Why Obamacare Cannot Fix the American Healthcare System


So; yesterday the New York Times had a piece with the headline, “Health Insurers Use Process Intended to Curb Rate Increases to Justify Them.” Briefly it explains that the Affordable Care Act (ACA) had created a public review process that was intended to shame private health insurers from demanding high premiums. But, instead of helping to keep insurance costs down, this review process is now being used to leverage huge premium increases. In addition, many insurance companies are dropping out of even the most successful exchanges, such as the one in Connecticut.

This is yet one more example of how trying to reform the current American healthcare system is next to impossible; and almost always leads to some unintended consequence.

This is not unique to the ACA. Back in the 1990’s Congress passed something called the Sustainable Growth Rate formula (SGR). It linked Medicare healthcare providers payments to the Gross Domestic Product (GDP) in the hope that doctors and hospitals will not charge more than the the rate of economic growth. Almost immediately it became clear that there was a problem: most of the increases in costs to Medicare were outside of the control of healthcare professionals. It turned out that most of the increase came from drug and medical device companies- and in fact doctors had kept their costs flat. But the SGR law required that the doctors get a pay cut!

For over a decade Congress had to pass stopgap measures to finance the gap in an effort to keep Medicare payments to providers from being cut. At one point the cost of repealing the SGR approached $500 billion. Finally,  Congress repealed the SGR in 2015.

But, in its stead, Congress passed another ‘plan’ called ‘Medicare Access and CHIP Reauthorization Act’ or MACRA. As with the SGR, MACRA attempts to control the cost of Medicare. However, instead of tying provider payments to GDP, MACRA attempts to link the payments to various complicated mechanisms and metrics. As with the SGR, there was only a limited input from healthcare providers in the crafting of the legislation. In addition, even though most MACRA provisions will begin in January of 2017, most physicians are not familiar with any of the details.

So, what can go wrong with that? What can we learn?

The truth is that the problem with all of these ‘fixes’ to our current healthcare system is not that they are ill conceived, but rather because there is no infrastructure to effect these changes to healthcare delivery and cost. In fact, one can say that there is no unified American healthcare system- but rather several autonomous systems with no single oversight body. Until this is changed, even reforms of increasing complexity like MACRA and the ACA will be needed to achieve even modest reforms; and will always have the risk of unintended consequences.

EMBRACE provides the infrastructure and the oversight to effect these reforms with maximal efficiency and minimal bureaucracy. The National Medical Board, structured to oversee the nation’s healthcare system like the Federal Reserve oversees the nation’s money supply, will be able to devise science based mechanisms to guide clinicians’ practice. And private insurance companies will work within the system but still be able to make a good profit!

Read more by ordering the book on Amazon by clicking here.

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