ObamaCare Light?



We recently reported that House Republicans introduced an alternative plan to ObamaCare in a Ways and Means budget hearing. Our initial analysis concluded the alternative was little more than a reactionary spending plan that benefited hospitals much more than people. Some hospital administrators, however, were extremely pleased with the plan. “We support Medicaid expansion, but this is another way,” noted Howell Clyborne, a Vice President at Greenville Hospital System. “It puts revenue into the hospitals.” Mr. Clyborne gets credit for both the honesty and accuracy of his remark.

But here’s a question worth asking: Why should the state pump money into hospitals – currently the price tag is set at $62 million in recurring funding – instead of returning that money to taxpayers so that they can make their own decisions about where to go for health care?

The answer is simple. Hospitals and the federal government reached a compromise to pay for Medicaid expansion through ObamaCare, which according to the South Carolina Hospital Association, included hospitals agreeing to “significant reductions in Medicare reimbursement and Medicare and Medicaid Disproportionate Share (DSH) funds [from the federal government] that provide financial assistance to hospitals for uncompensated care provided to uninsured patients.” Since the Supreme Court ruled that the federal government could not force states to expand Medicaid, hospitals could not be 100 percent certain that they would in fact get what they bargained for with the federal government.

However, South Carolina is more than willing to make good on the federal government’s end of the deal with hospitals. A provision put forward by the the House GOP (and supported by the governor) would allocate $20 million ($14 million of which comes from the federal government) to rural hospitals for uncompensated care.

But that’s just the beginning. As usual, when government intervenes in what should be a free market transaction – the purchase by taxpayers of goods and services from government – things get complicated and a whole lot of middle men begin to get paid before taxpayers even start to receive what’s supposedly intended for them.

In this case, here’s how that looks:

  1. State government gives $20 million to cover uncompensated care for rural hospitals.
  2. Fine, but since hospitals are now receiving 100 percent reimbursement from the government for treating uninsured persons, they (the hospitals) will be tempted to attract as many patients as they can – or at least fail to properly discourage over-treatment or treatment for insignificant reasons. So the government gives $35 million to hospitals to direct poor patients to federal clinics.
  3. Ah, but that creates a problem. The clinics may be too few in number or have insufficient capacity to treat the influx of new patients. So the government must spend money on the clinics, too – in this case, lawmakers reckon an even $10 million will do.

Who are the winners in this scheme?

Hospitals (and their lobbyists) would benefit the most if Medicaid were expanded (under ObamaCare) because of the massive injection of taxpayer money that would entail. But they would also benefit from this “alternative” plan. And in what one might assume to be the result of an alliance between the hospitals’ lobbyists and those of the federal clinics, federal clinics are also given an additional $10 million. So in the end, hospitals get taxpayer money to send poor patients to taxpayer-funded clinics.

As always, when the government steps in to offer alternatives to other government-imposed programs, there are obvious losers. In this case, taxpayers are on the losing side. Unfortunately, the “alternative” to Medicaid expansion emulates the same failed policies of ObamaCare and welfare programs in general: throwing money at a problem while disregarding any other practical solutions. Spending $83 million on this plan to “get revenue into the hospitals,” as the hospital administrator aptly put it, obligates taxpayers to pay at least that much every year. When the federal funds are no longer available, state lawmakers will likely fall to political temptation and make up those funds with more state dollars – dollars we don’t have. In the end, taxes will have to be raised to keep the scheme alive.

But here’s the most important point about ObamaCare Light, as this plan could accurately be called. It does nothing to help people get better access to health care. Giving more compensation to hospitals to cover uncompensated care and to send poor patients to clinics may help hospitals to keep functioning without making their own budget cuts, but does not help the sick. In fact, rural hospitals are given no incentive to promote healthier lifestyles since they know they’ll be compensated in full whether or not their patients can pay for it. Furthermore, the ObamaCare Light plan doesn’t do anything – indeed, doesn’t even claim to do anything – to lower healthcare costs or health insurance premiums.

While ObamaCare Light may not spend as much money as another expansion of Medicaid eligibility, it is still more government spending and an expansion of government power over the people.

Print Friendly, PDF & Email

3 Comments on “ObamaCare Light?”

  1. Health care is inherently not a competitive market good/service for the basic reason that the imbalance of information between seller (physicians, hospitals, pharmacies) and customers aka patients. There are no incentives for insurance plans to help patients learn or buy smart. And without a functioning price mechanism a free market can not function.

