An actuary would say the public option is actuarially unsound.
At the heart of President Barack Obama's health-care plan is a healthcare insurance program funded by taxpayers, administered by Washington, and open to everyone. The healthcare plan is modeled on Medicare.
The Medicare model has two important problems. The existing Medicare entitlement is unaffordable. It will have to be funded in the future by taxpayers with some kind of income tax increase.
If enacted, “the public option" will soon become the single dominant healthcare plan. This would represent an expansion of the Medicare entitlement program.
“ Republicans and Democrats agree that the government's Medicare scheme for compensating doctors is deeply flawed. Yet Mr. Obama's plan for a centrally managed government insurance program exacerbates Medicare's problems by redistributing even more income away from lower-paid primary care providers and misaligning doctors' financial incentives.”
The defects in President Obama’s public option are multiple. The unintended consequences are exponential. President Obama’s healthcare team is not analyzing the public option’s defects and its effects on the healthcare system. The public option goal is to provide healthcare insurance coverage for the uninsured.
The government would charge employees a monthly premium for healthcare coverage. The premium would probably be the same or more than Medicare. The premium would be means tested. It would be calculated from all income reported to the IRS.
It will be cheaper for employers to discontinue healthcare coverage for employees and pay a penalty than provide private healthcare insurance.
“Like Medicare, the "public option" will control spending by using its purchasing clout and political leverage to dictate low prices to doctors. (Medicare pays doctors 20% to 30% less than private plans, on average.)”
Medicare plans to lower physician reimbursement by 20% in 2010. Primary care physician are having difficulty financially with overhead increasing and revenue decreasing. It will only get worse under the public option. The primary care physicians’ only option would be to seek other sources of income.
“Physician income declines will be accompanied by regulations that will make practicing medicine more costly, creating a double whammy of lower revenue and higher practice costs, especially for primary-care doctors who generally operate busy practices and work on thinner margins.”
Physicians’ overhead will increase under President Obama’s healthcare reform plan. Electronic prescriptions and Electronic medical records (EMR) are mandated. The government is going to subsidize some qualified medical practices. The subsidy for the EMR is estimated, at the maximum, to be $40,000 per physician. A functional EMR costs $65,000 per physician plus a sizable yearly maintenance fee. This subsidy will still be out of reach for most self employed physicians.
“Doctors will face expenses to deploy pricey electronic prescribing tools and computerized health records that are mandated under the Obama plan.”
The government must create regulations and compliance rules in order to control potential abuse. Physicians will need to increased full time employees and documentation experts in order to comply with the new rules. The government promises a crackdown on fraud and abuse and severe penalties.
Sixty percent (60%) of physicians are self-employed. Some of those physicians will be driven into large groups or hospital owned practices to spread their overhead. Some of these newly formed groups are having problems. Some physicians will accept a salary and allow hospitals to deal with the government. The trend will further serve to commoditize medical care. It will destroy the therapeutic benefit of the patient physician relationship.
The primary care physicians who stay self employed will be driven to cram more patients into their schedule in order to increase their net profit. This will further decrease their ability to relate positively to patients and their illness.
The existing trends will increase wait times already high (18 days) for an appointment to see a Family Practitioner and 30 days for specialists. It will also decrease the length of time the physician can spend with patients. The result will be to drive patients into expensive emergency rooms.
Physicians will be forced to close their practices to Medicaid and Medicare (public option) patients when they discover government reimbursement is less than their expenses. This has already happened with Medicaid patients.
Some physicians will opt out of public insurance and only accept cash. The next step is obvious. The government will outlaw the private practice of medicine. This action would be a challenge to the Bill of Rights and the constitution.
I have described some of the unintended consequences of very good goals. The goals are universal healthcare coverage at an affordable cost, with improved quality. I agree with these goals. President Obama is going about accomplishing these goals the wrong way.