The New Health Care Bill: A Prescription for Diminished Health Care

by Joe Plemon on March 31, 2010

Quick +Health?
Creative Commons License photo credit: Brett L.

Allow me to preface this post by referring you to some other great posts on the health care legislation.  The Amateur Financier gives a balanced look at the legislation and what it means to us.  Other bloggers who have weighed in are Financial Samurai who is in favor,  Darwin of Darwin’s Finance who is convinced that we will have buyer’s remorse, Kevin of 20s Money who is certain (based on government’s history of underestimating projected costs) that it will be way more expensive than expected and Evan of My Journey to Millions who digs into whether the bill is even constitutional.

If you want a great summary of what the bill covers and which provisions kick in when, I highly recommend jumping over to this article provided by Health Insurance Providers.

What do I think?

Did we need health care reform?  I think everyone agrees that we did.  Me too.  But I also believe that this bill will ultimately result in poorer quality of health care for all of us.

Let me explain:

What will happen to Health Insurance Companies?

Imagine the following conversations:

Homeowner, “I need to purchase some homeowner insurance.”

Insurance Agent, “Tell me where you live so we can drive by and look your home over.”

Homeowner, “My address is 100 Main St, but my house burned to the ground yesterday.”

Or…

Woman, “I would like to purchase some term life insurance for my husband.”

Agent, “I will need to ask some questions.  How old is your husband?”

Woman, “He died yesterday.”

“Ridiculous!” you say.  “No insurance company is going to issue insurance against an event after the event has already happened.”  Right.  But, starting this year, the new health care bill requires insurance companies to extend coverage to children with pre-existing conditions.  By 2014, all pre-existing conditions must be covered for all ages and (get this), higher health insurance rates cannot be levied because of health, gender, etc.

“But…but…shouldn’t everyone have health insurance regardless of their circumstances?”

Good question.  One I don’t have an answer to.  But here is my question:  How can insurance companies stay in business if they are forced to insure all pre-existing conditions and not allowed to raise their rates?  Well, they can and will pass those increased costs on to other policy holders, but my prediction is that within five years all health insurance companies will have closed their doors, forcing the single payer government health insurance to be the only insurance in town (or in the nation).

What will happen to doctors?

Our government has promised to trim heath care costs and help save money on health insurance premiums.  While I haven’t read anything specific about the new bill monitoring pay for medical treatment, they will have to find ways to hold down health care costs if we default to the public option plan.  I envision them setting limited payments per procedure, effectively stifling doctors’ incomes.  With less income incentive, current doctors are going to start leaving the system and prospective doctors will think twice before spending $250,000 and 8-10 years of their lives for the privilege of working for a capped salary.

By 2014, the new bill forces all U. S. citizens to have health insurance or else pay a fine.  In effect, the 30,000,000 who are currently uninsured will then be insured.  Even if we keep the same number of doctors, each doctor will be seeing more patients thus reducing the quality of care.  If my theory is true about fewer doctors in the future, each doctor will be seeing even more patients,  further diminishing the quality of care per patient.

What will happen to pharmaceutical companies?

Pharmaceutical companies invest hundreds of millions of dollars in research to discover new cures for our health issues.  They must recoup these investments within the patent time period in order to justify future research.  Why?  Because once the patent has expired, any and every drug company will start selling the generic version for practically nothing.  For example, I pay only $10 for three months supply of the generic blood pressure medication.

The new Health Care Reform bill requires that, starting in 2011, seniors enrolled in Medicare Advantage or the Prescription Drug Plan will receive a 50% discount on brand name drugs immediately with additional prescription drug discounts to follow.  Now…ask yourself what will happen if the Pharmaceutical companies are not allowed to recoup their research investments because they are restricted in what they can charge.  Right.  They will simply stop doing the research.  We won’t notice for years, but, without the research, no new drug discoveries will be made.

Summary

I hope I am wrong, but it seems to me that the health care bill we passed is going to lower the quality of health care for all of us.   When the insurance companies close their doors, we will all have government run health care.  Because of our nation’s debt problems, restrictions could be capped on rates health care providers charge, which would discourage prospective doctors from entering the medical field.   The equation of fewer doctors and more patients equals metered care for all.  If pharmaceutical companies cannot profit from new medicinal discoveries, there will be no new discoveries.