    Health care is an oligopoly and big health care needs big gov’t to balance it’s power.

    • You mean MEDICAL care. Let’s stop calling it health care. It has nothing to do with health. Rather it is all about covering up symptoms with drugs and surgeries for as long as the industry can get away with it and continue to milk your insurance. A better name for it would be DISEASE care. With the exception of Acute care and Emergency medicine, western allopathic medicine does more harm than good.

      You’re right! It is definitely not something government should get involved in. A little research would indicate to anyone that not only are not enough people helped by western medicine, but it is the leading cause of death in our country. The statistics are all in the medical journals. Just go to the Life Extension Foundation website and search for “Death by Medicine”. There you’ll see a 30 page compilation of statistics compiled by medical doctors, no less, showing that in 2004 there were more than 780,000 deaths, based on just 20 percent of reported incidents, due to people simply following their medical doctors advice and for example, taking their Rx as prescribed by the doctor. The report breaks it all down as to how many died for what reason.

      Additionally, the World Health Organization has statistics that show the per capita expenditure on medical expenses (or health care) by country. You can also look up the percentage of each country’s geriatric population with a healthy life expectancy. Guess what? The United States spends the most per capita already (and has for a long time) and has the same percentage of its geriatric population with a healthy life expectancy as Cuba does which spends 1/10 the amount of money per capita on so called “health care”. So spending more money on a way to pay for more western medicine is not the answer to increasing wellness, that is for sure.

      The statistics for Europe and Asia indicate that they spend far less than we do and their geriatric populations are far healthier! That is because, in Europe and Asia , traditional natural medicine such as Naturopathy, and Homeopathy and Chinese Medicine are on a level playing field with modern western allopathic orthodox medicine. Europeans and Asians have better access to the actual HEALING modes of medicine where in the United States they are maligned or discounted or referred to as “alternative” and in SC, practicing Naturopathic Medicine is punishable, according to Title 40, Section 31, up to a year in jail and/or up to a $500 fine! Imagine, SC being so backwards as to make it illegal to actually restore someone’s health using safe natural medicines!

      I’m not kidding. Look at this! Here is the link to the law. http://www.scstatehouse.gov/query.php?search=DOC&searchtext=Naturopathy&category=CODEOFLAWS&conid=7213886&result_pos=0&keyval=762&numrows=10

      Furthermore, Naturopaths spend as much time in medical school as a primary care doctor does but rather than learning about drugs and surgery to cover up disease symptoms, they learn about the underlying CAUSES of disease and how to get RID of them so the patient’s own immune system can fight off the disease and restore health.

      As a health insurance agent since the 1990s who has taken thousands of health histories, I can attest to the fact that my clients that prefer natural medicine over conventional medicine are by far the healthiest and qualified for the lowest health insurance rates.

      As an independent agent licensed in Massachusetts and Rhode Island, I witnessed the implementation of Romneycare in Massachusetts. Many of my clients were informed by the state that their prior chosen health plans which were quality health savings account (HSA) qualified high deductible insurance plans with reasonable rates did not meet the new Massachusetts standards thereby forcing my client into something much more expensive with a lower deductible which he did not want. Additionally, this legislation had a negative effect on the number of carriers that even wanted to offer health insurance in the state. I didn’t even bother to keep my license active there, things got so bad.

      I also witnessed the destruction of the health insurance industry in Rhode Island as legislators got so carried away passing “tough” legislation that now there are only two insurance companies doing business in Rhode Island where there used to be dozens. Needless to say, with the lack of competition, prices are through the roof and plans are few and far between and those that used to be able to afford health insurance, no longer can.

      To get an idea of what Obamacare in SC would look like, all anyone needs to do is look at the disasterous state of health insurance availability and affordability in states with the most government regulation which are mostly all located in the northeast. Besides Massachusetts and the New England states (with the exception of NH), NY and NJ are horrendous.

      If the South Carolina legislature wanted to do something good for the people of SC and actually promote real health care, in addition to passing H3101 which would prevent making the current health insurance situation worse in the state, they could start by repealing the idiotic legislation that prevents the only mode of medicine that is most effective in restoring people’s robust health !

  2. The last sentence above should read:

    If the South Carolina legislature wanted to do something good for the people of SC and actually promote real health care, in addition to passing H3101 which would prevent making the current health insurance situation worse in the state, they could start by FINALLY repealing the idiotic legislation that prevents the only mode of medicine that is most effective in restoring people’s robust health from being practiced and available to South Carolinians !