Patiently awaiting the Golden Years

Obamacare 2.0: Extreme Makeover

By Randall Poulton | Sep 15, 2017

There were several reasons I decided to “retire” before the traditional age of 65.

Financially, our house was paid off and we had managed to save (and invest) enough money that we figured we could continue to live pretty well without that regular paycheck and the stress that came with it.

Secondly, we were dealing with aging parents and lot of debilitating health problems among our friends and family — cancer, dementia and stroke are real game-changers. No one knows when it will be their turn in the barrel.

Third, my wife, who was already retired, was having way too much fun without me! Overall, “retiring” (I still work part time), was a good decision but the cost of health insurance and health care has far exceeded our original budget.

Last year we paid over $15,000 in premiums for “catastrophic” high deductible policies and another $5,000 out of pocket for actual health care! For anyone, Republican, Democrat or Zombie, to say our health care industry and health insurance “marketplace” are anything but utter disasters is dishonest.

Fortunately, this year my wife is on Medicare, which is reasonably affordable. But, insurance-wise, I am still on my own and the recent letter from Anthem Blue Cross says my premiums will increase by 25 percent next year!

At least in Maine we can get coverage; some people are not so lucky. As the cost of health care continues to spiral upward, insurance companies are pulling out of Obamacare in droves. And the cost of subsidizing the insurance market place is adding billions to our national debt. Like I said, it is a disaster.

Fixing Obamacare will require an extreme makeover and soon. Let’s be very clear about one thing: It is the cost of health care that drives the cost of health insurance, and the cost of health care is increasing faster than the creators of Obamacare predicted (or they purposely low-balled it).

Recently, the nonpartisan Congressional Budget Office said Obamacare will cost taxpayers $1.34 trillion over the coming decade, $136 billion more than the CBO predicted a year ago. Look for this estimate, and our national debt, to increase again next year.

So, can Obamacare be fixed? I think so, but currently, the folks in Washington seem more interested in Russian collusion and getting re-elected than doing any hard work. Addressing these three obvious problems would be a good start:

1. Unfortunately, Obamacare did not deal with the sky-high cost of malpractice insurance. Each doctor, or the hospital they work for, pays tens of thousands of dollars a year for insurance because, if they make a mistake, a clever attorney can collect a huge settlement, much of which goes into that attorney’s pocket.

Yes, doctors should pay if they are negligent. But the current system is unfair and is a gold mine for attorneys. The answer is called “tort reform.” What tort reform means is capping, by law, the amount a doctor, or their insurance company, will pay for any claim.

Ever tried to sue the state of Maine? If you do, you will learn about tort law very quickly — the max you can get out of the state of Maine is $400,000. Unfortunately, medical malpractice tort reform efforts go nowhere because the insurance companies (who collect huge premiums), and the lawyers (who keep 30 percent to 40 percent of each settlement) hire hordes of lobbyists to protect their gravy train.

Fixing this problem lies directly at the feet of our elected officials in Washington. Congress needs to change the tort laws to reasonably limit a doctor’s exposure to malpractice law suits.

2. Obamacare was supposed to attract more young healthy people into the insurance pool. It didn’t. Why? Because, in part, it turned out it was much cheaper to pay the penalty (tax) than pay the insurance premiums.

But that is not all. Obamacare contains provisions that are self-defeating.

First, it encouraged states to “expand Medicaid” to provide free health insurance to young, healthy, low-income people. For example, in many states college students can get free insurance! (This is an example of what “expanding Medicaid” has done.)

Second, Obamacare allows children to stay on their parent’s policy until age 26. Only our government could invent a program this screwed up. You need young healthy people to buy insurance — yet you offer it to them for free!

Consider this analogy: A healthy “twentysomething” is looking to toss back a few cold ones. If their choice is to go to the corner store and buy some beers or sign up for government-sponsored free beer, or grab a six-pack out of their parents' fridge, do you think the store will sell any beer?

Bottom line, to make Obamacare affordable and sustainable, we need a lot more young and healthy people buying insurance — no more free beer.

3. Another big reason health care costs are out of control is many hospitals are practically monopolies. Monopolies can get away with charging ridiculous prices because you, the customer, have little choice. Plus, even sick people who have choices seldom shop around for the best deal. And those ridiculous prices include all manner of behind-the-scenes costs.

For example, your hospital bill pays the salaries for the hospital’s numerous non-medical personnel, including administrators and bean counters. The fact that top hospital administrators are paid like pro quarterbacks needs to stop. According to Eastern Maine Healthcare System’s 2014 tax return (form 990, available online), their CEO was paid well over a million dollars.

To put that in context, the CEO of EMHS (a nonprofit company with a dismal bond rating) was paid more than the CEO of Camden National Bank (a financially successful publicly traded company). That is just plain wrong. And in the world of hospitals (there are over 11,000), EMHS is a small player and the CEO is but one of a bunch of EMHS admin types drawing a huge paycheck.

Bottom-line, to fix Obamacare, we need to drive down the cost of health care. One way to do that is to change the tax code to cap what a nonprofit hospital can pay its non-medical personnel. You want to pay your CEO a million dollars? Fine. But then your hospital also needs to pay taxes. Hospitals either get their pay scale under control or lose their nonprofit status.

By instituting tort reform, stopping free insurance for healthy young people, and reining in the salaries of hospital administrators, we can go a long way toward fixing Obamacare. Or we can continue to borrow our way to better health. The problem with borrowing is the mounting national debt, now about $20 trillion, will be very unhealthy for our kids.

This month’s 'Did you know'

Medicaid began as a new welfare program to provide free health care for poor people who were unable to work. Specifically, it covered certain services for seniors (Medicare covers health care for those 65 and older) and paid for health care for the blind, the disabled, and single-parent families. In 1966 it covered 4 million people. Like every government program, over the years Medicaid has grown in size and cost. Medicaid now covers 71 million people and consumes about 10 percent of the federal budget. In 2015, total spending on Medicaid was $545 billion and it’s rising every year (along with our national debt).

Randall Poulton lives in Winterport. He writes a monthly column for The Republican Journal.

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