Health Care Reform

Many, many smart Americans truly believe that Obama Care is likely to fail and place an unbelievable financial and bureaucratic burden on the nation. Their theory is that Obama Care never attacked the underlying root causes of the nation’s escalating health care costs, most of which should be addressed as a public health problem. Rather, the legislation went after the problem as a government regulation, taxing, and bureaucracy solution, mostly bypassing the underlying root causes and dooming it to an inglorious failure.

The underlying root causes for high health care costs in this country are relatively straightforward:

1) Americans smoke too much.

2) Americans eat too much.

3) Americans eat too much of the wrong types of food.

4) Americans do not exercise enough.

5) Americans’ average age is getting older.

The first four likely root causes are public health issues and that is how they should be addressed. The fifth issue is a graying of the population issue and that should be attacked by a focused effort to minimize the effect of aging diseases, the top cancers, heart disease, and all forms of dementia. Even if Obama Care attained all of its taxing and bureaucratic goals, the bottom line is that the above five conditions would still be around and would still contribute to an ever escalating health care cost crisis.

Now, more and more evidence is starting to pile up, beyond what we have already presented, that further indicates that Obama Care is fatally flawed in so many different ways:

– In a February 15, 2011 article in USA Today, “Heart Disease Gets Real,” author Mary Brophy Marcus reviewed the latest guidelines from the American Heart Association regarding ways to prevent cardiovascular disease in women. According to the article, every minute of every day a woman dies in this country from heart disease, making it the leading cause of death for women in this country, more than breast cancer. According to the American Heart Association, what should be done to reduce this pubic health and private health issue:

* Avoid smoking and exposure to environmental smoke

* Be physically active, getting 150 minutes a week of moderate exercise or 75 minutes a week of vigorous exercise.

* Achieve a healthy body weight.

* Eat a diet rich in fruits and vegetables, chose whole grain, high fiber foods, eat oil fish at least twice a week, limit saturated fat, cholesterol and sugar, avoid trans-fatty acids.

Sound familiar? Virtually the same list from above. The root causes of a deadly and widely suffered disease has its root causes in smoking, eating, and exercising. If all Americans did this, disease rates would go down and by reducing the number of times Americans get sick, the costs would go down. Simple, basic economics: reduce demand, keep supply the same and prices have to come down. This was the same advice from the experts at the Cleveland Clinic, when they were interviewed by Fortune magazine and other research and other medical sources. It is not hard if you know how to solve a problem and identify the underlying root causes. Obama Care did none of this.

– One of the major selling and talking points about Obama Care was that needy Americans would rush to enroll in the new programs to get health care coverage. Not so fast, says Amy Goldstein in her Washington Post article from February 11, 2011. According to Ms. Goldstein:

* Although some Americans have signed up for special health plans for people that have been spurned by the insurance industry, signups are far below the levels expected by the Obama Administration.

* The number of people enrolled in these so-called high risk pools is only up to 12,500 across the entire nation, about 250 per state on average.

* Last spring, less than ten months ago, the government’s chief actuary forecasted that 375,000 Americans would have signed up for the pools by the end of 2010.

Thus, the government’s forecast was off by over 96%.

These are not numbers from Fox News. These are not numbers from the Tea Party. These are not numbers from Rush Limbaugh. These are Obama administration actuals vs. Obama administration forecasts. Missed it by 96%. Pitiful.

Some administration officials say the low numbers are because awareness is so low, which does not change the fact that the administration was so wrong in its forecast and expectations. However, other experts say the new Obama Care program is too expensive for people with existing medical problems. Thus, even when the political class designs a program specifically for certain Americans, by not understanding underlying root causes, they still cannot get the solution right.

– Another major selling point from the Obama/Pelosi/Reid Obama Care trifecta was that the legislation would actually end up being a job creation vehicle, as she stated just days before the final vote: “It’s about jobs. In its life, (the legislation) will create four million jobs, 400,000 jobs almost immediately.”

How is that prediction coming along? According to an article in the National Review on February 10, 2011 by Yuval Levin, not so good. Mr. Levin was covering a House Budget Committee on that day when he heard Congressman John Campbell ask a question of Congressional Budget Office (CBO) Director Douglas Elmendorf:

Campbell: You just mentioned that you believe – or that in your estimate – that the health care law would reduce the labor used in the economy by about one half of one percent. Given that, I believe you say, there’s 150 million full time people working in 2021, that means that, in your estimation, the health care law would reduce employment by 800,000 in 2021. Is that correct?
Elmendorf: Yes. the way I would put it is that we do estimate, as you said, that household employment will be about 160 million by the end of the decade. Half a percent is 800,000.

Obama Care supporters do not dare challenge the credibility of the CBO on this issue since they used the CBO numbers to help pass the legislation. Thus, if anyone believes the CBO was right in their original estimates of how much this legislation would reduce the Federal deficit (which we have proven was based on faulty data and assumptions), you cannot now say the CBO is wrong in their estimates when the say that Obama Care will actually reduce U.S. employment by 800,000, not increase it by 4 million as Ms. Pelosi claimed. Another horrendous estimate.

– However, while many still firmly believe that the five reasons listed above are primary underlying root causes of our high health care costs, there could a potential other reason, unrelated to the public health causes. In the March, 2011 issue of Life Extensions magazine, William Faloon had an interesting article entitled, “No Real Health Care Cost Crisis.” (Note: there is a potential conflict of interest here since Life Extension the company is in the business of selling supplements whose sales are likely sometimes competitors with drug company products.)

