Obamacare Aftermath: Fewer Doctors, Higher Costs

Obamacare Aftermath: Fewer Doctors, Higher Costs

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Beleaguered defenders of President Obama’s healthcare law are frantic to assure Americans that at the end of the day – in spite of all the glitches and disappointments – Obamacare is good for the country. 

They argue that our nation’s existing healthcare system is “broken” and needs to be fixed. In a recent op-ed published in The New York Times, Charles Blow offers up several places where the U.S. falls short. He notes that the U.S. has fewer doctors per person than most OECD countries, fewer hospital beds per person and that our increase in life expectancy – nine years between 1960 and 2010 – does not equal that of several other developed nations. 

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He neglects to mention how Obamacare will fix these failings – probably because it will not. How does cramming down fees paid to doctors and hospitals result in more people deciding to go into medicine or hard-hit medical centers being able to expand?  Granted, there will be a larger population seeking care, but increased demand does not necessarily lead to increased supply. For that to happen, prices have to rise – and we have been promised that, to the contrary, Obamacare will “bend the cost curve.” 

Since we were promised the ACA would bring costs down, and since one of the great selling points for the legislation was that it would not increase our budget deficit, it follows that more money isn’t pouring into healthcare – it’s just being rearranged. It’s being taken from the Medicare system, from people who can afford to pay higher insurance premiums and manage higher deductibles, from those who don’t now have health insurance because they have chosen to self-insure (the young and healthy), from those earning high incomes and from the makers of medical devices – and distributed to people who by and large cannot afford healthcare today. This may be a worthy social adjustment, but it does not create a new generation of eager doctors. 

Indeed, with medical school tuition of roughly $50,000 per year at top schools, students must be wary of the changes brought on by the new law. A report from the Kellogg School of Management at Northwestern University indicates that Obamacare rules intended to rein in costs and lower Medicare reimbursement could actually decrease available care.

The author studied the roll-out of the State Children's Health Insurance Program (SCHIP) in 1997and found that while the new law expanded access, it also led to shorter patient visits and to “significant numbers of physicians electing to work fewer hours,” most probably in response to lower reimbursements. The study projected that we might see fewer and less qualified medical students in the future, as the financial rewards of practicing medicine decline.  

This is not rocket science; people respond to incentives. Take away the prospects of high pay, and fewer kids may agree to the rigors – and expense, and time -- of becoming a doctor. 

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The Association of American Medical Colleges estimates that the United States faces a shortage of more than 91,500 physicians by 2020 and over 130,600 by 2025. The shortfall – which predates the increased demands of the ACA - will grow in spite of rising applications and enrollments in medical school. Nothing in the Obamacare law resolves this issue. As Dr. Atul Grover, Chief Public Policy Officer for the AAMC wrote, “simply having an insurance card won’t mean people will get the care they need.” 

What about hospital beds?  Initially, hospitals get socked with lower Medicare and Medicaid money intended to compensate for reduced emergency room treatment for indigent patients. In Texas, for instance, such payments are scheduled to drop by $21 billion through 2021. Doctors there are concerned that the poor will still rely on emergency rooms, which by law must treat everyone, regardless of the ability to pay. Patients there have questioned why they should buy insurance, when they already have access to emergency room care. 

Hospitals also face increased costs from Obamacare, such as being required to adopt electronic record-keeping. According to the AMA, that can cost up to $50 million for a mid-sized hospital. More significant, hospitals worry that with many patients choosing higher-deductible plans, they may see bad debt costs rise. A recent report from Moody’s confirmed that “the added bonus of more insured patients is becoming more of a credit negative for hospitals due to several exchange-related risks.”  

More generally, Moody’s warns, "We expect hospital revenue growth rates will come under pressure in 2014 and beyond as enrollment gains traction and exchange plans take a sharpened pencil to hospital reimbursement rates to ensure their profitability going forward." This is not a climate in which hospitals are likely to expand. 

As for life expectancy, most of the bad news about the nation’s health stems from our poor diet (too much junk food), overindulgence in tobacco (cancer and heart disease) and alcohol (traffic deaths) and high homicide rates. Obamacare requires increased menu labeling for calorie content, and a premium surcharge on smokers – but not much else that steers Americans toward healthy choices or a longer life span. In some ways, making companies insure those with preexisting conditions – a great gift to those with serious ailments -- actually reduces pressure on people to watch their weight and to exercise.  

Obamacare fans will soon learn what most Americans now believe: that the healthcare bill will make them worse off.  It will.

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