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The Right Prescription
Medical Losers
According to Obamacare, it’s good for consumers to have to pay more for less and less coverage and treatment.
Tim Jost, a self-described health care expert and well-known Obamacare shill, hailed new Department of Health and Human Services regulations dictating how much health plans have to spend on medical services as “good… for consumers.”
The goal of imposing a fixed medical loss ratio (MLR) is to force health plans to lower prices, cut costs and provide more care. Like other aspects of Obamacare, the mandatory MLR will have the opposite effect: mandating that at least 80-85 percent of premiums be spent on medical care will lead to a rapid consolidation of health plans, reductions in physicians pay, cuts in services, and hospital closures.
The history of controlling health insurance premiums by requiring a minimum of spending consists of one failure after another. As the Heartland Institute noted: “Both Kentucky and North Dakota passed higher loss ratios as part of a series of reforms in the 1990s. Kentucky’s loss-ratio bill was part of larger health reform legislation that destroyed the state’s insurance market. Not until the loss ratio was lowered to a more reasonable 65 percent did the individual market finally begin to recover. North Dakota has faced a similar crisis. Carriers have abandoned the market, leaving consumers with fewer choices and higher premiums.”
Similarly as I noted in a column earlier this year, Missouri nearly killed off its health insurance market by imposing controls on premiums and medical expenses. Jay Angoff, who is now in charge of MLR enforcement for Obamacare, was in charge of a similar effort in the Show-Me State. He acknowledged: “One of the reasons that our state health plan in Missouri is not doing as well today as it did in the first five years is that we got greedy. We had so much bargaining power that we kept rebidding the contract and kept squeezing these guys because we had the power to do so.”
And power is what Obamacare is all about. The Congressional Budget Office all but conceded that point when it stated that a high mandated MLR would, along with other government regulations, lead to a government takeover of healthcare. CBO concluded, “Insurers operating at MLRs below a minimum [of up to 90 percent] would have a limited number of possible responses. They could change the way they provide health insurance, perhaps by reducing their profits or cutting back on efforts to restrain benefit costs through care management. … Alternatively, they could exit the market entirely.… Taken together with the significant increase in the federal government’s role in the insurance market under the PPACA, such a substantial loss in flexibility would lead CBO to conclude that the affected segments of the health insurance market should be considered part of the federal budget.”
The decision to go with 80-85 MLR instead of 90 percent was made so CBO wouldn’t rule Obamacare was a government takeover. But that doesn’t mean it is not so. The concentration in purchasing power among government bureaucrats and a few large health plans is underway and would be worse but for hundreds of temporary and politically parsed waivers. The ensuing cuts in what doctors and hospitals get paid and what services are covered will lead to less of everything.
This is not an unintended consequence but part of Obamacare’s grand plan. As Tom Daschle notes: “Instead of a market, we could have a smoothly functioning system, with a central decision-making authority for coverage and payment decisions.”
Last week Donald Berwick told the Senate Finance Committee: “My principle is that patients should get all of the care they want and need, when and how they want and need it.” Which is sort of like saying you can keep the health insurance and doctors you have. Under Berwick’s definition of want and need as established by a central authority, Medicare has delayed payment for new cancer vaccines, genetic tests to personalize care, refused to pay for Vitamin D deficiency and diabetes strips.
Yes, that’s right: Medicare is limiting the number of blood sugar test strips, to six per day for insulin-dependent seniors and cut the number of strips to one a day for those diabetics who use oral medications. And it will not pay for a Vitamin D test (to determine if someone needs Vitamin D) unless a doctor can demonstrate a patient has a Vitamin D deficiency. If you’re wondering how you can demonstrate Vitamin D loss without testing for it, ask the central authority.
In his essay, “Use and Abuse of the Medical Loss Ratio to Measure Health Plan Performance,” James Robinson observed: the best indicator of future value in a market economy is the willingness of the consumer to purchase and retain the product. Under Obamacare the MLR will eliminate choices and let government decide what is valuable. Maybe Jost and Berwick can explain how this is good for consumers.
