The Right Prescription

How Obamacare Will Change Your Life

You'll be spending more money for less care.

By 6.17.09

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It's all over but the slow walking and sad singing. The old U.S. health care system is about to receive the last rites from the high priest of hope and change. All that remains are a few arrangements relating to the funeral, which is tentatively scheduled for some time in August. And, if you are like many Americans, you're thinking, "Good riddance." You've been convinced that what was once the best medical delivery system in the world has become too inefficient and expensive to be worth saving. You look eagerly forward to the new and improved health care model promised by President Obama and his allies in Congress.

If so, you're in for an unpleasant surprise. Much of what you have long taken for granted about health care and the way it should be delivered is about to change in ways that you definitely will not like. Your discomfiture will be particularly poignant if you happen to agree with the rest of the electorate about what exactly is wrong with U.S. health care. Public opinion surveys have consistently shown that most Americans consider access and cost to be the most important problems facing the system. Perversely, the primary changes Obamacare will bring to you and your family will be reduced access to care and significant increases in its cost.

As to the latter, the most noticeable pinch will come in the form of new taxes that you will pay to cover the direct costs of "reform." And, make no mistake about it, the costs of Obamacare promise to be stupendous. Not even the President's allies in Congress and the media bother to deny it. The New York Times, for example, admits that the tab is "expected to top $1 trillion." Obama claims this breathtaking price tag can be covered with improvements in health information technology, a renewed emphasis on prevention, payment cuts to hospitals, and comparative effectiveness research. No one with any sense believes him, least of all the CBO.

Thus, the only serious question is: Who will pony up the trillion bucks? For the solution to that mystery, you have only to look in the mirror. As Bloomberg reports, "Health-care overhaul legislation being drafted by House Democrats will include $600 billion in tax increases." And what sort of tax increases are they talking about? Charles Rangel, the chairman of the House Ways and Means Committee, indicated that the Democrats are considering "a possible end to the income tax exclusion for employer-paid health benefits." In other words, if you're one of the millions of people who get health insurance through their jobs, your federal income taxes are about to go up.

"Wait a minute," you're thinking, "the President denounced John McCain for a similar proposal during last year's presidential election. He ran a campaign ad accusing McCain of 'taxing health care instead of fixing it.' Surely, the man isn't such a brazen hypocrite that he'd go along with this travesty now." Sorry to break this to you but, according to the Washington Post, he has already given his congressional allies the go-head. A couple of weeks ago, he told a group of Democratic senators "that he is willing to consider taxing employer-sponsored health benefits to help pay for a broad expansion of coverage."

Sadly, the increase in your tax burden is only the tip of the cost iceberg. Obamacare's inflationary effect will render health care in general more expensive. Its "efficiency" initiatives, for example, will add significant overhead costs to care providers which they will in turn be forced to pass on to you. We got a preview of this in Obama's "stimulus" package, which requires doctors and hospitals to buy expensive EHR software. The government will allegedly reimburse the cost, but an analysis by PricewaterhouseCoopers concluded that "funding for health IT is a small carrot compared to the amount of resources it will take to deploy this technology." In other words, Uncle Sam pays the tip and leaves you with the bill.

Thus, you will be taxed for Obamacare up front and pay more for care at the point of service. Ironically, when you and the rest of the voters start complaining, the President and Congress will try to "control costs" by restricting your access to care. Presumably, when you think about "access," you don't visualize a Canadian-style waiting list. You want to see a doctor or get a hospital bed without significant delays. These luxuries will soon be a thing of the past. The President and Congress will not, of course, overtly restrict access to physicians and hospitals. They will, instead, impose a set of price controls so Draconian that many providers of care will be unable to survive financially. They simply won't be there to treat you.

This is already happening to patients covered by the government's existing health coverage programs. Government price controls have, for instance, created a primary care shortage for seniors. Medicare patients are having increasing difficulty getting appointments with primary care physicians because the program's Soviet-style payment system doesn't cover the cost of an office visit. As ABC News reports, "Primary care doctors from around the country have told ABC News that they are either opting out of treating Medicare patients, or are preparing to do so." In other words, Medicare restricts access by setting payments levels so low that doctors can't afford to treat the patients.

Such access-restricting tactics will also be employed by the "public option," a new government health plan that the President and congressional Democrats insist must be included in any health care legislation. The public option closely resembles Commonwealth Care, a taxpayer-subsidized coverage plan created by the state of Massachusetts in its 2006 universal coverage law. Commonwealth Care imposes strict price controls, paying so poorly that many physicians can't afford to treat patients covered under the program. According to a new study, "One in five [Massachusetts] adults said they had been told in the last 12 months that a doctor or clinic was not accepting new patients or would not see patients with their type of insurance."

And, if you're thinking you can maintain your current level of access by simply living with the tax increase and retaining your employer-based coverage, think again. It probably won't be available. According to the Lewin Group, a respected non-partisan policy research firm, the public option would price most private health carriers out of the market: "The number of people with private health insurance would decline by 119.1 million people. This would be a two-thirds reduction in the number of people with private coverage." Because your current insurer won't enjoy the taxpayer subsidy that allows the public plan to charge below-market premiums, it won't be able to compete. You'll be forced to go on the public plan because there won't be any other coverage choices.

You will not, however, enjoy those below-market premiums for long. Once the public plan has gained a monopoly in the health coverage market by pricing everyone else out of business, your out-of-pocket expenses will begin to creep up. The pretext for this will involve the need to defray ever-increasing costs, as if Obamacare had not been foisted on you based on the promise that it would control such costs. By then, you may be feeling a little nostalgic about that the old health care system, the one in which you were the final arbiter of your own medical fate. In the dim mists of memory, it may not seem as "inefficient" and "expensive" as it once did.

But the old system, like John Brown, will be moldering in the grave. Meanwhile, in addition to being saddled with those old, familiar health insurance premiums, you will be paying higher taxes and have considerably less access to care. This is how Obamacare will change your life.

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.