Understanding the Death Panel

This WSJ editorial tells it like it is: As usual, the most dangerous parts of ObamaCare aren't receiving the scrutiny they deserve—and one of the least examined is a new commission to tell Congress how to control health spending. Democrats are quietly attempting to impose a "global budget" on Medicare, with radical implications for U.S. medicine.

Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year—and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for. White House budget director Peter Orszag calls this Medicare commission "critical to our fiscal future" and "one of the most potent reforms."

On that last score, he's right. Prominent health economist Alain Enthoven has likened a global budget to "bombing from 35,000 feet, where you don't see the faces of the people you kill."

As envisioned by the Senate Finance Committee, the commission—all 15 members appointed by the President—would have to meet certain budget targets each year. Starting in 2015, Medicare could not grow more rapidly on a per capita basis than by a measure of inflation. After 2019, it could only grow at the same rate as GDP, plus one percentage point...

To avoid a senior revolt, Finance Chairman Max Baucus decided to bar his creation from reducing benefits or raising the eligibility age, which meant that it could only cut costs by tightening Medicare price controls on doctors and hospitals. Doctors and hospitals, naturally, were furious.

So the Montana Democrat bowed and carved out exemptions for such providers, along with hospices and suppliers of medical equipment. Until 2019 the commission will thus only be allowed to attack Medicare Advantage, the program that gives 10 million seniors private insurance choices, and to raise premiums for Medicare prescription drug coverage, which is run by private contractors. Notice a political pattern?

But a decade from now, such limits are off—which also happens to be roughly the time when ObamaCare's spending explodes. The hard budget cap means there is only so much money to be divvied up for care, with no account for demographic changes, such as longer life spans [Note: WSJ must be joking, here. There will not be longer life spans under Obamacare. WSJ gets most of the economics, but they don't get the real impact. Less care means shorter life spans.], or for the increasing incidence of diabetes, heart disease and other chronic conditions...

Worse, it makes little room for medical innovations. The commission is mandated to go after "sources of excess cost growth," meaning treatments that are too expensive or whose coverage will boost spending. If researchers find a pricey treatment for Alzheimer's in 2020, that might be banned because it would add new costs and bust the global budget. Or it might decide that "Maybe you're better off not having the surgery, but taking the painkiller," as President Obama put it in June...

In other words, the Medicare commission would come to function much like the National Institute for Health and Clinical Excellence, which rations care in England. Or a similar Washington state board created in 2003 to control costs. Its handiwork isn't pretty.

The Washington commission, called the Health Technology Assessment, is manned by 11 bureaucrats, including a chiropractor and a "naturopath" who focuses on alternative, er, remedies like herbs and massage therapy. They consider the clinical effectiveness but above all the cost of medical procedures and technologies. If they decide something isn't worth the money, then Olympia won't cover it for some 750,000 Medicaid patients, public employees and prisoners.

So far, the commission has banned knee arthroscopy for osteoarthritis, discography for chronic back pain, and implantable infusion pumps for pain not related to cancer. This year, it is targeting such frivolous luxuries as knee replacements, spinal cord stimulation, a specialized autism therapy and MRIs of the abdomen, pelvis or breasts for cancer. It will also rule on routine ultrasounds for pregnancy, which have a "high" efficacy but also a "high" cost...

Currently, the commission is pushing through the most restrictive payment policy in the nation for drug-eluting cardiac stents—simply because bare metal stents are cheaper, even as they result in worse outcomes. If a patient is wheeled into the operating room with chest pains in an emergency, doctors will first have to determine if he's covered by a state plan, then the diameter of his blood vessels and his diabetic condition to decide on the appropriate stent. If they don't, Washington will not reimburse them for "inappropriate care."

The real problem with the healthcare program is that I think Obama understands the budget constraints he is under. This will result in government cutting back on more and more specific procedures.

ObamaPlanners think in terms of aggregates. Notice they are always talking in terms of healthcare costs in terms of GDP and total government budgets. They simply refuse to think in terms of the way free markets work, i.e., individuals making choices, with their own damn money. For ObamaPlanners, it's take the money through taxes, through forced health "insurance" for youth. Then they use the power of controlling this money to sit with GE's Jeffrey Immelt, Carlyle's David Rubenstein, BigPharma and other to divvy up the loot, cutting the services actually provided, and allowing the schemers to pocket a huge chunk. This is all simply pure evil, and deep down most of the plotters know it.

How serious of a problem could Obamacare become?

Greg Mankiw, who never says anything negative about anyone, or anything, other than Paul Krugman, had this to say about Obamacare on his blog:
Here are some basic principles of supply and demand: If a government policy increases the demand for a service, the price of that service tends to rise. If the government prevents prices from rising, shortages develop. The quantity provided is then determined by supply and not demand. In the presence of such excess demand, the result could be a two-tier market structure. Consumers who can somehow pay more than the government-mandated price will be able to purchase the service, while those paying the controlled price may be unable to find a willing supplier.
Well, I think he is talking about Obamacare, this is Mankiw afterall. But, it is a major warning that shortages are a very likely outcome of Obamacare in its current structure.

He then clips this from a WaPo story:
A plan to slash more than $500 billion from future Medicare spending — one of the biggest sources of funding for President Obama’s proposed overhaul of the nation’s health-care system — would sharply reduce benefits for some senior citizens and could jeopardize access to care for millions of others, according to a government evaluation released Saturday.

The report, requested by House Republicans, found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.

Congress could intervene to avoid such an outcome, but “so doing would likely result in significantly smaller actual savings” than is currently projected, according to the analysis by the chief actuary for the agency that administers Medicare and Medicaid. That would wipe out a big chunk of the financing for the health-care reform package, which is projected to cost $1.05 trillion over the next decade.

More generally, the report questions whether the country’s network of doctors and hospitals would be able to cope with the effects of a reform package expected to add more than 30 million people to the ranks of the insured, many of them through Medicaid, the public health program for the poor.

In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, “exacerbating existing access problems” in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services.

Though the report does not attempt to quantify that impact, Foster writes: “It is reasonable to expect that a significant portion of the increased demand for Medicaid would not be realized.”
The House report and Mankiw are missing one element, though. Under Obamacare it will be the government that will determine what can and can’t be paid for under any given health insurance program, so what is likely to happen is that Obama’s team will cutback significantly on what can be provided to those with the best insurance to provide more to the Medicaid crowd. Somehow they will get that money over to the Medicare crowd through some kind of enforced coverage by insurance companies of Medicaid recipients. Afterall, they are going to force the “insurance” payments of the young to be applied for the elderly. Likewise, they will do so with the “insurance” payments of the rich. In other words, there will be less care for everyone. The U.S. will become the Big Havana. Mankiw is correct in hinting that it is going to be a mess. I don’t think, however, that he is any where near understanding how big a mess it will be.

http://www.economicpolicyjournal.com/2009/11/warning-from-of-all-people-greg-mankiw.html

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