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ACA and Medicare for All

There is an old saying, “Be careful what you wish for; you just might get it.”

 

In just a few weeks, this country will seat a new justice to the Supreme Court, hold an election and have the highest court in the land hear oral arguments to possibly throw out the largest piece of health care legislation since Medicare was created in 1965.  Each of these issues is emotionally charged and could have long-lasting impacts on this country in a very profound way.

 

Physicians are taught to weigh the benefits of treatment options with the side effects and long-term impacts.  That kind of thinking is sorely missing when you look at the court battle over the Affordable Care Act and what may happen as a result.

 

Let me stop right here.  This is not a biased piece to support the ACA or glorify its virtues.  Since the ACA was passed, I have been very consistent in evaluating the good things it did and where it went wrong.  What follows is just a real and possible scenario of what may happen due to the path we are already on and is a cautionary tale about focusing on one thing and forgetting the big picture.

 

Ok, with that out of the way.  Let’s play this scenario out, shall we?  Ok, let’s say the polls are right and Biden wins the white house.  Let’s say the polls are also correct, and the balance of the Senate shifts Democrat.  Shortly after the election, the supreme court hears the arguments on the ACA with the new conservative justice seating and part of the process.  Sometime after Biden takes the oath of office and the new Congress is seated, the high court, in a 5-4 vote with Chief Justice Roberts siding with the three liberal justices, throws out the ACA by ruling that the individual mandate is not only unconstitutional but also not able to be severed from the rest of the law.

 

Immediately 20 million Americans lose their insurance.  Insurance reform is no longer the law of the land, and neither is Medicaid expansion.  The Republicans have finally gotten their wish and killed Obama Care.  This is the part where I remind you of the opening.  Be careful of what you wish for; you just might get it.

 

The Democrats are in control of Congress, and they are angry.  Obama Care is no more, and the deciding vote was cast by a justice that they don’t think should have ever been seated.  Cries of hypocrisy and the knowledge that RBG would never have allowed this to happen fill the news cycle.  President Biden is pressured by the more progressive section of his party.  Senator Schumer, now in control of the Senate, starts legislation to end the filibuster.  The legislation passes on a pure party-line vote.  Speaker Pelosi allows Medicare for All legislation to be introduced in the house where it is quickly passed on another strict party-line vote.  The bill is sent to the Senate for consideration.

 

President Biden, who has never been in favor of Medicare for All, can’t get in front of this runaway train.  The Senate has a floor vote on the House bill, and it passes.  It’s not even the end of President Biden’s first 100 days, and he finds himself with a Medicare for All law on his desk and the cries of his party to sign the bill and stick it to the Republicans like they “stuck it to us.”  Biden signs the bill, and before you know it, we have universal health care, and the entire insurance industry has been destroyed.  I will pause while some of you cheer about the demise of the insurance industry.  Go ahead, get it out of your system.  I understand.

 

Now, as the dust settles, someone asks the intriguing question, “what have we just done?”

 

Well, the short answer is everyone in the country now has free health care.  To pass the bill quickly, we have decided that all doctors and hospitals will be paid at Medicare rates.  They will submit all claims to the government for processing.  Hurray!  We did it!  But wait, that’s not the end of the story.

 

On day two, someone else speaks up and asks two even better questions; “How are we going to pay for this, and what will happen to our doctors and hospitals?”   I will leave the question on how we pay for this because that would take a whole book and more economic analysis than I want to do right now. Instead, let’s focus on what happens to our doctors and hospitals.

 

The quick answer is they take it in the shorts.  Doctors and hospitals would take an immediate and crushing reduction in revenue.  A CBO study shows that, on average, doctors get paid 30% more than Medicare from insurance companies, and hospitals get paid an average of 80% more than Medicare from insurance companies.  These statistics may be understated, but even if they aren’t, can you tell me any industry or business that survives without dramatic changes if their revenue dropped by 30% to 80% over night?  I didn’t think so.

 

This kind of dramatic hit to revenue would cause many rural hospitals to fail, and the urban hospitals that did survive would have to change the way they provide care.  Expenses would have to be cut, and those cuts would hurt.

 

The same thing and worse would happen to doctors.  Again, expenses would have to be cut, and those cuts would impact patient care.  Also, large numbers of physicians would likely retire.  Remember that 42% of the practicing physicians in this country are over the age of 55.  If just half of them retired early, that would mean around 170,000 doctors were leaving practice.  Right now, about 25,000 doctors graduate medical school each year.  So, if we had a mass exodus of doctors to the tune of 170,000, it would take us seven years to replace them, and that is only if no more doctors retire during that seven years.

 

So, at a time when everyone has free health care, and demand for care and services inevitably go up, we could see hospitals close and a shortage of doctors.  Wait times go up, and the quality of care derived goes down.

 

Be careful what you ask for; you just might get it.

 

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