About the Author
Robert M. Goldberg is vice president of the Center for Medicine in the Public Interest and founder of Hands Off My H ealth, a grass roots health care empowerment network. His is new book, Tabloid Medicine: How the Internet is Being Used To Hijack Medical Science For Fear and Profit, was published last month by Kaplan.
Letter to the Editor View all comments (36) | Leave a comment
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Stammon| 11.24.10 @ 8:38AM
It is patently obvious to anyone that doesn't have their head up liberalism's hindmost that this will end in death panels.
Chuck| 11.24.10 @ 8:44AM
Anyone care to guess what Obamacare's loss ratio will be ...? There's another article for you.
Clinton Lovell | 11.24.10 @ 9:32AM
We can have universal health care any time we want it that is indeed universal and much more affordable than what we have today. Entitlement financing is about the capital finance plan's structure - this is the entire ball game and we can't use the antiquated insurance model or government payor model to get there. The reality is that we can ONLY get there if the government IS NOT the operator, the financier or the arbiter of the system. Only a complete free-market system will give us truly affordable health care and comprehensive entitlement reform.
It starts with how we go about creating money, undertaking fiscal appropriations, allocating credit and operating our capital markets - these are the crucial underpinnings that have to be there to get what we want.
And what is it that we want? How about premiums of $30 per person per month, with copayments on all therapies, drugs, procedures, visits and physician services of only 2%? How about comprehensive cost containment and real accountability rolled up in a self-sustaining and self-regulating system that provides built-in tort reform?
It all starts with the underpinning. Read about the new banking system that opens the door to make it all happen by downloading this FREE white paper:
http://www.capitalismbookstore.....System.pdf
Bob| 11.24.10 @ 12:22PM
Both the conservatives pushing for market reforms and liberals pushing for a single payer, government-run health care system are forgetting that we already have a government-run health care system in place. There is some variation from state to state, but for anyone who joins this plan there is complete coverage for physician care, hospital care, and nursing home care -- and all this with no premiums, co-payments or deductibles. Except for minor children, anyone who makes an effort can join this system -- and many who qualify can remain in the system for life. It is called the US prison system.
Oh Bum Care| 11.24.10 @ 4:56PM
Bob,
You hit it out of the park. First I would commit a huge money making white collar crime and while I were at it I'd enjoy the best in life can offer with the money I made. Then when I got caught, I would surrender and claim the privilege of this generous, free, and comprehensive health care system.
Oldefarte| 11.28.10 @ 2:34PM
Your latter noted SYSTEM is exactly where the politicians/governmental administrators now in charge should be incarcerated into!!!!
gigireceda| 11.24.10 @ 4:55PM
The goal of Obama is to squeeze insurance cos out of existence, obviously. People should be paying copays and outofpocket for part of our care. Otherwise, we will be finally a nanny socialist state. Tragic for US of A
ROB| 11.26.10 @ 2:29AM
free market medical care would lower coast for everyone dratsically increase medical care received and available and perfectly provide all treatments and options for everyone. Everythign will be what it once was before the socialism affordable for all. But no lying crooks like LBJ created subsidized programs that instructed forced and guided people not towards productiong and saving for their later years. insurance and medicine for for more abundant and available before medicare and before the fda an other terror orgs it was easy simple and cheap to get drugs going back ot the free market will greatly increase responsibility thrift savings production and providing real tradeable for medical assests. Also removing the bloodsucking trial lawyers and courts and unions from off the backs of the market will decrease cost far greater as these forceshave raped pillaged and plundered the market. Insurance used to cost 19 dollars a year back 1960
The Underwearinator| 11.26.10 @ 3:41PM
Your a rasist!
Oldefarte| 11.28.10 @ 2:36PM
Your underwear is too tight.....it's called a RA'C'IST!!!!!!!!!!!
