, Gloucester, MA

Letters/My View

January 7, 2014

Letter: Insurance changes don't lower cost

To the editor:

Obamacare is an ill-conceived disaster in process.

There’s a lot of information out there that should have led to some critical thinking and a better process before the roof fell in.

It’s not clear whether Nancy Pelosi was covering up the “unintended consequence” deliberately built into the Affordable Care Act when she stated, “We have to pass the bill so you can find out what is in it.” Or was she just displaying party-loyalty ignorance?

So, instead of inundating the country with more unintelligible paper (974 pages of law and 11,000-plus pages of regulations), they should have spent the time fixing the glitches in Social Security and Medicare before trying to expand government’s reach to a single-payer system. By the way, Singapore and Switzerland have universal health care managed by the private sector.

Price reductions were never in the cards. From Economics 101, by pushing the demand curve to the right (adding more people), you intersect the supply curve at a higher price. Tinkering with the payments to the providers drives some of them out of the business, which pushes the supply curve to the left again, pushing the intersection higher and increasing the price even more.

There is a significant difference between cost and price. Remember the horror stories of $5 aspirins at the hospital that cost a penny when you buy them at the market? You cannot reduce cost by tinkering with the insurance, which is just adding up all the prices charged and dividing it among the insured.

Real cost reduction requires a change in process, improved productivity as well as major break-throughs to go from just managing chronic conditions to actually curing them. ...

After an operation, we received a statement from CMS (Centers for Medicare & Medicaid Services). The surgeon charged $25,000 in round numbers, CMS allowed $5,000, and Medicare pays 80 percent of the allowed. Our supplemental insurance pays 80 percent of what Medicare doesn’t cover, or $800. We paid $200. So $20,000 in charges disappeared!

Price control is the real benefit of health insurance. But that would severely irritate the right-wingers and crank up the medical profession and its lobbyists.

I expect the progressives to claim that’s a lot of technical stuff to expect a community organizer to know. Then, of course, the response is, “Why did you put a community organizer in charge?”



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