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Gaming ObamaCare

Remember my post a few months back about how some large companies were getting waivers so they didn’t have to pay into the new health care system? Things are getting worse.  According to this article on The Hill, the feds just granted new insurance waivers to more than 500 groups, bringing the total number of individuals covered by waivers to 2.1 million.

The system just isn’t going to work.

Let me get my soapbox out here. [Tap tap tap] Is this thing on? Good.

First, there’s still this misconception that the “mandate” to purchase insurance will somehow translate into accessibility of medical care. It doesn’t work that way. I’ve said it before. Purchasing health insurance doesn’t mean that you have access to health care any more than purchasing car insurance means that you have access to a car. If your insurance is cut-rate,  chances are that your medical care will be cut-rate. You can’t make a silk purse out of a sow’s ear.

The general idea of “insurance” is conceptually sound. Everyone pays into a system to spread the risk of paying for a catastrophic event. You pay$100 per month to presumably avoid having to pay $100,000 or more if you have a major medical event. The amount of money paid into a system is dependent upon how much money is taken out of the system. If there is a surge in the number of people needing medical care, one of two things happens: More money has to be paid into the system or less money has to be taken out of the system through rationing of medical care or providing lower quality less expensive medical care. There aren’t any other variables to change. Cost, availability, and quality. That’s it.

The proposed system creates too many loopholes. It caters to special interests. It changes the cost/availability/quality variables in ways that the public doesn’t realize. So lets look at a few examples.

First, what exactly are we getting for our money in the current system – or in the proposed system? Many people don’t know. With regular insurance plans, your policy guides coverage. Maybe you have exclusions for certain conditions. Maybe there is a limit on how much the insurance company will pay for a certain type of care. Maybe certain types of care (like dental care or vision care) is unavailable. But at least you know what you’re getting. Can anyone say with certainty what type of medical care they’re going to get once they start paying into the new and improved health care system? I sure can’t. The lack of specifics opens everyone up to being refused care once they’ve paid into the system. After all, the feds and/or insurance companies can just say “We never agreed to pay for that type of care.” In essence, we’re paying for what’s behind the curtain without really seeing what’s behind the curtain.

Speaking about “exclusions” on insurance, under the current plan, “exclusions” on insurance policies will be limited. True that insurance companies have used exclusions and rescissions unethically in the past, but when used appropriately, exclusions keep people from gaming the system. If you’ve had a bum knee for 20 years, you shouldn’t be able to pay one month’s insurance premiums and then be entitled to the newest titanium replacement, the services of the best orthopedist, and unlimited therapy. If everyone gamed the system that way, the system would collapse because there would be a tremendous funding input/output mismatch that couldn’t be sustained by just increasing insurance premiums. No one would purchase “insurance” because they know that they could just get a policy once a catastrophe either occurred or was about to occur. Outlawing or severely limiting insurance exclusions essentially amounts to allowing people to purchase homeowner’s “insurance” while their house is burning to the ground. Result: Quality of care will decrease or costs of insurance will skyrocket – or both. Our family’s health insurance premiums have jumped about 30% in the past 8 months, so we know where this is headed.

Then there is the issue of spreading risk. Remember how everyone needs to pay into the system to spread the risk? When fewer people pay into the system, either the amount of care decrease to create a new equilibrium point with input/output of funding  -or- everyone else must pay more into the system to maintain the status quo.  Look at all of the waivers that have been granted under the new health care legislation thus far. Multibillion dollar companies like Blue Cross Blue Shield, Cigna, Aetna, and McDonalds are all getting a pass on purchasing insurance. When people want to use the system but they don’t pay into the system, they create a greater expense for those who do pay into the system. Why there are so many insurance companies and unions receiving these waivers, anyway?
There is also a religious exemption to purchasing insurance. Whether Amish, Muslims, or other religious groups will be exempt from purchasing insurance under the new health care plan remains to be seen, but ultimately if they do receive care and don’t pay into the system, those extra unfunded participants will result in additional increases in expense and/or decreases in care.

Yesterday, I posted a comment to ERP (from ER Stories) on Kevin’s blog about ERP’s notion that the “mandate” was a good thing. In that comment, I noted that one of the other issues that we have to address is the tremendous amount of inefficiency in our current system. Bureaucracy has to diminish, not increase. Empowering the IRS to enforce the insurance mandate is heading in the wrong direction.