Isabel | 11.27.10 @ 4:06PM
Read George Gilder's Wealth and Poverty (1981) for a compelling re-visit of the economic disaster that the Great Society had created in this country by the late 1970s. What amazed me is how quickly Ronald Reagan's reforms brought the economy back to life. Another great book is Rose Wilder Lane's Discovery of Freedom - it would make a great Christmas gift.
Nite| 11.27.10 @ 11:11PM
In 2012, individuals selling homes for amounts of about $250,000 for singles, $500,000 for marrieds will pay a 3.8 special Medicare tax. This tax will also apply to investment income of $200,000 for singles and $250,000 for marrieds. This is part of the Obamacare law. This information was in the Kiplinger Tax Letter. This is another tax hike, which is another government grab!
Oldefarte| 11.28.10 @ 2:39PM
This MLR is simply another method by liberals to control health insurance and the medical profession, and to secure the profits from same [in order to finance more governmental welfare]!!!!
W.P.Koch| 11.29.10 @ 2:07PM
WHAT SHOULD HAPPEN
Congress and the White House should stop squandering the people’s money and use savings to improve quality of basic invested entitlements. Preserve the 2010 tax schedule. Congress should improve basic Medicare. Vote opponents to this “out”. Citizens come first.
It is time the U.S. reduces its human rites and police activities for the World by lobbying the United Nations, NATO and Interpol to “take on more”. 800 bases in 63 countries across the world should be reduced. Starting with Iraq, continue training for self reliance. After a surge in Afghanistan repeat above and remove corruption starting with monitoring accounts, substituting minerals mining and food crops for drugs.
If we train make them pay. Decrease forces in selected areas such as Germany, Bosnia and Okinawa.
Cut bloated federal bureaucracy. Combine CDC, EPA and FDA. Combine the FAA, NHTSA and Transportation Department. Combine GAO and CBO. Phase in outsourcing. Departments should eliminate “must spend all”. Return “unused” yearly budget to the treasury. Cut consolidated department budgets (other than entitlements) on an average of 10%.
Eliminate all 32 CZARS Mr. president. Reduce your 469 member staff which makes nearly 39 million per year! Halt first lady $180,000 air force one vacation trips. Cancel $ 20,000,000 executive order (HB 1388) to relocate key Hamas members to U.S. Stop “$200 million per day” presidential foreign trips.
Contribute to only one of: The World Bank or International Monetary Fund or U.S. Agency for International Development.
Reduce foreign aid bribery. For example, no aid to oil rich -Iraq. $37 billion and increasing with $8.7 billion of Iraq development funds not accounted for. Halt $150 million aid to Palestinians.
Charge bailed companies (TARP) for their huge executive bonuses at taxpayer expense. Government should sell its shares to recoup for taxpayer. About $154 billion owed.
Congress should reduce the “stimulus” and monetary expenditures by halting: over budget earmarks and, non relevant earmarks for vote bribery. Do not pay student loans for congressional staff. Please- no private or military jets for congress. An example was Pelosi’s family of $2.1 million for over 2 years. Congress should set commercial travel cost standards and controls.
Reduce medical cost by: allowing purchasing anywhere in U.S., “tort reform”, and reducing “red tape”. Trace funds to local medical groups for expediting billing cost speed, doctor/patient verification and fraud reduction.
Federal government should enforce existing immigration laws. Complete the improved fence. Entitlements or benefits should be for only citizens. Deport criminal “illegals”. Only workers on a Visa Program qualify for needed medical benefits.
Improve medical expense tax deduction for citizens reaching age 65. Provide corporations tax reduction incentives for hiring with healthcare.
The improved economy and savings will improve funding for:” Medicare”, “Medicaid, and “Veteran’s Affairs”.
Healthcare quality can be at least that for Congress or the Federal Employee Health Benefits Program (FEHBP). Additional benefits are: dental coverage, improved visual coverage, no drug “donut hole”, no deductibles and co-pays except for extended skilled level nursing.
These actions will allow aid for unemployment compensation and Social Security with reinstated cost of living increases.
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