Obama Care: Still Constitutional and Still A Major Disaster: Part 1 - Root Causes Of High Health Care Costs and The Gutting Of Medicare

We have not talked about Obama Care for a while, our review of the latest slime, sleaze, morality, and corruption of American political class taking up five of our recent posts. However, that does not mean the bad news of Obama Care has not continued to come to the surface. While it may be Constitutional, it is still a disaster along every dimension imaginable: costs, problem solutions, freedom, and fiscal irresponsibility.

But before reviewing the latest, let's review the basic problems we have discussed way too many times in this blog:

1) Obama Care never identified or addressed the primary root causes of our nation's escalating health care costs:

• Americans eat too much and Americans eat too much of the wrong kind of food - These two interrelated causes have many underlying drivers, not the least of which is Federal government farm subsidies. These subsidies have incented American farmers to grow way too much corn, corn that ends up as cheap but unhealthy corn fructose which ends up in just about everything Americans eat.
• Americans smoke too much - This problem is exacerbated by the Federal government, with the American taxpayer paying and incenting tobacco farmers over $190 million a year in Federal subsidies to grow more tobacco which ends up killing more Americans.
• Americans do not get enough exercise - Americans exercise so little that a recent article in the August 17, 2012 issue of The Week magazine discussed a global study which found that Americans "ranked among the most physically lazy countries in the world," with 40% of American adults rarely engaging in any physical activity or exercise.
• Americans are getting older - Rather than mobilizing resources to aggressively go after new cures and treatments for aging diseases, e.g. cancer, dementia, etc., Obama Care instead just introduces a massive new Federal bureaucracy and taxation system without a focus on disease eradication.
• The legislation contains none of the previously successful medical tort reform that some states have already shown to reduce health care costs, an omission due to the fabulous lobbying efforts of the ABA.
• The legislation does nothing to break down the state line barriers that inhibit insurance company competition across state lines.
• The legislation never "followed the money." In other words, when we go into for a simple medical test that takes only a handful of minutes to perform, e.g. a blood test, but end up paying hundreds of dollars for the simple test, Obama Care never took the time to understand where these outrageous amounts of money flow, who benefits from the outrageous fees, understand how much of these fees are reasonable and unreasonable, and how to control the flow.

2) The legislation does little to curtail current wasteful spending of existing massive Federal government health care programs, Medicare and Medicaid, which easily lose well over $100 billion a year to waste, inefficiencies, and outright criminal fraud.

3) The legislation will not contain health care costs, with the Congressional Budget Office estimating that the gross cost of the legislation is almost double what was estimated just a few years ago, the head actuary of Medicare and Medicaid recently estimating that Obama Care will add more than $300 billion to the national debt in the first ten years, and the one sub-program that was supposed to be a positive contributor to the legislation's financials, the CLASS program, has already been shut down for being ineffective.

4) The legislation is written so poorly that companies have already set plans in motion to curtail hiring, change full time employees to part time employees, and cancel existing company health care plans in order to dodge the taxes, regulations, and burdens imposed on them by the legislation. This legislation and the ensuing actions by companies are likely a primary driver to our continuing high unemployment rate.

We could go on with other examples of idiocy and fiscal dangers that we have already discussed in this blog but you get the idea. When you do not address the root causes of any problem, your chance of actually resolving the problem is almost nil. This is the case with Obama Care.

This is a horrible piece of legislation. And the depths of the dangers just keep bubbling to the surface.

- One of the supposed selling points of Obama Care and the main reason we were supposed to pass it was that the legislation would provide for health care insurance for EVERY American once it was fully implemented. However, a new Congressional Budget Office (CBO) report says that under the Affordable Care Act, a.k.a. Obamacare, 30 million non-elderly Americans will remain without health insurance in 2022, ten years from now.