We also need to learn to say that we aren’t going to pay for medical care that has a negligible effect.
Providers have to be comfortable doing that and the public has to become comfortable hearing that.

End of life care needs to be compassionate, but made with the understanding that everyone is going to die. We need to become comfortable with the ideas of hospice care. Yes, maybe we can eek another few weeks out of your loved one’s life, but what will the quality of that time be? How much should we pay to keep the shell of the person that was once your loved one alive? There have to be checks and balances in place to prevent “death panels” but we can’t afford the system of end of life care as we know it. It’s a tough question, but it is one that needs to be asked and one that needs to be addressed.

Medications are another huge expense. Track medication use. Have a national database of what patients are getting what medications at what pharmacies. This will decrease multiple prescriptions from different providers and decrease adverse medication interactions or overdoses from the little old ladies who can’t remember their medications. If you aren’t taking your medications, a national registry will also let us know that you aren’t filling your prescriptions.
If you can’t afford your prescriptions, you can go to the federal medication dispensary inside the federal health care clinic at the free VA system and get your medications for free. They will have a limited formulary with mostly generic medications. If you don’t want to wait in line at the federal dispensary, then you go to the pharmacy and pay for the prescriptions out of your pocket. If you want the new designer medications that have the same effect as WalMart’s $4 medications, that’s fine. You need to pay for them out of your own pocket. If your doctor won’t work with you to find a medication on the $4 list, then find another doctor.
Introduce free market forces into the medication market and prices will have to come down. Pharmaceutical companies can’t make money on their blockbuster drug if no one can afford to purchase it. Want to hedge your bet against being stuck purchasing outrageously expensive medications for an orphan disease? Maybe there’s an insurance policy for that.

Stop playing semantics regarding the need to fund the system. The administration has already admitted that the “mandate” is really a “tax.” Call it a tax and implement it like a tax. If the public wants access to care, we need to increase everyone’s taxes. Kick up the Medicare tax deduction from everyone’s paychecks by 10% and forget about the “exemptions” and waivers from the “mandate.” Everybody pays their fair share. Tie the Medicare tax to costs of care. If costs go up, the tax goes up, but if costs go down, so will the taxes. Maybe we implement some type of consumption-based tax so that even those who are in this country illegally, who are visiting from other countries, or who do not work will still pay something into the system when they purchase groceries and other necessities of living.

Then do something to actually increase ACCESS to care. Open up the VA System to every citizen in this country. Expand the system to include county hospitals as well. Fund the systems exclusively with the new tax money. Then, if you walk in the door with your verifiable US ID, you get free care. All those taxes you paid are now funding your care. If you are visiting this country, you purchase insurance before your trip or you pay with a credit card – just U.S. citizens do when they visit your country. If you’re here illegally, you still get care, but then you’re getting detained, processed, and deported once you’re discharged from the hospital or you’re stable for transfer. You’re breaking our laws, so it’s about time that we either enforce our laws or we change our laws.

What would happen if we repealed the health care law and put the system above in its place?


  1. You basically get a European health care system. which, according to many of your fellow Americans, is socialist. Which, according to those same people, is inherently evil.

    Definition of evil in this case: a health care system that provides medical care to everyone who needs it, without breaking their bank for decades in case of catastrophic illness. A health care system whose quality indicators (and I’m talking about actual quality, not patient ratings) are right up there with American indicators, and often better, but naturally also often worse. But, of course, it’s also a health care system in which your rich busted knee or rich barely symptomatic gallbladder is going to have to wait in line until AFTER all those poor AMIs and cancers are treated.

    Is it perfect? No, not even close. But I’m not currently bankrupt thanks to getting run over by a car or that cancer in my immediate family or that AAA in my immediate family or, hmmm, odd that, those 9 non-urgent hernia repairs in my family. See, we do get all the care we need, even non-urgent. It just that it happens based purely on level of urgency and not at all on the ability to buy expensive insurance.

  2. As a VA doctor, the care here is pretty bad and slow. The US public wouldn’t put up with it.

    • That’s the rub, though.
      The care may be slow and it may not be top of the line, but it is free. Some people sit 24 hours in a county emergency department waiting room because they know they’ll eventually get free medical care. So slow care isn’t necessarily a deal breaker.
      Similarly, people may choose a provider with less of a reputation in order to get faster care.
      Just like with soup kitchens – people know that their free meal probably isn’t going to be fillet mignon.
      We see many VA patients in our emergency departments because they believe that they get better care – and they have insurance to cover the costs of going outside their “system.”
      At what point would everyone be willing to pay for better and faster care?
      That’s why I think we have to let the free market principles take over.

