacare over the last seven years. That is why the Republicans cannot develop a superior plan even though they control totally the federal government. It has nothing to do with the fact that medicine and private insurance are “complicated” or that Republican legislators differ in the degree to which they are willing to return millions of Americans to uninsured status. There are, of course, limitless ways to replace Obamacare with inferior plans. The leaks of the closed-door Republican meeting prove what we knew – the Republicans fear the political cost of replacing Obamacare with an inferior private insurance plan.

My prediction is that the Trump administration and the congressional Republicans will continue to take steps to exacerbate Obamacare’s difficulties in order to produce the breakdown of the existing system in several states. Then they will repeal it as a failure and blame it on Obama. They will add a fig leaf that purports to forbid insurers from denying “access” due to the applicant’s preexisting medical condition, but that access will be illusory due to the combination of cost and very high deductibles. Trump’s representative at the Republican meeting indicated this strategy (in the administration’s characteristic dishonest manner).

Even as Bremberg [who heads Trump’s domestic policy office] offered few details about what the president plans to do, he emphasized that last week’s executive order “repeatedly” used phrases “such as ‘to the maximum extent permitted by law’ ” to enable his political appointees to start dismantling the ACA [the Affordable Care Act, a/k/a Obamacare] by executive authority.

“The president has now officially given direction [not only] to HHS, but to all of these agencies that have responsibility . . . to exercise all available discretion to begin helping the American people and to begin fixing our health-care system.”

The dishonesty, of course, is characterizing “dismantling” Obamacare as “helping the American people” by “fixing our health-care system.” The strategy is to “dismantle” key provisions of Obamacare without replacement. The administration designed the dismantling to degrade Obamacare to the point that it breaks down in multiple states and provides a pretext for its repeal.

When Trump and Republicans state that they “have” a “superior” plan to replace Obamacare they are lying. They are lying because they refuse for ideological reasons to replace Obamacare with a superior plan. There is too much emphasis on Trump’s daily lies as if they were an unprecedented departure from the consistent practice of the Republican Party for over a decade. Congressional Republicans have been lying constantly for over seven years about their claim that they have a “plan” to enact a superior replacement for Obamacare.

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  1. jackiebass

    I believe republicans will be successful in repealing Obamacare and not replacing it with something better. It will be a glossed over version of pre Obamacare health care. The past indicates that republicans are experts at convincing people that their plan is superior. It’s the only reason that people vote against their own interest by voting for republicans. They know how to steer people away from the real issue, which is what they will do with health care. They have been doing the ground work to paint SS and medicare as failing and in need of a fix. The fix of course will be privatization , even though there are several easy fixes that don’t involve privatization. Education is a good example of how republicans and some democrats over time worked to move education into the private sector. They campaigned using propaganda to convince voters that their schools were failures even though evidence tells a different story but the keep pumping out the same lies. Their ides of shrinking government is through privatization of government functions. It really doesn’t shrink the budget. The only difference is that it make the services worse, more expensive , and makes public employees workers in private businesses at a lower economic package. I like what Bill Black writes but in this case i think he underestimates republicans.

    1. dw

      the reason to go back (at least for the GOP) is no calls about having issues with health care

      its like the scam where they are so anti tax. but all of their proposals are for tax cuts for some. just not for those below the top 5%, if that low

    2. wet

      With Trump in the White House, I don’t know if this axiom holds true. Republican establishments almost hate him as much as Democrats.

  2. Disturbed Voter

    New article … Why The Americans Cannot Replace King George. It is called a revolution, baby.

    Not that I think the Republicans won’t make a hash of it. As long as they cancel the individual and small business mandate .. I am good with it. Death to Tyranny … Don’t Tread on Me.

    1. LT

      They could get rid of the mandates. That would be a way to lead to the ACA’s demise.
      But that is the bailout part for the private health insurance industry. It dies a slow death with the ACA. The reality is that the increasing prices only make it increasingly unaffordable to any one who isn’t already independently wealthy or insured through their jobs. The future for employment is looking better for machines ( which do not, ironically, need health insurance).
      The only way I see them getting rid of the mandate or just throwing it out the window is if the American private health insurance industry can get more into the Euro markets.
      Britain is salivating to get rid of their national healthcare system. And you can’t tell me the Eurozone’s spreading project of austerity isn’t aimed in that direction.

      1. Grebo

        Britain is salivating to get rid of their national healthcare system.

        The Conservative Party is. They have to be super sneaky about it though, lest they end up dangling from the lampposts in Parliament Square.

      2. Yves Smith Post author


        No, the insurance industry does not die a slow death.

        The policies sold on the ACA exchanges go into a death spiral.

        No one mentions that the insurers made out very well on Medicaid expansion.