Thus, if the CBO is to be believed, and Obama, Pelosi, et al relied on the original CBO analysis to force through Obama Care, then a primary tenet and objective of Obama Care, all Americans will be covered by health care insurance, will go largely unfilled. The CBO's analysis estimated that there are currently 53 million Americans without health care insurance. By leaving 30 million people uninsured when the legislation is fully rolled out, the legislation will have missed this target by over 50%. Pitiful.

And it probably will not even hit this low coverage result. As we have reported many times in this blog, American companies have publicly announced that they will seriously consider dropping their existing health care insurance policies they currently fund for their employees and retirees under Obama Care. Why? Obama Care makes it a better business decision and financial decision to pay a smaller Obama Care fine for not having employee health insurance coverage than to continue their existing programs, an action that will likely result in millions and millions of more Americans not having health care insurance.

- Not only is Obama Care likely to screw up the health care coverage that tens of millions of Americans get from their employers, but it is also likely to really devastate Medicare. The Wall Street Journal reported on this gutting of Medicare under the Obama Care legislation two years ago:

 (http://online.wsj.com/article/SB10001424052748703649004575437311393854940.html

Their article focused on the findings of Richard Foster who was the head actuary of Medicare at that time, a person who probably knew more about the numbers driving Medicare than anyone else anywhere. Mr. Foster's findings and analyses led to the following conclusions:

• Medicare payment rates for doctors and hospitals serving elderly Americans will be cut by 30% over the next three years under Obama Care
• By 2019 Medicare, payment rates will be lower than under Medicaid. 
• At the end of the 75-year forecast window for the Medicare, Medicare payment rates will be one-third of what will be paid by private insurance, and only half of what is paid by Medicaid.
• Obama Care chops $818 billion out of  Medicare Part A (hospital insurance) over the next ten years.
• Combining these cuts with cuts to Medicare Part B brings the total cuts to $1.05 trillion over the first 10 years and $4.95 trillion over the first 20 years.
• Mr. Foster's analysis also concludes that 50% of senior Americans with Medicare Advantage will lose their plan because of these cuts.
• These cuts do not include unforeseen cuts that Obama Care's 15 member "death panel"of unelected bureaucrats might impose in the future to keep costs under control

No one argues that Medicare and Medicaid costs need to be gotten under control. But funding Obama Care with arbitrary cuts to Medicare does not eliminate the cost issue, it just moves the costs elsewhere within the Federal bureaucracy. All it does it make medical care for America's elderly more difficult to provide and find without solving any of the underlying root causes of the problem to begin with.

- While the Wall Street Journal article is a little dated, a new CBO analysis and report from late July is not. It reinforces these findings from the Journal article, updating them for current estimates but reaching the same conclusions, namely that Obama Care arbitrarily guts Medicare funding according to the following budget cuts:

•A $260 billion payment cut for hospital services.

•A $39 billion payment cut for skilled nursing services.

•A $17 billion payment cut for hospice services.

•A $66 billion payment cut for home health services.

•A $33 billion payment cut for all other services.

•A $156 billion cut in payment rates in Medicare Advantage.

•$56 billion in cuts for disproportionate share hospital (DSH) payments.

•$114 billion in other provisions pertaining to Medicare, Medicaid, and CHIP.

Note: CBO report details are available at:

http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf


Different year, different analysis, same conclusion. The Heritage Foundation, pulling information from the 2012 Medicare Trustees report concluded: "The impact of these cuts will be detrimental to seniors’ access to care. The Medicare trustees 2012 report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services."

Boy, it just keeps getting worse. Didn't anybody in Congress or the White House consult with the Medicare and Medicaid experts to find out ahead of time what Obama Care would do the the health care of senior Americans from the experts who would know best? Obviously not.

Yes, Obama Care is Constitutional. But it is also a disaster that does not address the root causes of our escalating health care costs, will leave tens of millions of Americans uninsured, will add to our skyrocketing national debt, and will likely deprive funding to existing health care programs that serve our senior citizens. And worst of all, we have more bad news to report int tomorrow's post, the nightmare continues.

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http://www.repealamendment/