      • “The care may be slow and it may not be top of the line, but it is free.”

        I thought we got to pick two out of the three? -.-

      • “the care here is pretty bad and slow”. That sound like a problem with your VA. Through residency, fellowship, academia, and private practice I have been affiliated with 5 VAs. I currently operate 2 days a month at one. The care at this VA from ICU, pulmonary, surgery, clinics etc is great. Not fast, but very good. The VA is paying more so more MDs are working there full time. The days of non-english speaking FMGs providing all the vets care is likely gone.

        WC, I agree with pretty much everything you have posted, but you are misinformed about the VA. It is not free care. It is if you are service connected for the problem or if you are disabled. In fact, for certain surgeries if the patient is non-service connected and has Medicare, the out of pocket cost is less if they are operated on at a private hospital/ASC.

      • VA care is also free for certain non-insured, low income, non-service connected veterans, if their income and assets are below a certain level, as verified by a means test every year or two.

        For most vets, though, there is a co-pay required for appointments and meds. Also, if a vet has insurance, the insurance company is billed for appointments, procedures, and meds.

  3. Dear Whitecoat,

    I think you have hit the nail on the head. My family has private insurance. With costs on the rise and less being covered the care of my medically fragile child is overwhelming. I would be happy to drive somewhere wait in line to get the things he needs for free! However I think many of the people who want “free” health care are still going to be unhappy.

  4. Lot of words WC to basically say it’s a stupid mandate passed by a bunch of wombles with too much good intentions but not enough brains.

    • And don’t forget, these wombles will be excluded from having to use it, too… they have different private insurance for life.

  5. WC, your post is misleading.

    You bring up “waivers”, and then later claim that these waivers give companies “a pass on purchasing insurance”. That is not true.

    The PPACA will require that insurance plans have no annual limit on benefits starting in 2014. In order to gradually implement this change, starting this year, annual benefit limits must be no less than $750K. The waivers you mention temporarily, for one year only, waive this new requirement, and are granted only if the insurer can prove that the new requirement would result in a large premium increase or in the plan no longer being offered. They do not waive the requirement to purchase insurance, as you claim.

    The religious exemption is indeed an exemption from the mandate to purchase insurance. As you can see in the snopes article that you linked to, it is granted specifically to groups that do NOT receive benefits, and which have the inclination and means to take care of their own. So I don’t see how the religious exemption would end up bankrupting the system.

    As for knowing what medical care we’ll get: as you say, your policy guides coverage. What makes you think that we will no longer have policies in 2014?

    My current policy is detailed in a medium-sized book. I confess I haven’t read the entire thing, but the parts I have read, I don’t understand. But the PPACA’s insurance marketplace will require that policies be simpler and easier to understand! Why do you think that a requirement that policies be easier to understand, will result in policies that are harder to understand?

    You write, “Outlawing or severely limiting insurance exclusions essentially amounts to allowing people to purchase homeowner’s insurance while their house is burning to the ground.”

    You are correct that outlawing exclusions without a mandate to purchase insurance would result in people buying insurance only after they got sick. That is why the PPACA includes a requirement to purchase insurance, and fines for not doing so. Your hypothetical guy who has been uninsured and suffering a bum knee for 20 years has been paying 20 years worth of fines, so he’s not getting the free ride that you claim.

    I do agree with you regarding ineffective care and end-of-life care.

    As for your single-payer healthcare plan, it would be a great system but I think you know as well as I what would happen if it were proposed: “Rationing! Death panels! Socialism! Canada! We’ll no longer have access to the unlimited care that we have now! Barack Obama is a secret Muslim atheist who hates white people! Booga booga booga!!!”

    • The waivers are now up to 730 companies. Yes, the claim is that they are temporary, but SEIU, will be exempt until 2018. I don’t look at that as temporary. You can read all about it from Michele Malkin…Believe what you see and only half of what you hear…this is not going to be temporary.

      And WC’s example of the man paying fines for not having health insurance…How can you honestly believe that even if the gov’t collects the fines, they would be using it to reinvest it in the system? I can almost guarantee there is some caveat that will allow a “surplus” to be applied anywhere but the system it was meant to serve!!