Mr. Faloon’s conclusion is that a leading cause of our high health care costs is the cozy arrangement the drug companies have with the Federal government. His theory goes as follows: the Federal government gives pharmaceutical companies a virtual monopoly over patented and generic drugs which result in outlandish profits earned from their protected drugs which are then used to use lobbyists who work on Congress to pass legislation that leaves the taxpayers on the hook for paying for these over priced medicines.

He gave several examples of this model and potential reality including the following:

* In July, 2009, the FDA officially announced something that those in the medical field knew for a long time: an old drug called colchicine was effective in treating acute cases of gouty arthritis.

* The drug had been around since the 19th century and has its original with the ancient Greeks.

* The FDA wanted the ancient drug officially tested for safety and efficacy and offered one company an exclusive three year protection plan, i.e. they would have no competitors in the sale of the drug for that time period even though the drug predated the FDA.

* In return the company conducted a ONE WEEK trial and proved the drug was all it was supposed to be and was safe.

* Before the Federal government via the FDA got involved, the drug sold for $.09 a pill.

* Once the government granted the monopoly, the price shot up by a factor of 50 to a cost of $5.00 a pill.

* Before the FDA got involved, the Federal government and the American taxpayer had paid out about $1 million a year through Medicare-Medicaid to supply colchicine for Americans who needed it.

* After the FDA intervention, the government and the American taxpayer will now pay about $50 million a year for the same drug that they used to pay $1 million for.

If you repeat this outrageous price mark up strategy across all drug categories, you can see why the nation is paying such high medical bills.

The article lays out another example for the drug Valtrex. According to Life Extension, the raw material to make a one month supply of Valtrex costs about $.60. Yes, $.60. The article estimates that the cost of production is about $1.50 so the total end product to the drug company is $2.10. However, given the government/drug industry connection, one month of Valtrex retails for $200, resulting in about $198 in gross margin for every month’s worth of Valtrex sold.

Is Mr. Faloon wrong and biased? I do not know but I am sure most Americans have gagged many times when told what the actual costs of their drugs are. At least his line of reasoning is worth an unbiased investigation and analysis to see if this is another root cause of our high health care costs.

And, according to an article in the January, 2011 issue of Business Week magazine, Congress may actual to this. The article pointed out the fact that the drug industry “offered $80 billion In dIscounts and refunds over 10 years to help pay for the law. The concessions may have insulated the industry from tough new rules or price controls.” Maybe Mr. Faloon is onto something afterall.

– Our final example has not been written up in an unbiased, national publication. It is based on a sample size of one but much like high priced drugs, I would bet many people have experienced or heard of the following situation. A good friend of mine runs her own business. She is the only employee of the business. She had a health care plan but dropped it because of its expense and the fact that it never seemed to live up to the hype and coverage it received when she purchased the policy.

Thus, when she needed a relatively major operation, she knew that she would have to pay for it herself out of her funds. However, once her doctor realized she had no insurance, the costs of the operation dropped dramatically. This is a situation we have all probalby seen a number of times. There is often two price lists: one for those that have insurance (the higher price) and one for those that do not have insurance (a lower price).

Seems many doctors are artificially inflating their prices since they know the end customer, the sick American, will be getting help in payment via their insurance company. If the operation costs the uninsured $10,000, it might cost the insured $15,000. Since the insured person is getting help in payment from the insurance company, they are not as diligent as they might be if they were using their own money. Thus, another potential, underlying root cause.

In summary, now what do we know about Obama Care:

* The political class never understood the underlying root cuases of our high health costs, public health issues, and thus, Obama Care’s heavy handed government bureaucracy approach is likely to fail.

* Americans currently with health care insurance coverage are likely to lose that coverage because their companies can save money by paying the fine for not having insurance under Obama Care rather than continuing to provide health care coverage.

* The numbers that Obama Care is based on, from a deficit reduction perspective, are flawed since the CBO estimates do not include all of the costs components that were in the final legislation.

* The law criminalize millions of honest Americans if they do not purchase mandatory health care insurance under Obama Care.

* Promised job creation under Obama Care is unlikely to materialize.

* Promised program enrollment under the early components of Obama Care are staggering short of expectations.

* The Federal government via the FDA and the drug companies may be in such a close relationship, along with the Congress and the drug company lobbyists, that the Federal government might actually be a major source of cost escalation.

* The “two price list” syndrome, not addressed under Obama Care, may actually be another major cost factor.

It appears that the major causes of escalating health costs in this country are the ones NOT covered by the burdensome Obama Care legislation. It is fatally flawed and needs to be repealed as soon as possible. We need to impanel a group of smart Americans, similar to the success we enjoyed using the same process for the Manhattan Project, the Apollo Space Program, the Military Base Closing Commission, the Grace Commission, etc. They would identify and quantify the underlying root causes and come up with proposed solutions, sans lobbyists and politicians. These alternative proposals would be voted on by the American voters and the winner would be implemented.

The political class has proven via Obama Care that they cannot solve a problem because they cannot understand the underlying root causes. Obama Care is fatally flawed, lets pull the plug and start over before it is too late and the nation, its citizens, and the country’s financial health straight lines.