Obama-Daschle “reform” will cripple American health care

Obama-Daschle “reform” will cripple American health care

President-elect Barack Obama has promised sweeping changes during his first few months in office. Perhaps the most far-reaching – and troubling – of his proposals is his plan for healthcare reform.

Obama has tapped former Sen. Tom Daschle to serve as both the Secretary of Health and Human Services and the director of the newly created White House Office for Health Reform.

Since being ousted from the U.S. Senate in 2004, Daschle has written extensively on health care. His recent book, Critical: What We Can Do About the Health-Care Crisis, might as well be a blueprint for the Obama Administration’s position on health reform.

Unfortunately, the Obama-Daschle plan’s assumptions are false, its details are alarming, and its results will ultimately be disastrous.

Obama proposes a National Health Insurance Exchange where individuals and small businesses could purchase health insurance from government-approved private providers or from the government itself. All applicants would be eligible for a policy through the Exchange, regardless of pre-existing conditions or medical history, thanks to “guaranteed issue” regulations.

Further, Obama and Daschle want to prohibit insurers from charging different premiums to different applicants. These “community rating” regulations would ensure that a 55-year-old man with emphysema would pay the same amount for his health insurance as a 22-year-old non-smoker.

That may sound fair, but it ignores several facts about health care.

Younger people tend to be healthier and therefore do not use the healthcare system as much as older people, who generally have more medical problems. Insurers take this reality into account when calculating premiums, which is why young people pay lower insurance rates than the elderly.

But if insurers must charge both young and old the same rates, premiums for everyone will be in the stratosphere. Many of the young and healthy would not purchase insurance — until they got sick, when they’d take advantage of the plan’s “guaranteed issue” provision to get a policy. This cycle would continue until the only people left in the pool were the desperately ill.

Rather than cutting costs and expanding coverage, guaranteed issue and community rating will likely increase costs and cast more Americans into the ranks of the uninsured.

Obama-Daschle’s answer for this problem is a government-run health insurance program to insure those who fall through the cracks, which will soon be everybody.

In Critical, Dasche says the government-run insurance program “will be modeled after Medicare, a proven and popular program.”

Medicare is popular with its elderly beneficiaries. Medicare and its cousin Medicaid are far from popular with healthcare providers, who are usually reimbursed at below-market rates for their work. Doctors must devote valuable time to mountains of confusing paperwork to perform the most basic of medical tasks.

Daschle’s own book relates the stories of people who were arbitrarily cut off from government benefits or turned away by doctors who were no longer willing or able to work with the poorly run government insurance programs. And yet somehow he concludes that these failing programs must be expanded. Go figure.

Government reimbursement rates already discourage doctors from accepting patients with government coverage. As the government program slowly becomes the only game in town, what then of physicians? Will they simply accept their fate? We can look to our north for a possible answer.

Canadians have “enjoyed” universal health coverage since the 1970s. They also enjoy the rationing of care. Both drugs and physicians are in short supply.

The governments of each province in Canada establish payment rates for physicians, and they’re less than half what their American counterparts earn. Is it any surprise that 11 percent of Canadian-trained doctors pack up their stethoscopes and come to the U.S. to practice medicine?

Because there aren’t enough doctors, Canadians must wait in line. Wait times for referrals from primary care physicians to specialists in Canada exceed 18 weeks — twice what doctors consider clinically acceptable.

Brian Day, former president of the Canadian Medical Association, remarked that Canada “is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years.”

Having squeezed private insurers out of the market with his government behemoth, Daschle next proposes to take on providers. In Critical, he writes, “[W]e also have to cut costs and improve quality . . . We can and should strive to get more for our health-care money by steering providers toward drugs, treatments, and procedures that yield the best results for the lowest cost.”

Daschle wants the government, not your doctor, to decide what the best treatment is for you. And he somehow equates cost-effectiveness with medical effectiveness.

Daschle wants to create a Federal Health Board (FHB) to make these medical decisions for us. He likens the FHB to the Federal Reserve, describing it as “a quasi-governmental organization” consisting of presidentially-appointed, Senate-approved governors.

Daschle’s FHB will decide which treatments and drugs will be allowed under the government programs and what price the government will pay for them.

Such a system will stifle medical innovation. Why should a pharmaceutical or medical device company spend hundreds of millions of dollars to discover, test, and bring a new product to market if there is a chance the FHB will decide the cost to the government is not worth the gain for the patient?

Reform will be necessary to deliver the effective, affordable, and responsive healthcare system that Americans need and deserve. But Daschle and Obama are advocating changes that will drive healthcare costs higher and lead to a government takeover of the healthcare industry. That may be their goal, but it shouldn’t be ours.

Sally C. Pipes is president and CEO of the Pacific Research Institute. Her latest book is “The Top Ten Myths of American Health Care: A Citizen’s Guide.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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