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The Alt Facts of Republican Health Care

Now we know the Republican three-stage strategy for gutting the American health care financing system, with the acceptable collateral damage of denying insurance and health care to millions of Americans.

Republican Speaker of the House Paul Ryan told us what their brilliant plan is. Stage One: jam through a law repealing as much of Obamacare as possible with only Republican support.

Stage Two: let Health and Human Services Secretary Tom Price try to use regulatory controls to prevent the resulting upheaval in insurance markets. (Translation: to keep prices from rising so fast that more millions of people find insurance unaffordable and drop out, driving up prices even faster for those that remain, a feedback loop known as the death spiral in the insurance bizz.)

Price’s job is to prevent a meltdown in the 2018 prices for coverage (2017 prices are already set), to give Republicans time for Stage Three: to browbeat Democrats into accepting the fact that neither Obamacare nor anything like it is coming back, and agreeing to more legislation that will create a health care system more to Republican liking. They continue to insist they can devise a system that will cover more people at lower prices because it will be based on free market principles and not subject to so much government control.

Of course, Stage Two proves that the whole scheme is nonsense. If they had a plan that had any chance of accomplishing what they want, why would they need Price to impose regulations (meaning some form of direct or indirect price caps) on the free market loving industry they intend to rely on to fix the current problems. I thought the whole point was to get rid of government control. Stage Two is a tacit admission that the markets will go berserk, prices will skyrocket, and the only way to stop it from happening is to impose government controls. Well, they’re right about one thing. Guaranteed that insurance companies will take the opportunity (game the system) to increase premiums an additional 15-25% because of the uncertainty (added potential risk) the changes will produce. Good luck stopping that with your controls.

A very elaborate system of financial gymnastics is not working now to hold down the cost of health care. Neither the Obamacare controls nor the proposed Republican controls address the actual causes of cost inflation in American medical care. Take the not even remotely free-market controls that allow the pharmaceutical industry to charge ridiculous prices for prescription drugs. Drug costs are escalating faster than overall medical costs, thus accounting for progressively more of the market. They won’t let the free market operate here – which would clearly lower the costs for all of us – because that would take away the regulatory structure that has been created to support high prices for this industry, by sheltering it from the free market.

Here’s another reform they won’t make. This is the most obvious fix. Take the insurance companies out of the mix altogether. But this is the private enterprise, allegedly free market part of this racket. This is where a public good is turned into a private, money-making opportunity.

All the insurance companies do is provide financing for the health care system. They do not provide one overpriced emergency room visit worth of health care to anyone. Nada. Never have. They simply handle the money. For handling the money they take their share off the top. But it’s not that easy. To create the opportunity for profit, they had to build a lot of complexity into the system. If you want to create competition, you also have to have uncertainty – about what is covered, who is covered, what is the price. So you have to create a large system and bureaucracy to keep track of who is covered – eligibility – and to deny coverage to those who are not covered, and to determine what services are covered and under what circumstances. And you have to create a lot of plans to give consumers of health care a choice.

That last sentence is full of so many lies I don’t know where to start.

The idea that health care is just another consumer good is preposterous – but I suppose necessary in a system hell bent on convincing all citizens that there is no such thing as common goods. Anyway, people don’t shop for health care like they do for a new pair of shoes. Consumers make choices. In important health care situations/decisions (that means almost all of them), the only choice that matters from the consumer point of view is whether you are going to get the care you need or not. And the answer is always yes, I need it so I’ll take it. This is a case where having choices is not a better deal. It’s a choice you shouldn’t have to make. You should just have health care and be able to get what you need.

All this complexity – these wonderful choices – costs the system anywhere from $300 to $500 billion a year. There’s a lot of bureaucracy, sales forces, IT departments, clerks in doctor’s offices involved. None of it is necessary to deliver health care. It is only necessary to provide someone the opportunity to make profit off the system.

So if we simply create one plan for everybody, we can save $300 billion-plus off the top, before we cut back one doctor visit. We’re not taking away $300 billion in profit from someone. The insurance company profits are a small fraction of that amount. Most of that $300 billion savings comes from reduced overhead – admin – necessary only in order to enable someone to make a profit. We’re spending hundreds of billions in overhead to allow insurance companies to profit $10-$20 billion if they’re lucky. That’s just stupid. Yes the profits are obscene, but not so much by their magnitude. What’s obscene is setting up a system that harms so many for such little profit, and then defending and sanctifying it as rooted in some  divinely ordained, mysterious but infallible process for how to allocate resources and profits and thereby order society. Come to think of it, I wonder if the invisible hand of the market is bigger than Trump’s hands.

$300 billion-plus buys a lot of healthcare. This is the low hanging fruit that would pay for many of the fixes the system needs, while reducing costs significantly at the same time. More health education, more primary care providers (not necessarily MD’s – see Cuba), more intake into the system, to get people the treatment they need sooner and on the track to better health, and off the track to deteriorated conditions and a lot more expense. In other words, to improve the health of Americans.

This is the easiest way to start. The Republicans definitely will not do this.

And that would make you happy, if you preferred your free market insurance industry bureaucracy to make decisions about whether the high-priced plan you are paying for will even cover the procedures you need, and which doctors (not necessarily your own) they will pay to perform the procedures. But I mean, wouldn’t just about anything be better than some horrible government insurance plan that just covered you for everything you need with no questions asked?

Nor will the Republicans do anything else meaningful to cut costs except reduce benefits and the number of people covered. They won’t take on the hospitals or the doctors. They won’t address the epidemic of over-prescribing – some estimates contend that more than 25% of all medical procedures performed are unnecessary. They’ll muck around with the financing, but they won’t do anything about how health care is actually delivered.

So back to Stage Two and Tom Price and his chore to keep the system under control. Good luck on that one, given that you have ideologically blinded yourself to the simplest of common sense solutions.

Thus the Republicans will pursue Stage Three with the fanaticism of a terrier shaking a fake rat. (Alternative rat.) They will incessantly remind us that Obamacare was not working – a disaster in fact. They will desperately try to convince even the people who are paying lower premiums for better benefits under Obamacare (many in their base) that the obviously better deal they are getting under Obamacare is really a bad deal, and they have a better one coming. Alternative facts. What you know to be right from your own experience is wrong. Up is down. At the same time they will try to convince us that healthcare is too expensive because we use too much. Patients are the problem, not the doctors, hospital chains, drug companies, and insurance executives. We need to charge you more money for your health care so you make better decisions. That will bring the prices down (eventually, date unspecified). Austerity, disaster capitalism, call it what you will, as applied to health care.

Then when the Republicans can’t deliver a better plan, they will blame it on the Democrats for not coming to the table and helping to pass more new laws to make our free market dream system come true. This has already begun. See Ohio Republican Governor John Kasich’s op-ed beseeching Democrats to give up partisan bickering and help Republicans make a better plan.

Yeah, those same Democrats that brought you that horrible Obamacare. Remember how awful it was.

Say it long enough and loud enough and enough people will believe what you say. Maybe not this time though. Health care might be one area where people don’t buy the upside down bullshit this crowd is selling. Maybe on this issue the reptile brain kicks in and overrides the more easily manipulated rational mind – because this time, for many, the question really is down to survival.

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Jeff Sher is a journalist specializing in the health care industry. He lives in San Francisco.

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