The High Costs of Complexity in Healthcare Reform

by Philip Caper, M.D.

Special to the Bangor Daily News


I have great admiration for the political courage of President Obama and the  Congressional leaders who were willing to take on healthcare reform, justifiably called the third rail of American politics. Our system cries out for reform. But I think they made a fatal mistake in allowing the law to be drafted by Congress, which is composed of 535 members with vastly varying values, goals and interests. 

Consequently, the resulting law is a conglomeration of ideas from across the political spectrum, thrown together and lacking any coherent conceptual framework. (Congress is usually a better editor than author.) This lack of coherence has resulted in a law that is far too complicated and therefore too expensive to manage, is full of holes, will be applied unevenly and unfairly, be full of unintended consequences, and be easily exploited by those looking to make a quick buck.

It has been credibly estimated that excessive administrative costs make up over 30% of our national healthcare bill - equivalent to around $1 Trillion. That is more than enough to provide healthcare to every uninsured person living in our country. Some of these costs result from the slicing and dicing of Americans into ever tinier and more confusing categories - the inevitable result of applying the principles of insurance to healthcare. 

But the costs go beyond dollars to a lack of basic fairness, and of public understanding and support. 

A plurality of the public still views the law negatively. Even many experts are confused by it. The law tries to deal with this confusion by providing a host of federally funded “navigators” to help people find their way through the maze it creates. While this provision will provide many well-paying jobs, it uses healthcare funds but does not pay for any healthcare - an example of your healthcare dollars (not) at work.

The ways in which the costs and benefits of the law are distributed are patently unfair.  Even if it is perfectly implemented, it will leave around 30 million Americans without healthcare coverage. Some of this was intentional, but some wasn’t. The ACA’s architects intended the federal government to expand the Medicaid program and make it more uniform to cover the poorest among us on a fairer basis.

But the Supreme Court found that requiring the states to expand their Medicaid programs would be unconstitutional, thereby gutting that provision. About half the states, including Maine, have declined the Medicaid expansion. They have decided to forgo the 100% federal funding (dropping to 90% after three years). That has created the anomalous situation where some of the poorest Mainers  will receive no help, while those who are slightly wealthier will receive federal subsidies to buy insurance.

Similarly, some people who make too much money to qualify for any federal assistance but cannot afford increasingly expensive health insurance on their own will continue to pay state and federal taxes to finance Medicare, Medicaid, the VA and other programs for others. They will also be paying higher federal taxes to compensate for the fact that private insurance for union members, corporate executives and others with employment-based coverage, some it quite comprehensive, is tax exempt,

The ACA does not go nearly far enough in restraining ballooning healthcare costs or reforming the way we pay those providing healthcare products and services. These abuses have been brilliantly and persuasively documented in Stephen Brill’s Time Magazine cover story Bitter Pill. Healthcare prices are completely out of control and the uninsured, many of them the least able to pay, are often the only ones charged full sticker price.

The only persuasive reason that has been given for our failure to address these glaring problems is that the power of the healthcare industry (that spends three times as much lobbying as  does the defense industry) is too great. Pretty pathetic, and yet another example of your healthcare dollars at work - this time against you.

It doesn’t have to be this way. It is now well-documented that Medicare, a far simpler program than the ACA, spends much less on administration and is much more effective in controlling prices than private insurance. Apologists for the existing system of private insurance claim that it preserves “choice” of insurers, and that Americans want that choice. 

But the choice people really want is a choice of healthcare providers, not insurance. Medicare beneficiaries can already choose any participating provider they wish. I have never heard a single Medicare patient complain about not having more choice of insurance companies.

Even Senator Harry Reid, one of the ACA’s architects, now admits that it must be a way-station to a Medicare-like single payer plan. He has said he thinks the country has to “work our way past” insurance-based health care.

Fortunately, in Maine we have a couple of ways to do that. Hearings will be held on LD 1345 in 2014, co-sponsored by Representative Charlie Priest and Senator Geoff Gratwick. That bill would start us on a path toward a statewide non-profit, unified and universal healthcare system, similar to the route recently taken by our neighbors in Vermont.

Failing approval of that measure, Maine (unlike Vermont) has a referendum process—a direct vote of the people for sanity in healthcare. If we were to follow either path, Maine would once again have the right to say “DIrigo” - I lead —and set a historic example for other states to follow.

Tag lines: President Obama; Obamacare; Affordable Care Act, U.S. Supreme Court, Sen. Harry Reid, complications of ACA, single-payer financing, Vermont, Maine