By Paolo von Schirach
February 19, 2013
WASHINGTON – The “birth defect” of Obama’s Affordable Care Act, (universally known as Obamacare), is that it tackles the almost impossible topic of US health care coverage and out of control spending from the wrong end. It tries to reduce spending by reapportioning the bill. The problem is in the spending drivers.
Increasing coverage while reducing costs?
This effort is a bit like buying the best new tires for on old car that needs new tires alright; but most urgently it needs a new transmission. If you do not fix the transmission, the brand new tires will not get you very far.
The laudable goal of the ACA is to extend coverage to millions of uninsured Americans. But the wishful thinking here is in the unsupported assumption that, by some magic, it will be possible to change almost overnight established practices whereby we will get the miraculous result of an entire US population insured, sensible, cost-effective new protocols adopted by the medical profession, and therefore a net reduction in overall health care costs.
This outcome is most desirable, but most likely unachievable, unless enormous transformations will take place. And the ACA does little to get us there.
Doctors make money only when you are sick
It has been said before; but it is well worth repeating. Most US doctors are paid only if and when they treat and prescribe. Hence a built in financial incentive to do “more” rather than “less” regarding any given patient. Combine this with “defensive medicine”, and it becomes clear that the tendency to over treat and over prescribe is almost irresistible. Considering that most patients are insured, all this insane hyperactivity would appear painless, as patients pay out of pocket only a small portion of their health care.
But higher costs translate into higher insurance premiums. And this is inevitably translates into a larger burden for employers who provide medical insurance for their workers.
Add to this problem another –possibly bigger– one. Americans are more and more unhealthy because of the widespread adoption of bad habits. Addiction to processed foods and nutrition generally rich in fat, starch, sugar and salt has caused a massive, nationwide obesity epidemic. All this causes more diseases, many of them (like type 2 diabetes) chronic and costly.
Bad health and eager doctors, a bad combination
And there you have it. A very unhealthy population and doctors eager to treat and over treat. The notion that it is possible to fix all this mostly by re-regulating insurance is crazy.
Better habits and doctors who teach prevention
In order to contain US health care costs and bring them down to the average of other rich countries, (this would be overall spending at around 9-10% of GDP, as opposed to US spending around 17% of GDP), Americans need to embrace a healthy life style, while the medical profession needs to be restructured.
Doctors should have a financial incentive to keep people healthy, as opposed to making money only when they (over)treat sick people.
Obamacare addresses some of the cost containment issues, but not in a systematic fashion. Its basic flaw is that it hopes to reform a horribly flawed health care system mostly by broadening insurance coverage. This alone will not do it.