Small change in health care

When this year’s health care bill was recently voted into law its chief champion, President Barack Obama, announced that America was witnessing the kind of change that he had been promising.
But just how much change is there in the new law as compared to the way health care is now?
Currently, the responsibility for health care management rests on the shoulders of the insurance industry. This had been one of the most significant complaints of those seeking to reform and change the way health care is managed and delivered.
Insurance companies are evil, after all—full of greed and avarice. Health care reform was supposed to take the power away from insurance companies and put it into the hands of patients and consumers.
Does the new law accomplish this? Let’s take a look.
Under the new health care reform law, every American earning above the federal poverty level is required to purchase health insurance. According to government bean counters, there are currently 30-40 million Americans living without health insurance. So, the new law is going to expand business for health insurance companies by an additional tens of millions more policyholders; meaning that insurance companies will have even more involvement in the health care industry than they do right now. The law gives insurance more money and more power, while summarily taking the power to choose away from the patient and consumer.
Since people are now going to be required to purchase health insurance, they can no longer simply choose not to buy; they have to buy. Even though insurance companies will be in competition for those 30 million more policyholders, they don’t have to go into a price war to get them, because the consumer is going to have to settle on an insurance provider eventually, or else face a fine. Consequently, one probably won’t see significantly lower premiums because insurance companies will have no incentive to lower their prices. The customer isn’t going to simply walk away; he is going to have to settle on some sort of health coverage because it is now the law that he does so.
Another promise of the health care law is that it will drive the costs of health care delivery down because adding another 30 million more policyholders will expand the burden of paying for health care and end up lowering the cost to each consumer across the board.
However, the backers of this law seem to have ignored the old, fundamental economics lesson of supply and demand.
The number of new physicians has been on the decline in recent years. The mere cost of medical school coupled with the realization of six to seven digit loan debt, and the prospect of having to carry that debt for decades has discouraged many potential medical professionals from pursuing careers in medicine; not to mention there’s the high costs of doing business once a new doctor has completed his or her residency and is ready to strike out on his or her own.
In addition to maintaining a license through respective state medical boards, a doctor must also carry substantial malpractice insurance to protect him or herself against egregious lawsuits. Malpractice insurance coverage is a very expensive endeavor these days because of the frequency and prevalence of litigation and the amount of damage awards sought. The higher the coverage sought for malpractice insurance, the higher the premium.
Experienced doctors currently in the field of medicine aren’t getting any younger either, and eventually, they are going to retire, leaving a void in care that may not be filled.
Sadly, the number of new doctors is not keeping pace with aging practitioners.
Furthermore, a growing number of experienced doctors have been deciding to leave their practices and quit medicine altogether; primarily because the cost of staying in business simply outweighs the benefits.
Supply is thus on the decline.
Meanwhile, demand is poised to rise sharply as a result of the new law and demographics.
To begin with, the law requires insurance companies to cover pre-existing conditions. That’s not to say it isn’t a good thing to provide coverage for pre-existing conditions. But there are consequences to doing so.
The chief consequence is that it is going to increase the cost to insurance companies, because they will be spending money that they might not have otherwise spent before. Not only will the increase in cost be shared by other policyholders, but there will be an added strain on medical services as well. More insured people in need of health care equals greater demand for services. And let’s face facts: People with pre-existing conditions are going to visit the doctor, the pharmacy, the emergency room, diagnostic centers, labs, and hospitals more often than healthier individuals.
So, as a consequence of the new health care law, demand is going to surge.
But the number of people with pre-existing conditions pales in comparison to the number of retirees that are going to require more care in the next few years.
The baby-boom generation—those Americans born between 1945 and 1964—is the largest age demographic in the United States. Many of these people are either retiring now or have retired, and more will be retiring over the next two decades. As the baby-boomers advance in age, the level of care will change from routine maintenance to more intensive health care needs. In fact, the first block of baby-boomers born immediately after World War II is already 60-65 years old. Chronic health problems are surfacing that shall require much more than just routine care.
Most of these people already qualify for Medicare and are on the public insurance dole. And many of them also have a combination of public and private insurance coverage to meet their health care needs. So, as the baby-boomers age and require more health care, the demand for services is going to increase significantly; and along with that, the cost to both the taxpayer and private policyholder alike.
There can be no denying that demand for health care services is going to continue to rise just as it has done for the past few decades. In fact, I forecast that demand will reach new highs never before seen in the health care industry because of the two chief reasons I just cited: pre-existing conditions and the baby-boomers.
If we think health care is expensive now, then let’s just wait another decade and the costs of care today may seem like a bargain.
The danger we are going to find ourselves in shall boil down to simple mathematics. The more demand for a product or service there is, and the fewer people there are to provide it, then the higher the costs, the longer the wait, and the less product or service one can expect to get for one’s money.
Let’s say 100 people all want an apple, but there are only 50 apples to go around. Either the cost of each apple is going to increase because there are more people wanting apples than there are apples to get, or each person is going to get less apple than they paid for in order to give all 100 people an apple; or both. In all likelihood, both scenarios are going to happen with regard to health care.
More patients minus fewer doctors will equal a higher market price for services and shall result in the consumer getting less for each dollar he spends on health care.
In other words, we won’t get anywhere near what we are going to end up paying for.
But the backers and pushers of the new health care law have convinced supporters that it is the next best thing since sliced bread.
I believe America is literally being sold a bill of goods. The salesmen (and women) have done quite a job selling their product as the best ever solution to the problems in the health care industry. They tout the new law as historic, landmark reform that is going to mean more affordable health care for everyone.
My question is simple: How so? When one analyzes supply and demand trends, one sees a different picture than the one being painted by the law’s proponents.
Furthermore, those who currently have fallen through the health insurance cracks because they can’t afford it are going to have to wait four more years before there’s even a possibility that they may be able to get coverage. In the meantime, what are they supposed to do? How does this historic, landmark reform help them over the next four years?
So the current problems with the health care industry won’t be entirely addressed by the new law for the next four years.
Exactly how is this helping the country, and more specifically, the health care consumer? How is it changing the way things are already done for the better?
I thought change that President Obama promised was supposed to be good. I thought it was going to make everything better. So far, I see darker clouds on the horizon than the storm we are currently weathering.
If this new health care reform law is representative of the kind of change that Obama campaigned on two years ago and has been promising us ever since, then we ought to start counting his change with pennies, because there will be too little of it to make a real difference one way or the other.