    • Waivers allow a company to avoid purchasing the same insurance that all other similarly situated companies are forced to purchase. When McDonalds provides a $2000 yearly policy for $728/year, they are paying little if anything for the policy. So you’re right that technically the companies are still paying for insurance, but they avoid paying for the “insurance” that is supposed to improve the system and that everyone else must purchase.

      Regarding religious exemptions, use some common sense. What’s going to happen when the groups that do NOT receive benefits go to the emergency department? Will there be some change in the federal law so that they can be refused service? Doubt it. So all those with religious exemptions go to the hospital uninsured, get their care, and then the hospital attempts to collect for the care provided. Many hospitals just give up trying to collect those debts.
      Will mandated and unfunded care provided to those without insurance “bankrupt” the system? Unlikely. But it will be another “hole in the dike” that will drain the system if it is not plugged.
      If religious exemptions are such a good idea, then why not let everyone decide whether or not to pay into the system if they agree NOT to receive benefits?

      Of course those who can afford them will have policies in 2014. The problem will be that policies provided by corporations will be the least expensive bare bones policies available and will have the most number of allowable exclusions. Then think about the tens of millions of people who will soon be entering Medicaid. What do their “policies” say? What about Medicare? What do their “policies” say?

      All I can do is encourage you to watch and see how much the system gets gamed in the next 5 years.

      I don’t advocate a single payer healthcare plan. I think that there should be a fee for service plan with transparency. Providers advertise their prices. Patients are aware of prices before they utilize the services. Patients can make a choice on which hospital to patronize based on reputation, cost, promptness of care, or a combination of those variables.
      Such a plan would leave many poor patients without the ability to afford medical care. For that reason, I also propose a “fall back” system or a “safety net” where there is a “single provider” of health care to which everyone in this country has access. You pay into the system, you have a right to utilize the system.
      I just think that the feds want to stay out of the business of providing medical care. If they do so and the care is not up to everyone’s expectations, then that would just be another battle cry that opponents could use – much like what is happening in Canada now. Oh, and could an avoidance of lawsuit liability have anything to do with such a decision?
      Instead, by staying in the “insurance” business, the feds can just point their fingers at the providers, pay them less and less, then try to turn public sentiment against them.
      The fee for service system naturally wouldn’t have the ability to provide unlimited care – much in the same way that it can’t do so now. Rationing through time or through limiting available services is a necessary part of any plan. That’s something that we have to become comfortable with if we don’t want to pay an even larger portion of our GNP for our health care.
      For those with the “booga booga” cries, I encourage them to propose something better.

      • The PPACA is being phased in slowly. As part of the slow phase-in, exceptional cases are being given extra time. I don’t have a problem with this; I think it’s a good thing. If the majority of these companies have not made progress by 2012, that would be a problem. But the fact that several hundred of them were not able to meet all of the 2011 obligations in the eight months they had to prepare, is not evidence that “the system just isn’t going to work”.

        Regarding religous exemptions, I AM using common sense, TYVM. When the groups who do not receive benefits go to the ED, I expect they will get excellent treatment from you or another doctor, and then they will PAY THEIR BILLS. Do you currently have problems with Amish patients skipping out on their bills? Are there hordes of homeless Mennonites roaming your city, sleeping in doorways and asking for spare change? These folks have historically been allowed to opt out of the social safety net precisely because they have demonstrated that they can and do take care of their own. I don’t understand why you expect that to change.

        Allowing people to opt out of the PPACA would create a huge logistical headache; aside from that, I wouldn’t be too opposed. Someone who wanted to opt out would have to show that they have the means to pay their bills should they get sick, which effectively limits this option only to the very rich. Or we could allow just anybody to opt out, provided that they also opt out of the EMTALA — but that would lead to libertarian-types being denied care at the ED for lack of funds, and fraud when people who opted out lied about doing so in order to get treatment. Furthermore, we would have to ensure that nobody was forced to opt out for financial reasons.

        Of course, anybody who opted out would have to jump through some hoops (i.e. prove that they are healthy) before being allowed to opt back in. Bottom line, I really don’t think it’s worth the hassle, just to please the whackos who think they’ll never get sick, or who want to commit delayed suicide by ensuring that they won’t have access to medical care.

        I don’t think the PPACA is perfect; not by a long shot. But while you and I can likely propose half a dozen better ideas, none of them are going to be implemented. The PPACA is what we have to work with; it’s not going to be repealed anytime soon, and while valid criticism can be very useful, tearing it down with FUD doesn’t help anybody.