An ironic silver lining: if the quality of health care is lessened, we might start taking better care of ourselves.  That would definitely be a good thing.

Please jump in and share your thoughts on the new Health Care Bill.   Do you agree that it will lower our quality of health care?  If so, is insuring the uninsured worth it?

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{ 15 comments… read them below or add one }

Evan March 31, 2010 at 8:37 am

As scary as your post sounds, I don’t think you are that far off!

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joeplemon March 31, 2010 at 8:40 am

Evan,
Like I said, I hope I am wrong. Time will tell.

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Arthur @ FinancialBondage.org March 31, 2010 at 2:48 pm

I agree health care had room for improvement. Reform and a take over by the feds was not the answer. The feds can’t run anything. Social Security is a great example. This is a BAD move for America. America and American’s will suffer from this.

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Craig Ford March 31, 2010 at 2:59 pm

Joe,
Let me start by saying I know nothing (almost) about the new health care bill. I do know that being a Canadian most people don’t want to hear what I have to say about health care :). However, when you say the new bill “result in poorer quality of health care for all of us”. Who is us? Wealth Americans? Middle Class Americans? Poor Americans? For the first and second I would agree. However, I don’t think that is the case for the third group – poor Americans.

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joeplemon March 31, 2010 at 3:56 pm

Craig,
I want to hear what you have to say because 1) I value your thoughts and 2) because you are a Canadian citizen. I realize that I grouped all Americans in the same category, so thanks for asking me to dig a bit. If my hypothesis about pharmaceutical companies paring back on research is correct, all Americans who depend on medical advances would eventually be affected. That one is tough to gauge.

If we have a shortage of doctors, the wealthy may be able to pay a premium to continue getting the same care they are now. The poor may start getting better care if they don’t currently have health insurance now. That leaves the middle class who would be sharing the care they now get with those who are currently uninsured…so they might be hurt the most.

I am interested in hearing from other readers on this question.

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Craig Ford March 31, 2010 at 5:15 pm

Joe,
I really can’t say much about the bill because I haven’t jumped into it too much. What I saw surprised me – I didn’t think the US would ever pass a health care bill like the one that was just passed.
I do think that any ‘socialization’ of health care will reduce the quality of health care for those in higher classes and improve it for those in lower classes.
Should the upper suffer to help the lower? That is the million dollar question. That certainly does not fit with capitalism.
Our last two kids we chose to have in Canada because the US was 3x more expensive. My wife is American and I am Canadian. Our kids are all dual citizens. The high cost of health care has will be a serious factor for us when we move back to North America. They simple are (at least were) two very different systems each with equally strong strengths and weak negatives.
I’m in a bad mood because my health insurance premiums are now double my house payment. I just found out I’ll be paying another $3,500 in premiums this year. Even though it is international health insurance the cost is increasing because the US portion. If I dropped US coverage then my rates would drop by about 75% (which I would do in a second except the higher ups who make the decisions want me to have US coverage).
Reform was needed. Will the changes help? I have no idea.

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joeplemon March 31, 2010 at 6:46 pm

Craig,
Thanks for letting us in on some of your health insurance issues. It shouldn’t surprise me that the cost of having children is three times more in US than in Canada, but it does. I am guessing that you had a high deductible health insurance plan in US, so the deductible would have been the issue.

Bummer about the huge premium jump you are encountering. It puts ME in a bad mood to read about it.

Your last sentence sums this entire discussion up well.

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Craig Ford March 31, 2010 at 7:10 pm

Joe,
Sorry for taking more than my fair share of the discussion :).

The hospital cost difference was not the deductible. My daughter was born in the US. We had 80/20 insurance – $500 deductible. What we paid in the US with insurance (20%) was more than the TOTAL COST without insurance for my son born in Canada (but, we did have insurance so we paid $250 deductible).
Here’s a post I did comparing Canadian and US healthcare – http://www.moneyhelpforchristians.com/health-care-reform/
Here’s where I talk about the insane differences in the cost of having babies in each country – http://www.moneyhelpforchristians.com/average-cost-of-delivering-a-baby/
I’m not trying to promote my website, just trying to save myself time re-writing all my thoughts.

