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Why Obamacare Will Fail

Posted Feb 18 2013 12:24am

Stanley Feld M.D.,FACP,MACE

The storm is brewing in the healthcare system.

Even Democrats are concerned.

Recently, I have been criticized for blaming the impending failure on President Obama. President Obama would rather blame the impending failure on congress.

 A reader wrote;

“President Obama is a nice guy. He is trying very hard. Give him a chance.”

It is true. He seems like a nice guy. My criticism is not personal. The fact is his philosophy and tactics are responsible for the mess. As time goes on it seems more likely that Obamacare will not work out.

There are multiple reasons for the impending failure. A major reason is Obamacare is developing new perverse incentives for stakeholders rather than aligning all the stakeholders’ vested interests.

Obamacare is extraordinarily complex. It is confusing to all the stakeholders,  especially as new rules and regulations are being written.

By forcing the development of programs such as health insurance exchanges, accountable care organizations, pay for performance plans , functional electronic medical records, and the consolidation of healthcare hospital systems and physicians against their will, Obamacare is creating tensions and uncertainties that will be difficult to overcome.

Patients’ medical care and their relationships with their physicians are personal issues. Obamacare is commoditizing medical care. It is destroying the patient physician relationships. These relationships account for at least one half of the therapeutic effect of medical treatment.

The 2300 page law usurps the power of the legislative branch of government and shifts it to the executive branch. This is dangerous. It has created additional tension and uncertainty for the nation.

Many congressmen who voted for the law did not read the law’s 2300 pages. The implications of much of the law were not understood. It did not have bipartisan support.

In 2012, the executive branch of the federal government issued another 70,000 pages of guidance for participants in Obamacare. The executive branch has created at least 22,000 new regulations and 68,000 new ICM codes.

The more complex a law becomes the more likely it is to be unsuccessful.

There is no question the healthcare system nears repairing. Healthcare costs are exploding. Waste and bureaucracy are expanding.  Dysfunctional interactions between stakeholders are mounting.

All of this results in an inability to deliver effective medical care.

At present 55% of Americans of all ages receive healthcare insurance through an employer sponsored healthcare plan. An additional 32% receive healthcare insurance through government programs.

Thirteen percent (13%) of the population are uninsured or under insured. Obamacare’s goal is supposed to provide healthcare insurance for that 13%.

Present predictions are that Obamacare will not provide universal care. It is predicted that it will not save $850 billion dollars. The CBO, on the basis of numbers provided by the administration, predicted the law would save $850 prior to the passage of the law.  The CBO’s current prediction is Obamacare will cost the nation an additional  $1.2 trillion dollars over 10 years.

Healthcare insurance rates are rising by double digits each year. Employers are passing the costs of the increasing insurance rates to their employees through higher deductibles and copays along with lower healthcare coverage plans.

 Obamacare will require employers, who offer skimpy healthcare benefits such as Mini-med insurance, to provide more robust ones.

To date the Obama administration has waived more than 2000 employers from providing more robust healthcare insurance coverage. At the time these waivers expire companies with waivers, such as McDonald’s, will scream bloody murder.

They will opt out of providing any healthcare insurance at all and avoid government penalties. They will accomplish this by decreasing the number of hours an employee will work to less than 30 hours a week. This is not good for minimum wage workers. The uninsured rolls will increase.

The penalty of $3,000 per employee is less than the $15,000 healthcare insurance cost per employee for employees working more than 30 hours a week.

Surveys have been published concluding that more than 50% of employers are planning to drop healthcare insurance coverage.

The federal government is trying to discourage this by invoking the IRS anti-abuse rules;

“The IRS has indicated that anti-abuse rules will be implemented to curtail the use of Obamacare loopholes to dodge the play or pay requirement.

  Yet as some have already questioned, can the  IRS legitimately utilize rule-making to modify core components of a federal act? Or will this rule-based clean-up effort simply spawn more lengthy litigation?” 

Obamacare’s health insurance exchange program is in big trouble . Less than half the states have signed up to participate.

 States have opted out because of the potential cost overruns. States are struggling to balance their budgets. The federal government is only going to pay for health insurance exchanges’ development and execution for the first two years.  The cost burden will then fall on the states.

The federal government keeps extending the deadline for states to sign up. The federal government does not have infrastructure or manpower to set them up.

The health insurance exchanges are supposed to be up and ready to sign up consumer up in October 2013 and operating in January 2014.

Physicians do not know what to do about Obamacare. Physicians feel helpless. They know Obamacare cannot work. Physicians do not have a leadership organization that can direct physicians to have an effective voice.

Accountable Care Organizations (ACO’s ) will fail because physicians are trained to use medical judgment. They have not been trained to obey the rules of hospital administrators.

They bristle when their value is determined by hospital systems or federal agencies such as IPAB. They prefer to have their value determined by their patients.

Physician leadership needs a new mentality to enable physicians to act and articulate  the steps needed to be taken to repair the healthcare system.

Physicians want the healthcare system to function equitably for all the stakeholders and effectively for their patients.

Medical organizations have been consistently losing membership because it has not represented or articulated the needs of practicing physicians.

If Obamacare works as President Obama hopes, he will have secured his legacy and solved the long-festering problem of the uninsured.

Obamacare will not solve the problems of increasing healthcare costs nor provide universal care in its present form. This has been a pipe dream all along.

Another reason Obamacare will fail is because it does not consider the cost of defensive medicine significant. President Obama is not interested in tort reform.

Obamacare doesn’t align any of the stakeholders’ vested interests.

When Obamacare fails it will provoke a citizen backlash that will be very difficult to overcome.

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



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