        1. aab

          I’ve been wondering about that. I’m under the impression that the “I” part of FIRE is more connected to the Democrats than the Republicans. But if Trump wants to avoid a big headache in terms of taking on another industry enemy, wouldn’t he leave the Medicaid expansion alone, even if he messes with other parts of the ACA? It’s doing a lot of good, it’s profitable for business, it puts a floor under the misery and chaos of whatever else they plan to do to health care — and I honestly think he’s not interesting killing his own voters.The point of block granting the way Ryan wants is to let states funnel the funds away from health care to citizens, right? Given that he presumably wants to slap Ryan down, too, wouldn’t leaving Madicaid as is make Trumpian sense?

          1. Yves Smith Post author

            I don’t think Trump is interested in Obamacare. He said nothing or the functional equivalent of nothing in the primaries. He made what I read as obligatory anti-Obamcare noises after he won the nomination. His initial tweets on the matter after winning were trying to urge the Rs to leave it alone and let it get worse on its own.

            I don’t think he wants to spend political capital on this. It’s not one of his priorities. But the Rs have committed themselves to Doing Something when per above, they are pretty boxed in.

            I have no idea how this nets out. If I were Trump, I’d make this someone else’s problem.

            1. aab

              That’s basically my take, too. But that’s why I’m wondering if whatever band-aid version of “replace” they try (if they do anything other than speed up the existing death spiral), he might at least keep the Medicaid expansion.

              Hey, I’m trying to find a pony somewhere in all this…

    2. d

      well, they can do the mandate part. and that would do in the ACA. but then nobody will be buying health insurance cause the regulations for policies would remain (they would need 8 or more D’s to vote for those changes. which they may never get.

      in the mean time, the insurance companies would pull out (and probably already planning to do so). that will also kill the ACA. along with the individual health insurance market. and no, no insurance company from another state will come to you aide. cause to do so means large losses as premiums will have to be artificially low for short while, because their network of providers will be small, and cost more (they would have little no leverage with providers to lower prices). besides there are 3 states that already allow out of insurers to sell in their state. and no insurers have (which makes you wonder how the GOP is committed to states rights and will over ride them for this)

      but hey as long as you get health insurance from your employer, you might still have it. course that may not happen as health care costs go up

  3. Eureka Springs

    I would need evidence from Prof. Black to believe Obama and the crats wanted any more than what they received.

    He made a deal with Pharma before any negotiations started. He took Tri-Care or Single Payer, even as a false negotiating chip off the table from the get go as well. The public option was a lie. I also think it’s a false premise to bemoan shrinking numbers of insurers when what we need to is to abolish them, at least in terms of government dollars paying those useless middlemen or government forcing others to feed that beast. And I don’t know what he’s talking about with slower cost rises when our expenditures are already so far above anywhere else in the world for such dismal results. We should only be talking about cutting by more than half whilst establishing health care as a human right… then keeping cost rise in check.

    Democrats got what they wanted. They were in complete control.

    Has Prof. Black gone over to the Kos side? Or perhaps he should turn off the TV.

    1. andyb

      The agenda of those behind the curtain is to destroy the “last bulwark against tyranny”; i.e the American middle class. Obamacare turns out to be the greatest job killer of the last century. All of the elected 535 are complicit whether through bribes or blackmail. How else to explain the effective 30 hour work week for so many and the outrageous premiums and deductibles; and the lack of any meaningful consensus to fix the problems. Few, if any, in the 95%, have enough discretionary income to sustain a growth economy, thus the Greatest Depression will continue. The has been absolutely no positive GDP in the last 8 years when true inflation is considered; in fact it has been largely negative.

      1. TheBellTolling

        “last bulwark against tyranny”; i.e the American middle class

        lol The middle class is a core part of any fascist movement. Get out of here with that BS.

    2. Jason Boxman

      I still remember when an OFA clown asked me to sign some health care petition or other and the magic pony public option wasn’t even on it, so I said so and I refused to sign. The dude just kind of looked at me in disbelief.

      What a tool.

  4. jgordon

    I’d like to posit that the very idea that insurance should be used to pay for healthcare is bizarre and unworkable, and if that issue is not addressed at the start any replacement plan is bound to fall apart. As for politocal involvement, the government either needs to have zero influence on health care–up to and including relinquishing control over licensing, enforcing IP laws etc, or it needs to have total control over healthcare ala single payer with zero private industry involvement anywhere in the process.

    Personally I’d be fine with either, but the middle ground system we have now of private monopoly profit with government violence enforcing that profit is just an unadultetated scam being perpatrated on the American citizenry. Although on that topic, since the scam is so profitable for the participants they would of course do anything and buy anyone to prevent it from going away.

    1. Sandy

      Indeed. All people will need healthcare services at some point in their lives. Not all motorists will be involved in a collision nor will all homeowners lose their house in a fire. Calling it insurance is ridiculous. In fact other countries with public systems do not generally label them insurance programs.

      1. PaulHarvey0swald

        All people will need healthcare services at some point in their lives.

        For starters, that “some point” is also called “your birthday”. The first one, that is.

