http://www.economist.com/blogs/schumpeter/2012/02/health-reform-america
Listen to any Fox News broadcast that discusses Obama's health care reform bill and you will surely hear a negative response and virulent criticism. It costs so much, it is a total failure, forcing Americans to buy health insurance is immoral/unconstitutional, we need to repeal it, blah blah blah.
In addressing the validity of these criticisms, we must look at the initial intent/derivation of the bill. Two issues that drove the bill's legislation were America's skyrocketing health care costs, as well as the number of increasing number of Americans without health insurance. This inaccessibility is largely due to healthcare's lack of affordability.
As costs are rising and making healthcare increasingly unaffordable, we would hope that the bill (passed in 2010) is addressing these problems. I took health economics last spring, and we discussed the issue of health care lots extensively. The induced demand , or over consumption of healthcare technology, coupled with the inflation of healthcare technology prices, is pretty conclusively the leading driver of health care costs. Doctors, especially at for profit hospitals, have pretty strong incentives to overconsume these technologies.
For example, a patient has a knee injury: should the doctor order an MRI or X-RAY? The doctor is thinking, why not? Insurance covers it, so the doctor knows he will be getting more money than if he were to address the patient's issue without resorting to the technology. Also, the patient is happy, as he feels more secure knowing that the Doctor saw in essence a photograph of the patient's muscle/bone. This process, especially at for profit hospitals, is an incredible problem in the healthcarer industry. As The Economist article points out, "doctors make more money from treating sick patients than from keeping them well".
Click here for an indepth case study of my point: http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
How has Obama's bill addressed these problems?
As the above article from The Economist points out, UnitedHealthcare (my own healthcare provider) is addressing the issue by issueing "value-based contracts" to its doctors. Moreover, it is testing the use of a bonus to doctors that use new methods to coordinate care and treat chronic diseases. United also sells a software that faciliates this process that aims to keep patients healthy, which will undeniably lower healthcare costs.
However you feel about the healthcare bill, The Economist notes that "Nudged by the provisions of Mr Obama’s law, private-sector firms have been reforming themselves. Virtually every insurer and hospital is trying to make care better and more efficient. In many cases their reforms go well beyond the law itself", as evidenced by the actions of United.
Obama's law aimed to provide affordable healthcare to more people. Was it a perfect law, no, but it seems clear here that it has attracted much-needed attention to the high costs and inefficiencies of the healthcare industry. And maybe Bill O'Reilly, just maybe, begun to achieve its goals (imagine?)!
3 comments:
Eric, you make a very good point. I think that this goes back to what we read in Confidence Men and subsequently discussed in class. I think that during the healthcare reform process, there was not enough focus on how to reduce costs. Yes, Obama succeeded in expanding coverage, but perhaps we should have first focused on making the existing healthcare structure more cost effective. Patients, myself included, do not always know what sort of services that they require. Most of the time, people place their blind faith in physicians and physicians' assistants. If a plan to reduce unncecessary procedures was implemented, costs could be reduced, and Obamacare might be more affordable.
Although the article starts off suggesting that the President's Health Care act is responsible for companies like United adopting new cost control strategies and reimbursement methods, it implies at the end that the market is responsible for companies' reforms, instead. I'm not quite sure which interpretation to believe.
My natural tendency is to agree with the article’s first implication - that the bill is responsible for United’s positive changes. I hope this is actually the case. Not only because it would give me a chance to call Bill-O and other Fox Noise commentators out for their often patently false reporting, but because it would mean people would be better off because of an act of Congress.
Before rushing to a judgment, though, I'd like to have more information on what exactly the bill is accomplishing after two years in effect. Which already enacted provisions are having measurable (and hopefully positive) effects on the industry. Where are market trends leading the industry in the first place?
Off to Google…
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