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Obamacare is “Rationalized” not “Nationalized” Healthcare

July 9, 2012

 

Obamacare is not nationalized healthcare. It is rationalized healthcare. What I mean by that is it is not a government takeover as you referred to above. it is creating a set of standardized rules procedures etc. that apply to insurance provided in the private market.

The problem today is that the marketplace itself has not provided solutions to the major problems of expanded coverage, basic levels of coverage and of the pre-existing condition issue. To do so would require them to act in the public self-interest rather than the interest of their stockholders.

The other issue is that health insurance is highly regulated state level with over 2200 mandates across the 50 states that insurers employers etc. deal with today. Complying with these regulations which are often very slight differences and things like what age a student is covered until or how many days woman gets in the hospital for pregnancy is incredibly expensive and confusing.

None of these mandates, since many were put in by special-interest, deal with the core issues of access to affordable care, covering people with pre-existing conditions and protecting someone once they’re insured from being dropped from insurance.

I look at the affordable care act as not dissimilar from the interstate highway system we all take for granted today, while half a century ago we are all driving around on local and state roads through small towns with limited connectivity, slow speeds etc.

Creating an interconnected and standardized system of high-quality roads between major metropolitan areas has both driven the economy over time, but also made it much more possible for commerce to move quite quickly and efficiently saving time, money and lives with standardized lanes, road services, exits, signage etc.

Only the federal government could have created that system, funded it initially and been able to maintain a overtime in partnership with the states.

All that Obamacare does is create a standardized set of rules that everyone has to play by in the insurance market, at the same time providing a way to subsidize coverage for those not currently in the market, as well as compelling those free riding on the system to participate.

You reference the private sectors actuarial capabilities above and that’s exactly what the system expands on. The law of large numbers shows that people covered for more standardized types of benefits are more predictable and thus the less costly it will be over time.

Having standardize plan designs, standard Online enrollment procedures, administrative procedures, and billing procedures as well as plan communication will greatly simplify all aspectzs of interactions and tfransactions across the healthcare supply chain, which today are a morass of paper mistakes and confusion. The costs alone of this inefficiency for insurers,employers, insurance brokers, employees and providers is massive. Estimates of 40% of overall health care costs involved in this waste are not uncommon.

So what we have here is a federal government that has stepped in to effectively create a fence around an industry and standardized what can and can’t be done in the marketplace, while at the same time expanding the marketplace pool so the private insurers can compete more effectively and cost effectively for business.

The medical loss ratio provision alone forces this efficiency and more if the private insurers are to remain profitable and if providers are going to be able to make money.

The ACA has both forced and incented behavior change through things like funding electronic health records for doctors and hospitals, at the same time the insurance companies can no longer waste untold dollars on paper-based systems when electronic connectivity is the norm in every other industry in America we all use daily.

The impact of the medical loss ratio is the key to forcing systemic change in a private market while still providing that private market the opportunity to make substantial profits.

I could go into a lot more detail on true cost-saving provisions of law which are substantial but I think I’ve made my point.

Medicare is already showing the benefits of a lot of ways. the removal of 14% subsidies for Medicare advantage plans for private insurers, which was essentially a dead giveaway of tax dollars, has actually ended up creating more competitive marketplace for seniors at the same time costs remain level or even decreased a little bit. This is a time when free preventive care and closing the donut hole are part of these plans.

The last two years Medicare inflation has been slightly under 4%, the lowest it’s ever been. Here in Atlanta person over 65 has more than 100 options for Medicare choices and the same is true in every city, large or small.

So to say that we have nationalized healthcare with top-down planning that is run by the government is simply a false statement.

Rationalizing the system that we have today, forcing the players to coordinate around patient data, becoming more transparent and opening up exchanges which will provide more options to people be they individuals or employers will save time, money and cover 30 million more citizens.

The amount of innovation and venture-capital going into healthcare is stunning. Why?

It is a target rich environment for technology and efficiency to greatly improve care while at the same time reduce costs.

So no the government is not taking over our healthcare system. In fact what it is doing is mandating standardization that fosters innovation,that overtime will be a benefit to all of us in lower costs, improved outcomes and general health.

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