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LeanLifeCoach March 31, 2010 at 9:35 pm

Based on our previous experience with how the gov’t manages any program, let’s not hold our breath! As it is, when I calculated the cost per capita last year Medicare was near $11K/person while private health insurance was less than $8K/person. You might argue Medicare includes older people with more medical needs. I would argue this new approach will too!

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joeplemon March 31, 2010 at 9:50 pm

LLC,
I did not even want to breach the topic of how government manages money…lots to say and not enough room or time to say it. But I have zero confidence that bureaucrats could come close to matching the efficiency of any venture that is trying to make a profit.

Thanks for the stats. They are an eye-opener!

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Shirley April 1, 2010 at 12:44 pm

Joe,

First I would like to say that I have gobbled up every article regarding the health care bill because it has been such an intense matter of prayer for me in the last two years. This article too is appreciated as I need all the help I can get understanding this. (I don’t have time to pick and pour over the law, so I am grateful when others do it for me.)

Secondly I am using this comment to reply to the comment you left on my book review blog. Please know that while I do read and review a lot of Christian fiction romance novels, I also review many other genres within the broader selection of Christian titles in todays market. So please feel free to stop by again, I promise that its not all predictable romance novels!

I also wanted to say thank you for your kind words regarding my writing. I have felt God’s calling on my life to use the talent of writing that He has given me for many years now. Just last night I received news that a writing position I had dearly hoped to get, was offered to another. Your comment, I believe, was God’s way of encouraging me, His way of saying “I have something better for you, daughter.” So I am grateful that you took the time to be so kind.

Finally, as I mentioned before, I am humbly searching for the next door God will open for me. I fear, I don’t know where to begin, and I would be grateful for any suggestions or help you may have to offer. Thank you again for your encouragement.

-Shirley R.

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joeplemon April 1, 2010 at 5:52 pm

Shirley,
I might not be the best person to ask advice about writing. I think you are already a good writer, but of course people become good at writing by writing. One idea is to offer to write guest posts for blogs similar to yours. If you are thinking of free lance, read this post http://www.goodfinancialcents.com/how-to-be-a-successful-freelance-writer/

It is written by someone who is doing very well as a free lance writer…making 6 figures, most by ghost writing.

I hope that helps.

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The Patient Factor April 5, 2010 at 10:26 am

Our Canadian politicians do not experience the failings of our single-payer health care system but they do continue to shape the government health policies and legislation that controls access to what they deem to be “medically necessary” hospital and physician services.

Provincial and territorial governments provide block funding to their health authorities. These authorities then decide the number of surgical procedures to be performed and the number of operating room hours allocated to doctors based on funding received for their annual budgets.

In my province (Saskatchewan) alone there are currently 28,672 people waiting on a list for surgery. Many Canadian patients are forced to leave Canada’s single-payer, government-run health care system to seek the medical care they so desperately need.

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joeplemon April 5, 2010 at 1:18 pm

Patient Factor,
Thanks for sharing some health care info from Canada. It appears that the bureaucrats at provincial or territorial levels decide, based on block funding, how many surgeries and which will be performed. That could be a tough, tough call when more surgeries are needed than funding will cover. It is no wonder that many are seeking medical care outside the government run system.

Your stats seem to support my theory that our American system is headed toward diminished quality care.

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DFedor August 27, 2010 at 7:33 pm

Joe,

Loved the post. You are (unfortunately) spot on in what will likely happen. It is intertesting that this bill is written in such a way that it is a SLOW burn. Kind of like thinking “Yeah it will be awful, but if we give it to them in small amounts, they will get used to it.” Funny how we HAD to pass it right away, but it takes effect in 2013 and even then it has a few more years till it starts to settle.
Also, it makes the Secretary of Health and Human services WAY too powerful. Considering it is not an elected position.

Regarding your question. Would love to guest post at your blog…..

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