      • Erm…by “people” in “allowing people to opt out…”; I meant to write “the general public”.

        grumble stupid lack of an edit function.

        grumble stupid lack of proofreading.

  6. Not making a comment either way about what it will truly mean or pan out to be – I don’t know. But here’s what the govt web site says about the waivers which just seem to have to do with the annual limits of EXISTING policies:

    “Unfortunately, today, limited benefit plans, or “mini-med” plans are often the only type of insurance offered to some workers. In 2014, the Affordable Care Act will end mini-med plans when Americans will have better access to affordable, comprehensive health insurance plans that cannot use high deductibles or annual limits to limit benefits. In the meantime, the law requires insurers to phase out the use of annual dollar limits on benefits. In 2011, most plans can impose an annual limit of no less than $750,000.

    Mini-med plans have lower limits than allowed under the Affordable Care Act. While mini-med plans do not provide security in the event of serious illness or accident, they are unfortunately the only option that some employers offer. In order to protect coverage for these workers, the Affordable Care Act allows these plans to apply for temporary waivers from rules restricting the size of annual limits to some group health plans and health insurance issuers.

    Waivers only last for one year and are only available if the plan certifies that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage. In addition, enrollees must be informed that their plan does not meet the requirements of the Affordable Care Act. No other provision of the Affordable Care Act is affected by these waivers: they only apply to the annual limit policy.

    As of today, a total of 733 waivers have been granted for 2011. Key facts about annual limits waivers:

    •There was an increase in the number of applications received at the end of 2010 because December 1 was the final day to apply for a waiver for a plan or policy year that begins on January 1 – as many plans do. Over 500 waivers were granted in December. While the number of approved waivers increased by more than 200 percent, the total number of enrollees in plans receiving waivers has increased by only 48 percent since the previous posting.
    •Of all the waivers granted to date:
    ◦Employment-Based Coverage: The vast majority – 712 plans representing 97 percent of all waivers – were granted to health plans that are employment-related.
    ■Self-Insured Employer Plans Applicants: Employer-based health plans received most of the waivers – 359.
    ■Collectively-Bargained Employer-Based Plan Applicants: Most of the other health plans receiving waivers are multi-employer health funds created by a collective bargaining agreement between a union and two or more employers, pursuant to the Taft-Hartley Act. These “union plans” are employment based group health plans and operate for the sole benefit of workers. They tend to be larger than other typical group health plans because they cover multiple employers. There are also single-employer union plans that have received a waiver. In total, 182 collectively-bargained plans have received waivers.
    ■Health Reimbursement Arrangements (HRAs): HRAs are employer-funded group health plans where employees are reimbursed tax-free for qualified medical expenses up to a maximum dollar amount for a coverage period. In total, HHS has approved 171 applications for waivers for HRAs.
    ◦Health Insurers: Sixteen waivers were granted to health insurers, which can apply for a waiver for multiple mini-med products sold to employers or individuals.
    ◦State Governments: Four waivers have gone to State governments. States may apply for a waiver of the restricted annual limits on behalf of issuers of state-mandated policies if state law required the policies to be offered by the issuers prior to September 23, 2010.
    •The number of enrollees in plans with annual limits waivers is 2.1 million, representing only about 1 percent of all Americans who have private health insurance today.”

    • I had a lifetime and an annual limit. When the bill passed, it was immediately dropped. And in shopping for a new plan, there are also no limits.

  7. Here’s a study about Free Clinic care in the US.
    A Survey of Patients and Providers at Free Clinics Across the United States

  8. The main problem is the average American does not understand the word “no” and will not tolerate it when said to them by a doctor. The knee jerk reaction is to threaten to sue. This is usually closely correlated to the severity of the patient’s “Entitletude” factor.
    And if the VA care is so great, why do I see so damn many of their patients ? Even some that just got seen the day before at the VA clinic?
    I notice the VA has no problem dumping their patients into the public sector, but just try to get the VA to accept a transfer of one of their patients after 5 or on a weekend.

  9. I agree on this point WC, ACCESS needs to be increased. However, I still submit that the mandate/tax is a good thing to “promote the general Welfare”. The VA system sounds like an option for those who would otherwise fall through the cracks. Clearly improvements need to be made in the care there but will we be willing to pay for it? I would but most Teabaggers would not.

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