    2. Katharine

      Yes. The notion that insurance will somehow translate into care is ludicrous. I know someone with a Medicare Advantage plan (the advantage being the company’s) that says it has dental coverage because it covers an annual cleaning and checkup. When she started having problems with a failed root canal, she researched free and sliding payment scale programs in the area where she lives, thought she’d finally found one, but was refused treatment because she had insurance. The fact that the insurance wouldn’t cover what she needed was irrelevant to the bureaucracy that decreed this program would only take uninsured patients. To top it off, the director refusing treatment scolded her for neglecting a serious problem!

      1. dw

        the reason we ended up with insurance for health care was that cost had gotten out of control. example being saline for $100, thats basically salt water, the most common thing on the planet. and it also made it so that some one could bargain before it was needed (hard to do that with health care). now, there is also those who dont want the government doing this, no matter that it costs more, or any reason at all . and then there is the political side. giving it to the private sector, removes the politicians from being blamed when it goes badly. sort of like removing public education. and roads too. and we can see all kinds of examples where other countries have better care, and lower cost. and the government runs it. course there is also those (in health care) whose job or business would go away. or be a lot less profitable. they dont want it either)

    3. Waldenpond

      Yes, the ‘medicare for all’ is insufficient. Public insurance for a private health system? It’s just eliminating one seat at the elite’s table.

    4. MWilmot

      Good call, jgordon. I’ve felt this way since its inception. This middle ground/ death by compromise is the worst of both worlds

    5. toolate

      “As for politocal involvement, the government either needs to have zero influence on health care–up to and including relinquishing control over licensing, enforcing IP laws etc, or it needs to have total control over healthcare ala single payer with zero private industry involvement anywhere in the process.”
      While I tend to think you are right: Why rule out a Swiss style compromise?

  5. DorothyT

    The goals of those determined to “replace” Obamacare are quite simple, aren’t they?

    (1) Remove Obama’s name from a healthcare plan;
    (2) Increase pharma, hospitals, providers’ association’s campaign contributions;
    (3) Reduce young and sick patients’ ability to afford and obtain insurance;
    (3) Eliminate healthcare government subsidies.

    This broad definition of “insurance” by Investopedia is as uncomplicated as it gets: Shrink the “pool” so only the healthiest remain:

    Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

    Wait until they start to privatize Medicare.

    1. Johnny/sacks

      You forgot (4): Rebrand and remarket their crappified solution to a flawed program to start with as a terrific success.

    2. ger

      Medicare will die from a thousand pin pricks. Even the Repubs are not stupid enough to draw the attention of Millions of Boomers……a big part of their white base.

      1. Praedor

        That’s why when they float murdering Social Security or Medicare they put it in terms of future victims, not current, or near-current users. They put in stipulations that it is Generation X or Y that get the full brunt of suck. Boomers get to keep the same thing. They’ve already primed X and Y to think/expect that Social Sec and Medicare wont be there for them because it is “going bankrupt”.

        ALL news organizations credulously parrot Republican AND Democrap talking points that Social Security and Medicare are big drags on the debt and deficit (LIES). They’ve laid the groundwork for destruction…in the near future but not for current and near-current recipients who know better.

        1. MG

          Already positioned it in that manner and the Medicare voucher program will be implemented for those 55 and younger.

  6. Normal

    “It’s the pool, Stupid!”

    In other words, a limited size group having a high proportion of sick people. The authors of the bill knew this, and created a Rube Goldberg framework of monkey wrenches to correct it. One of these was “Risk Corridors”, which failed due to lack of funding.

    If ACA had 320 million insureds, it might have a chance of working (though FEHB for all would work better). That said, we have to keep in mind what commercial health insurance really is:

    “Definition of Commercial Health Insurance: I give my insurance company a dollar, and they give my doctor 80 cents and keep the rest.

    Definition of Medicare: I give the gov’t a dollar and they give my doctor 98 cents.”

    So yes, you might be able to make commercial health insurance work, but you have to throw away 20% of your money.

    1. amousie

      From the Financial Times link below:

      There is enormous inequality in the US: the bottom 50 per cent accounts for less than 3 per cent of overall spending on healthcare. The highest spending 5 per cent account for half of all health spending.

      So who exactly are these really “sick people?”

      Given this inequality, I’m quite curious, for every dollar paid into a health insurance premium, what is the return on investment for the individual paying in once you divide out by class? Since lifestyle choices is tagged a lot for the American health insurance costs, what are these relatively well-off by comparison people doing to suck up / account for this amount of health resources attributed to them?

      (Yes, I’m being a touch snarky because those numbers seem completely out-of-whack and are certainly not part of the normal narrative on “health insurance” but on a serious note, I would be curious as to the breakdown on where / what those health dollars are going to and how that compares to what the bottom 50% and the remaining 45% “expenses” are.)

      The huge disparities in US life expectancy in five charts

      1. Normal

        Amousie, I think you’re misinterpreting the graph. It says that the bottom 50% *of spenders* accounts for less that 3% of overall spending. Those 50% are not the lower income or lower social class. Same for the top 3%.

        All it means is that the healthiest people spend the least on health care and the sickest spend the most. This is hardly a surprise, though it is interesting to know the relative proportions.

