Why Obamacare Can’t Lower Costs
http://itsoureconomy.us/2014/05/why-obamacare-cant-lower-costs/President Obama and the Democratic Party dug themselves into a deep hole by claiming the Affordable Care Act would cut the nations health care costs when in fact it will raise them. Its the gift that will keep on giving to opponents of the law.
The ACA cannot cut costs because its proponents subscribed to the wrong diagnosis of the U.S. health care crisis. They accepted the conventional wisdom that overuse of health care services is the most important reason why per capita health care costs are double those of the rest of the industrialized world, and that overuse is caused by two chronic failings among American doctors: They routinely order services patients do not need and fail to provide them with obviously beneficial preventive ones that would keep them healthy and minimize later need for medical interventions.
This diagnosis is wrong. First, underuse is far more common than overuse, even among the insured. To cite one example, 80 percent of insured Americans showing telltale symptoms, such as shortness of breath, do not see a doctor. Second, preventive services usually raise spending because they cost more to supply than they save.
Predictably enough, the mistaken overuse diagnosis led ACA proponents to the wrong solution, namely, that doctors can be forced or induced to stop ordering unnecessary services and provide more preventive services if they are subjected to more control by insurance companies. But the premises upon which this solution is based are also false. It is not true that the methods that the insurance industry uses to control doctors are so precise that they reduce overuse without aggravating underuse. It is also not true that the insurance industrys methods are so inexpensive compared with the savings due to reduced overuse that, on balance, costs go down...The ACAs failure to control costs might not have mattered if we were still in the 1940s or 50s, when health care spending absorbed 4 or 5 percent of our national income. But it is 2014. Health care spending now eats up 17 percent of our income. Since the 1970s, observers across the political spectrum have agreed that America will never achieve and maintain a substantial reduction in our uninsured rate, never mind universal coverage, unless we reduce the cost of our health care system. As a candidate and as president, Barack Obama made it clear he understood that.
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MindMover
(5,016 posts)Demeter
(85,373 posts)but that's a feature, not a bug, you know....
msongs
(67,436 posts)there's surprise to practically nobody lol
november3rd
(1,113 posts)Preventive services do save more than they cost. Costs rise anyway because people don't avail themselves of preventive care, but wait until they're sick to see a doctor.
Because of liability and competition doctors prescribe unnecessary tests and treatments.
However, the primary driver of medical cost increases is private, for profit health insurance providers. The ACA's reliance on them is why it can't contain costs.
JayhawkSD
(3,163 posts)The clinic charges $1300 for an MRI and the insurance company pays that fee. Does the insurance company require the clinic to charge $1300 for that MRI? Does the lack of insurance in Mexico make that same MRI available in Mexico for $125? Does the fact that India does not use private insurance make that MRI cost $120 in India?
Of course not. It costs $1300 in the United States because medical providers are overcharging, and insurance costs are going up because insurance companies have to pay the inflated fees charged by medical providers.
Yes, insurance plays a role in the cost of health care, but the primary driver of the inflated cost of health care is the anti-competetive practices engaged in by medical providers, much more so than insurers.
cprise
(8,445 posts)Mosby
(16,342 posts)And then pricing for services could be lowered to break even.
It would also give the new government agency leverage with the pharmaceutical companies and medical equipment manufacturers.
Problem solved, mostly.