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Congressional Budget Office Reveals Budget Hurdles In Financing Healthcare Reform

Posted Jan 11 2009 3:44pm

 

Stanley Feld M.D.,FACP,MACE

 

The Congressional Budget Office report states that President-elect Obama’s healthcare plan would carry a high price tag. The healthcare plan would generate only modest savings.

Mr. Obama and other Democrats have not been precise about the cost of their proposals, nor have they said in detail how they would pay for them.” Some of the options, including proposals to increase taxes on cigarettes and nondiet soft drinks, are sure to meet stiff political opposition.

President-elect Obama has not been precise about any of his proposals on purpose. Both political parties say they will make a serious effort to overhaul the health care system in 2009. In our current economic crisis it is essential to that. As unemployment rises the uninsured population will rise. The fear in the population will create pressure on congress to pass any bill that promises hope and relief.

However, President-elect Obama’s transition team is going about the overhaul of the healthcare system the wrong way. I am positive they think they are doing it the right way.

“One bright spot in a generally bleak picture was the estimate of potential savings from a requirement for doctors and hospitals to use health information technology (EMR), including electronic medical records, as a condition of participating in Medicare.”

Such a requirement could save the federal government $7 billion in the first five years and a total of $34 billion over 10 years, by reducing medical errors and avoiding unnecessary tests and procedures, the budget office said.

President-elect Obama does not plan to create a universal electronic medical record. Electronic medical records are essential to repair the healthcare system. The administrations healthcare transition team believes it can force physicians to purchase, install and service electronic medical records most physicians cannot afford. The government plans to make EMR a condition to participate in Medicare. Many physicians would not mind being forced out of Medicare.

Most installed EMRs in large hospital systems are not fully functional. Many do not have total functional cross hospital system compatible interfaces that would allow efficient flow of information. Most EMRs do not allow for real price transparency that can stimulate efficient use of healthcare system resources.

If the government requires physicians to buy an EMR by penalizing them, physicians will drop out of the Medicare program. The result will be the creation of a shortage of physicians. The government should make available a fully functional EMR free of charge. It should not require a capital outlay. Physicians would pay by the click monthly.

Without action by Congress, the report said, health costs will continue to soar, the number of people without insurance will rise by nearly one million a year, to a total of 54 million in 2019, and spending on health care will increase to 25 percent of the gross domestic product in 2025, up from 16 percent in 2007.

All agree that something must be done to repair the healthcare system. The Congressional Budget Office (CBO) must work with the data they have even if the data is incomplete. CBO’s estimates are modest. During our present economic recession I think the number of uninsured will rise to 54 million by the end of 2009, not in ten years.

“Lawmakers from both parties said they would pay close attention to the cost of new federal subsidies for health coverage because these subsidies — unlike the one-time bailouts for banks and other financial institutions — would be recurring federal obligations for years to come.”

A large problem is that all the proposals would force a stakeholder to do something. In order to accomplish real change the government needs to provide incentives for stakeholders, not mandates. Historically, mandates never work.

1. Requiring employers to provide health insurance to their employees.

1a. or pay a fee to the federal government would bring in $47 billion of new federal revenue in the next 10 years, the report said.

The savings of 4.7 billion dollars a year is insignificant in a healthcare system that has 150 billion dollars of administrative waste a year. The government should go after the administrative waste.

A proposal to establish a national insurance pool for people who cannot obtain coverage on their own in the individual market would cost $16 billion in the next decade in subsidies.

The real issue is the need to put the individual market on a level playing field with the group market. Secondly, it is essential consumers be in charge of their healthcare dollar. Presently the healthcare dollar is owned by the healthcare insurance industry. Ownership of the healthcare dollar will remain with the healthcare insurance industry in a President-elect Obama’s administration.

Mr. Obama and many other Democrats want the government to negotiate with drug manufacturers to get lower prices for Medicare beneficiaries.

This is an important action. Medicare Part D is a structural disaster. Medicare Part D has to be restructured to be in favor of the consumer, not the healthcare insurance industry. Part D was a good idea turned into an overpriced plan. The plan does not improve patient compliance because patients cannot afford the medication. The result is that it will not decrease the complication rate of chronic disease.

But the budget office said Medicare could save $110 billion in the next 10 years if Congress simply imposed a form of price controls, requiring drug makers to provide the government with a 15 percent rebate, or discount, on brand-name drugs covered by the new Part D of Medicare.

Historically price controls do not work. Incentives and competition work, if Medicare Part D was structured correctly there would be no overcharging for medication.

Under the current proposals the saving would be insignificant compared to the rising cost because President-elect Obama’s team is trying to fix the wrong things.

Doing what they are proposing is going to result in a more expensive healthcare system. The result will be cost overruns and a decrease in access to care and quality of care.

We have all experienced inefficient government rules and regulations. We must brace ourselves for the worse and start understanding the deficiencies now so we can speak out with one voice.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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