        If anything it strengthens my argument. It doesn’t take a lot of sick people to skew a pool.

        1. amousie

          I copied the text directly from the article so I guess on my next break I’ll have to re-read more carefully and look at it from a different lens. Thanks.

          I’d still be curious about dollar in dollar out.

      2. Ernesto Lyon

        Much of the spending is in the last few weeks of life, on people who were largely going to die soon under any condition.

        Hospice care should be stressed over heroic interventions for the dying, if only because dying under those circumstances is miserable, but it would also save a lot of money.

        1. dw

          well the last 3 weeks of life would include some one who was in a car wreck, and to safe their life it might be more expensive than any other time. and they might 12. though a lot of care as one gets older is just because the body breaks down. and then there are the times when a surgeon talks your parent into a surgery, because it might safe them. but it was never going to do that, but it did help the surgeon out (i know cause this happened to my mother).

        2. WhiteyLockmandoubled

          It’s monstrous to even entertain the “end of life” debate in the US until we’ve stopped allowing the insurance, hospital and pharmaceutical companies to siphon a quarter to a third of our spending for profits, executive compensation and grotesquely unnecessary administration.

          It needs to be said over and over and over: We spend twice as much overall as the average wealthy nation, and almost 50% more per capita than the runner up. There is plenty of money to deliver whatever medical care anyone needs in this country.

          I believe strongly in hospice care, and that some end-of-life treatments amount to little more than torture. So we should have a discussion about what is appropriate care for the well-being of people nearing the end of life. But there’s no need to include cost in that equation when we spend nearly a trillion dollars a year on insurance profit and overhead, lavish government overpayments to private insurers, hospital system executive compensation and totally unnecessary bureaucracy, and the insane monopoly prices for pharmaceuticals that consistently deliver the highest return on investment of any “private sector” industry in the world.

    2. Cynthia

      I agree with you that, in theory, Medicare is much more efficient than commercial health insurers at managing healthcare dollars. However, in practice, that’s not the case. That’s because, ever since the dawn of ObamaCare, Medicare has imposed a whole slew of regulations on healthcare providers, causing them to spend 20 cents on every dollar, if not more, on regulatory overhead costs, which, BTW, is really no different from “throwing 20% of your money” away to the private health insurance industry.

      All of these regulatory expenses, whether they are imposed directly by Medicare or indirectly by private insurers, might indeed be justifiable if they somehow resulted in better patient care and better health outcomes. But that’s not the case, healthcare providers have had to increase their overhead costs by 20%, if not more, and have nothing to show for it, except for adding an enormous number of good paying, low stress jobs in the back office.

      So it doesn’t do much good to advocate for Medicare-for-All if 20% of all healthcare dollars are still being spent on worthless regulatory costs. That’s not much different from having a healthcare system based on commercial insurers. They both spend way too much money on doing back-office work and not enough on delivering care to patients.

      For a Medicare-for-All model to be better than a private insurance model in terms of delivering more care as well as better care at a better price, Medicare must FIRST reduce its regulatory burden on healthcare providers. Until then, having Medicare-for-All would be just as inefficient and wasteful as commercial health insurers are at managing healthcare dollars.

      1. dw

        so how do you propose to avoid the instances where the providers are padding the charges? since the patient A) isnt a doctor and doesnt know what care is valid, what alternatives are and B how much it costs. and even if you try to ask, no one at the doctor’s office can tell you that. now if adopted the Canadian or UK system, it would cost less than today. and based on the results it works better too

      2. Normal

        I think we’re getting a little mixed up. Medicare and commercial insurance both cause the provider to spend money on paperwork. Let’s say that it’s 20% for both.

        Then for commercial insurance I am paying 50% above the cost of care (120% * 125%). For medicare I am paying 22% over the cost of care (120% * 102%). I’ll take the latter.

        Agreed that the best would be to get rid of the 20% at the doctor’s office, but that’s a different argument.

        So the comparison of medical loss ratio between commercial and medicare is still valid. Your point that there are other areas for improvement is valid too but does not change the MLR argument.

        1. d

          maybe if Medicare and private insurers would combine the paper work requirements like the insurers already use Medicare care coding scheme?

    3. Cynthia

      I agree with you that, in theory, Medicare is much more efficient than commercial health insurers at managing healthcare dollars. However, in practice, that’s not the case. That’s because, ever since the dawn of ObamaCare, Medicare has imposed a whole slew of regulations on healthcare providers, causing them to spend 20 cents on every dollar, if not more, on regulatory overhead costs, which, BTW, is really no different from “throwing 20% of your money” away to the private health insurance industry.

      All of these regulatory expenses, whether they are imposed directly by Medicare or indirectly by private insurers, might indeed be justifiable if they somehow resulted in better patient care and better health outcomes. But that’s not the case, healthcare providers have had to increase their overhead costs by 20%, if not more, and have nothing to show for it, except for adding an enormous number of good paying, low stress jobs in the back office.

      So it doesn’t do much good to advocate for Medicare-for-All if 20% of all healthcare dollars are still being spent on worthless regulatory costs. That’s not much different from having a healthcare system based on commercial insurers. They both spend way too much money on doing back-office work and not enough on delivering care to patients.

      For a Medicare-for-All model to be better than a private insurance model in terms of delivering more care as well as better care at a better price, Medicare must FIRST reduce its regulatory burden on healthcare providers. Until then, having Medicare-for-All would be just as inefficient and wasteful as commercial health insurers are at managing healthcare dollars.

      1. Beans

        Also, Medicare drives the cost of all other care higher and makes price discovery impossible by setting a mandatory discount on all billable codes. Since Medicare is such a huge payer, medical fees end up being set after the best negotiated few with Medicare has been determined. The UCR fee ends up being what Medicare pays plus the mandatory discount – and in no way reflects the actual cost of service. The same thing occurs when insurers negotiate reduced fees based on a percentage discount off UCR. When non-Medicare and non or out of network insured patients receive a bill, it is often based on the starting point of price negotiations with Medicare and / or insurers. Most hospitals offer at least a 20% discount on UCR to cash paying patients but even that can end up being quite a bit higher that the same fee charged to an in-network or Medicare patient.
        The problem with Medicare for all is that all fees would have to increase to reflect the cost of care once all those who subsidize the Medicare discount no longer participating.

        1. Normal

          OK, so Medicare gets to pay artificially low rates. Still, I am paying the higher commercial negotiated rates, PLUS another 25% due to the lower MLR (Medical Loss Ratio) of my insurer. I would be better off with medicare, even if they paid the same rates as my commercial insurer.

        2. WhiteyLockmandoubled

          Nice argument. Too bad there is zero empirical evidence for it.

          The hospital industry has been spewing this crap for decades to fend off legislation that would make their now-secret prices transparent, or — heaven forfend! — actually control prices.

          Cooper et al studied 4 billion private sector claims for 88 million individual patients. They actually found a negative correlation between hospitals’ percentage of patients covered by Medicare and price, and zero correlation between percentage of Medicaid patients and price. This is consistent with previous studies by White and others.


          1. There is no cost shift. Doesn’t happen. Just because your state’s hospital association buys ads saying it does, doesn’t make it true.
          2. Provider prices are determined by market power. Full stop.
          3. you have no idea wtf you’re talking about.

          1. Normal

            I admit that I’m not a medical billing expert. But it seems pretty simple, I know what I paid for a procedure, and I can look up the medicare reimbursement. My bill is always higher.

            Can you provide a link to the Cooper study?

  7. Steve Ruis

    The Swiss took a very different approach. It is entirely private but regulated. Profits are restricted, quite a bit more than under Obamacare. The government set up risk pools to spread the risk. They established the rules under which insurance companies could play or not. Apparently thousands have. It is not perfect but it is better than ours. Better in that it is cheaper and better in that there are better health outcomes, aka better all around.

    Unfortunately, ‘Mericans don’t take no lead from no Euros; us being exceptional and all.

    1. LT

      Also, it seems like the Swiss are more concerned with the reality that if prices are rising for needs like housing, health insurance and education, income for people should increase accordingly (and not just for less than 10% of the population).

    2. WhiteyLockmandoubled

      The Swiss system is second only to the US as an unequal monstrosity. Now, don’t get me wrong, there’s a greater distance between number 1 and number 2 than there is between number 2 and number 20, but still.

      The Swiss have by far the highest out of pocket costs in the world (we’re number 2, but trying really hard). They have a mandate to buy a core benefits package from private insurers who are *ahem* “prohibited” from making a profit on the core package, but the core package is narrow enough that almost everyone buys supplemental insurance, upon which the insurers can profit. No perverse incentives there that I can see.

      out of pocket spending is a major barrier to care. Swiss society is not nearly as unequal as the US, but people at the bottom of the income distribution still miss/skip needed medical care because of out of pocket spending in a system that is very expensive.

      there is a lot to learn from other countries about the financing and distribution of access to health care. Switzerland is not one of the places from which we should be drawing lessons.

  8. Crazy Horse

    When the Democrat signature health care plan (AKA medical extortion scheme) is actually a Heritage Foundation/Mitt Romney invention doesn’t that tell you something about the “two party system”? Long live the Malignant Overlords.

    And please stop wasting our time debating which faction of the One Party is worse.

  9. ChrisFromGeorgia

    The Republicans will not impose effective cost controls on insurers and medical providers for the same reasons that Obama refused to do so. They fear the insurers and medical providers’ lobbying power and fear the loss of campaign contributions.


    Did anyone else catch Rand Paul’s sly little trick to try and insert language into his replacement bill explicitly exempting medical professionals from anti-trust laws? Karl Denninger over at market ticker has been covering it. It really shows the true colors of Republicans, even the ones like Paul who I thought was one of the good guys. I am now cured of that particular blend of hopium induced folly.

    1. John Wright

      Nothing in this document about cost controls and much about making sure the potential funds that would flow to physicians are protected (such as allowing HSA rollover from parent to child OR child to parent).

      This even had a feature that physicians can get a tax deduction equal to what they would charge for charity medical care due to bad debt. Can’t they already write off bad debt against income?

      Of course neither of these appears to cost the patients more, the HSA money was pre-paid and the additional tax deduction comes from the general taxpayer.

      But both help to assure the income stream of physicians.

      This seems like this was written from the financial POV of a physician, of which Rand Paul is.

      1. ChrisFromGeorgia

        That Paul would be so nakedly self-serving, is quite shocking to me, even in this current climate.

        If you look at his overall record he has done some good work on civil liberties and other things.

        It is hard to come to any other conclusion than the system has become hopelessly corrupted, when even decent guys like Paul seem to go to the dark side. People should be outraged and demand that the entire Congress drop everything until they fix the broken medical insurance system.

        All of that energy is now being deflected into protests on Trump’s immigration EO’s, which at the end of the day basically restore us to where we were circa 2011. That energy is being misused. Folks should be up in arms about how they are being financially ruined by the medical industries insatiable appetite for profits.

        There is no way to stay ahead of what is coming. As we saw in 2008, they’ll keep dancing until the music stops, then they’ll hold a gun to Congress and demand a bailout.

    2. Beans

      You do realize that insurers are protected by McCarron – Ferguson from anti-trust violations and have made hay for YEARS by colluding to set prices? While I would more support opening up insurers to anti-trust laws, I suspect that Rand Paul’s idea is to remove the leverage that insurers presently hold.

  10. PKMKII

    I don’t get why there aren’t any Republicans pushing for a Singapore-style healthcare system. Mostly universal coverage, free-market-esque, savings account feature has that “self-reliance” bit they’re always yammering on about, proven to work in another functioning capitalist country. Are they just ignorant of it, or have they simply disappeared down the rabbit hole of libertarian thinking?

    1. MG

      Because it requires greatly reducing the already incredibly bloated per unit cost of US healthcare.

      It also requires a relatively generous annual contribution to each citizen’s account annually as well as limiting out of pocket costs.

  11. Watt4Bob

    I predict the republicans will put on a show of ‘repealing’ Obamacare, only to re-brand it, more or less exactly as it exists, and call it Trumpcare.

    Problem solved, they not only get to claim the fulfillment of a campaign promise, but they get to keep the POS plan they so carefully crafted in the interest of the health insurance industry.

    When you consider that Obamacare was really re-branded Romneycare, it all starts to make remarkably simple sense doesn’t it?

    It’s just another case of Washington’s revolving-villains story, or is it revolving heroes?

    “What was the license number of the truck that hit you?..

    You don’t know!..

    Well, what color was truck that hit you?..

    You don’t know?..

    Your honor, what good are all these witnesses, if the man closest to the ‘accident’ can’t identify the cause of his misery?

    Incrementalism works in both directions, so Trump will be able claim hero status if he saves his supporters $3.53 a month.

  12. Gregory Etchason

    The real truth is Universal Medicare not only solves the problem of the uninsured and pre-existing conditions. It solves the looming Medicare insolvency with younger enrollees. I would also explain to Paul Ryan and Tom Price that Medicare is how the Insurance Industry socializes their loses. In 1960 the the Insurance Industry understood increasing life expectancy would lead to lower profits in Health Insurance. Medicare was their solution.

    Until the society takes on the Medical Cartel of Big Pharma, Insurance and Providers, there will only be death by a thousand cuts.

    1. JTMcPhee

      Medicare, like SS and the War Budget, CANNOT go “insolvent,” as repeatedly discussed and demonstrated in this space.

      But of course Medicare is and can continue to be corrupted into the worst kind of “disease ;profiteering…” as the special interests concentrate on all the avenues of looting that the money flows provide.

      1. Art Eclectic

        Human nature, being what it is, guarantees you will always have some level of corruption and profiteering. No system will ever be immune from it because sociopaths will always find a way. The best you can do is aim for the lowest possible percentage of fraud and that takes sharp people, committed to cause, who are hard to corrupt themselves.

      2. George Gerber

        Can you explain logically why Medicare and SS cannot go insolvent?
        Does that mean we have unlimited money not only for those 2 programs but also all federal expenses?
        Seems more like magic than math

    2. DH

      There are multiple models from many countries of how changes can be made, some involving government run single payer systems, and some involving more private input. However, the US has refused to acknowledge that any other countries’ models have merit.

      The canard that other countries have healthcare funding issues is BS because their total expenditures are so low compared to the US that they could make vast improvements in the quality of care and still not come close to our per capita healthcare expenditures (see my post below).

      1. susan the other

        Does controlling price inflation simply make the dollar stronger internationally but does nothing to prevent prices from rising domestically – leaving us with the worst of all possible situations: jobs are gone; wages are stagnant; prices are rising and crony monopolies rule. If we imposed price controls as a floor and not inflation controls as a ceiling, and did so strictly, it would help to reduce inequality in that costs would not increase for the poorest of us while the value of the dollar increased the net worth of the richest of us. It would be a form of trickle up which we desperately need. But price controls are blasphemy, no?

  13. Barmitt O'Bamney

    This invites an Onion style headline: “Anguished Republicans admit impossibility of making Obamacare worse”

  14. JustAnObserver

    Mint the platinum coin, use the proceeds to buy out all the private insurers, merge them into a single payer, institute Medicare-for-all. Job Done.

      1. Watt4Bob


        That is so good!

        I can hear it now;

        “Can I put my own head on it?”

        You’re living up to your moniker.

      2. Code Name D

        Please. Trump would never debase himself to putting his face on something as tawdry as a multi-trillion-dollar coin. With Trump, it’s a quadrillion – or nothing.

      3. ToivoS

        Trump would have to be dead first to qualify for his image to appear on that coin. Perhaps there a many now who would make that trade, I doubt that Trump would.

    1. Barmitt O'Bamney

      I object to wasting even 1 gram of platinum on parasites and racketeers, let alone n billion dollars worth of credit attached to special coin used to “buy them out”. Mint them a wooden nickel or a lead suppository -their choice- and push them aside without apology or compensation.

        1. Barmitt O'Bamney

          “…let alone n billion dollars worth of credit attached to special coin ”
          Yes, it would appear that I do see that the physical mass of the coin is not its most relevant measure.

  15. DH

    Out of 13 developed nations, the United States spends more public money on healthcare than 10 of them. The US spends even more private money on healthcare than it does on publicly funded healthcare. As a result, the US spends more money on each of publicly funded healthcare and privately funded healthcare than the median OECD government spends in total per capita healthcare. Despite this, the US is the only one of these countries that does not have something close to universal coverage.

    The end result is that the US spends almost three times as much as the median OECD country and double what Canada (our closest analogy in many ways) spends on per capita health care each year. The situation is so bad that I don’t think Americans can even comprehend how bad it is.

    This is mind-bogglingly wasteful and inefficient as it is clear that both the public AND private healthcare components of the system are massively inefficient. While people are babbling about trade deals, this is a quiet cancer slowly chewing the competitiveness out of the US labor force. The refusal of either party to make a solid case for something that would slash US healthcare costs by a third is a travesty. It is this inability to even attempt to address obvious major problems that would ultimately bring the US to its knees economically, unless changes are made.

  16. Ray

    “The administration designed the dismantling to degrade Obamacare to the point that it breaks down in multiple states and provides a pretext for its repeal.”

    But for them, the “solution” will be very simple. Let the citizens of these states buy insurance across state lines!

  17. Carey

    It seems to me that the US Health Insurance is working precisely as designed:

    Extraction from the Many, benefitting the Few, while the former slowly die off.

    A Two-fer!

  18. susan the other

    The idea of medical insurance started out as a cost mutualization project, not monopoly profiteering. But Congress seems to want to combine the two ideas for the benefit of pharma and insurance so that everybody is forced to buy in while costs and profits skyrocket. Here’s a question then: what would happen if we eliminated insurance and pharma as monopolies. Who would crash and burn the worst, people needing “healthcare” or the industry needing all those profits? I think the industry has already imploded and we are just pushing money at a corpse.

    1. susan the other

      We need to capitalize on all the improvements in med tech. It won’t be long now before a saliva test or a breathalyzer will tell us everything that is going on in our bodies. We should consider this a medical revolution because it will make healthcare so much better and cheaper. And as a nation we need to start treating it as part of our national infrastructure. Medical infrastructure. And do so before pharma and insurance can write policy to usurp it all.

    2. Waldenpond

      I would predict the system does not collapse. That other private interests are prepared to exploit any situation where an elite is banished from the table. Medical devise manufacturers, medical supplies, hospitals, unions, etc. are prepared to fight for those profits.

      Single payer system (health care as part of a broader system of a public commons) that covers pharma, medical products, public hospitals etc. rather than medicare for all which is public insurance for a private for profit system.

  19. Medbh

    I thought this was an interesting article about cash-based medical treatment facilities: Perhaps this would be an acceptable model for Republicans. Catastrophic/cash-based plans for most people, and government run care for the very poor or those with very expensive medical needs.

    From what I’ve seen among my family and friends (primarily college educated with employer-based medical insurance), we’d be financially better off using the cash based medical model, up until the scary diagnosis, of course.

    I understand why some people would be tempted to switch. Why would someone pay $10K in premiums and be unable to afford any actual medical care, versus pay $10K for actual medical expenses and hope for the best for a catastrophic diagnosis. I suspect that’s where a lot of people are heading with health insurance versus medical care now.

  20. John k

    Neither dems or reps would consider doing away with any of their income streams, certainly the useful one from insurance. Have to take over one of them or start a new one, the former probably slightly less impossible.
    Aren’t there any billionaire progressives? Is this a contradiction of terms? I can offer a guaranteed entry into heaven…

  21. oho

    a shrewd political move for Trump would be for him to propose Medicare for all—with some sort of stricter eligibility requirements tied to citizenship—and see where it goes.

    Trump’s power base isn’t Paul Ryan and Democrats are so blindingly anti-Trump that I wouldn’t be surprised to see Pelosi find some excuse to shoot down expansion of Medicare.

    If a push for Medicare for all fails, Trump can go to the people and say, ‘don’t blame me’

    Not holding my breath, but it would be fun politics to watch.

  22. Paul Art

    Very good article by Dr.Black but I just wanted to share these thoughts. I would say that throwing open the doors of Medicare for all will be the best way to prove to everyone that Government is not suited to doing healthcare. Why do I say that?

    Because while it will definitely reduce cost since Medicare rates treatment are low it will create a backlog situation in most clinics. We need to address the fact that we may not have enough Physicians in this country to provide healthcare for all citizens. This is a fact that the American Medical Association has been fudging for a long time. Periodically it releases alarmist communiques about how the supply of physicians in this country is too much. It’s end goal is to do everything possible to keep supply of physicians low because that is the surest way to an actual free market in medical care.

    Consider medical care in India. There are plenty of Doctors in India to provide basic preventive care. It is cheap and effective. There are also actual non-profit mission hospitals that operate at a rock bottom rate of revenue – many in rural areas. The Doctors who work here make a very conscious choice to take a salary and eschew working in urban areas where you can make more money but you come under enormous pressure to fleece richer patients with unnecessary procedures.

    So this is something we need to think about and no one is doing that.

    1. Harris

      India still has leper colonies. Leprosy is an extremely easy disease to cure. I have a hard time believing India can handle more difficult illnesses.

    2. dw

      sounds more like you are saying that the US health care ‘system’ doesnt have the people to do the work. and that doesnt matter if the government is doing it, or if insurance companies are doing it.
      or if neither was doing it. we would still end up with the same problem

    3. Crazy Horse

      ” We need to address the fact that we may not have enough Physicians in this country to provide healthcare for all citizens.”

      Simple solution, Donald. Just grant instant citizenship to a few hundred thousand excess doctors from places like India and Cuba that have too many doctors because they don’t require their medical school students to have $250,000 in debt as a condition of graduation.


  23. Quantum Future

    Obamacare is a tax and I believe this is the year the fines peak. So I wager any plan would be presented after April 15th.

  24. Gaylord

    Repealed and replaced with the Don’t Care Act (pay or die), Republicans might as well be honest, for once.

  25. VietnamVet

    The 2015 medical cost per person in the USA was $9,900.

    Decide how to pay the bill. Other developed nations pay half this. The way to make health care sort of affordable is to regulate costs. Canada, next door, the cost was $5292 per person in 2014. If Americans were humane, they would follow our neighbors single payer example rather than allowing the wealth extraction to continue and dying at an earlier age.

  26. blert

    The problem with medical care is cost.

    The problem with its cost are the Cartels.

    The supply of talent is artificially restricted… right along with drugs and much else.

    Partisan anger is not at all helpful.

    The cartels own BOTH sides of the aisle. I you can’t see that — contact an eye doctor, PDQ.

  27. optimader

    If Healthcare access is a real objective it is not that complicated if there is a will to do it. Inversely, if the objective is wealth stripping, healthcare access can be very, very complicated.

    International comparisons[edit]

    In 2015 the Netherlands maintained its number one position at the top of the annual Euro health consumer index, which compares healthcare systems in Europe, scoring 916 of a maximum 1,000 points. The Netherlands has been in the top three countries in every report they have published since 2005. On 48 indicators such as patient rights and information, accessibility, prevention and outcomes, the Netherlands secured its top position among 37 European countries for the fifth year in a row.[6] The Netherlands was also ranked first in a study comparing the health care systems of the United States, Australia, Canada, Germany and New Zealand.[7][8]

    The Netherlands has a dual-level system. All primary and curative care (i.e. the family doctor service and hospitals and clinics) is financed from private mandatory insurance. Long term care for the elderly, the dying, the long term mentally ill etc. is covered by social insurance funded from earmarked taxation under the provisions of the Algemene Wet Bijzondere Ziektekosten, which came into effect in 1968.

    Private insurance companies must offer a core universal insurance package for the universal primary curative care, which includes the cost of all prescription medicines. They must do this at a fixed price for all. The same premium is paid whether young or old, healthy or sick. It is illegal in The Netherlands for insurers to refuse an application for health insurance or to impose special conditions (e.g. exclusions, deductibles, co-payments, or refuse to fund doctor-ordered treatments). The system is 50% financed from payroll taxes paid by employers to a fund controlled by the Health regulator. The government contributes an additional 5% to the regulator’s fund. The remaining 45% is collected as premiums paid by the insured directly to the insurance company. Some employers negotiate bulk deals with health insurers and some even pay the employees’ premiums as an employment benefit. All insurance companies receive additional funding from the regulator’s fund…. Invwesa

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