By Karen Billing
A May 17 talk at the RSF Golf Club gave residents one expert’s insight on health care reform in the United States. Congressional advisor and health-care advocate Dr. Robert Hertzka gave his presentation as part of the monthly “Coffee and Conversation” series, which is sponsored by financial advisor Deana Carter of Carter Financial.
Hertzka spoke about why the plan to extend insurance to 32 million additional Americans by 2019 may or may not be problematic.
Hertzka said he would let his audience draw their own conclusions, but called President Barack Obama’s Patient Protection and Affordable Care Act (PPACA) a “brick covered in frosting.”
“However well intentioned, PPACA will be a dramatically underfunded government program with the potential to destabilize the entire health-care system,” Hertzka said.
Hertzka is a full-time anesthesiologist at Sharp, a past president of the California Medical Association, member of the AMA Council on Medical Service, and an instructor in health policy and politics at UC San Diego School of Medicine. He has been very involved in politics with the Health Care Act in Washington DC.
Hertzka talked about what he calls the “golden triangle” of health care: access, cost and quality.
“Anyone can solve one easily but solving all three at once is obviously a challenge,” Hertzka said.
He admitted that the subject of health care and reform is complicated and difficult for many to understand, and gave a brief history of how the country got into the “mess” of its current state.
According to Hertzka, the fundamental problems of the employer-based health care system is that the unemployed and the retired are not covered, which led to the 1965 solutions of Medicaid for low income/unemployed and Medicare for all over 65 years of age.
“Medicaid was underfunded from day one which is a problem,” said Hertzka.
The $500 billion program only covers obstetrics, pediatrics, nursing homes and HIV treatment.
“The bottom line is 30 million low-income adults are still uninsured,” Hertzka said.
The problem with Medicaid, Hertzka said, is that it funded massive new hospital infrastructure, it was based on 1965 health care at its peak—no one then could imagine the expense of things like bypass surgeries or MRIS or biotech drugs. It was also based on seniors staying at 5 percent of the population and now that figure is 15 percent and going to get even worse, leaving the future seriously underfunded, Hertzka said.
In 1984 there was the “epiphany” that Medicare was going broke and the solution was price controls on hospitals. Hospitals started cost shifting, private insurance premiums skyrocketed and employers dropped coverage. From 1988 to 1994, more cost shifting occurred for physicians and medical devices, more provider cost shifting and more premiums rose and employers continued to drop coverage, Hertzka said.
“As opposed to care for the uninsured, Medicare is the number one reason for cost-shifting into the private sector and, as such, has been a major driver of the number of uninsured,” Hertzka said.
In 2009, the health care system was flawed in all areas, he said. In access, 50 million were uninsured, 90 million in underfunded Medicare and Medicaid, there were 5-10 million free riders and 30 million low-income adults in a safety net.
In cost, the nation faced a $1 trillion hospital infrastructure. “In France or Canada they wouldn’t let this stuff get built,” Hertzka said, adding that seniors are treated like “40-year-olds.” “This is the only place an 80-year-old can get a transplant. It’s great but let’s not pretend it’s not going to cost more,” he said, adding that other problems include the fact that everyone is paid more, there is administrative excess and uncoordinated care of chronic disease.
Hertza contends that quality dipped due to the practice of defensive medicine, which includes lack of a good date on best practices because hospitals and clinics have to become competitive and don’t share how they’re treating certain issues.
Tackling the uninsured was a way to deal with some of the issues.
Demographics of the uninsured include adults with incomes who can afford coverage (8 percent), those less than 18 years old (20 percent), adults at 200-400 percent of the Federal Poverty Line (FPL) (8 percent), and adults living below 200 percent FPL make up 65 percent,” Hertzka said.
There is little evidence that many of these adults will respond to coverage, he said.
Universal health care coverage will require some of the uninsured to be incentivized, and many more to be subsidized up to 100 percent.
Hertzka said that a good starting plan might be strong incentives for catastrophic coverage in combination with insurance reform; capping the employee income tax exclusion for health insurance based on benefit design; and using the resulting $20-50 billion for child coverage expansion, subsidies for middle income workers, and expanded infrastructure for low-income uninsured.
He said problematic ideas for providing health care to the uninsured would be a weak individual mandate combined with guaranteed issue, using Medicaid as the primary vehicle to provide increased access to low-income adults, and taxing the health care system and increasing cost shifting to fund an expansion of access rather than capping the employee income tax exclusion.
What passed in March 2010 were all the problematic ideas, he said.
The PPACA full implementation begins on January 1, 2014: individual mandate, Medicaid to all adults at below 133 percent FPL, state insurance exchanges become operational and subsidies begin.
The mandate applies to very few people, Hertzka said: all below 133 percent FPL, all above 400 percent and all above 250 percent are exempted. Additionally, Hertzka said that the mandate is weak as successful mandates have penalties at or above 100 percent of premium.
In contrast, Hertzka said candidate Mitt Romney’s Romneycare has real penalties that drive people to get insurance.
The PPACA is a good deal for individual market victims of insurance company discrimination (50,000 so far), unemployed post-adolescents up to age 26 and their parents (2 million), some small business owners and their employees (300,000 so far), some early retirees (up to 1 million) and seniors with high drug costs (2-4 million).
He said it is not so good for 16 to 30 million new Medicaid recipients who will have very limited physician access and may end up in experimental managed care plans. Hertzka said it is also a bad deal for most of the 170 million currently insured who will see much higher premiums due to cost shifts from basic insurance reforms, the weak mandate and ongoing underfunding of government plans.
With the passage of the PPACA, Hertzka said it is not a shock that legislation that provides direct benefits to approximately five million people at the expense of over 220 million remains unpopular. Even 26 months after passage over 50 percent of the population wants PPACA repealed and 41 states are challenging some aspect of it.
“It does nothing to address the big four drivers of high health care costs in the USA, most notably hospital conglomerates will grow under PPACA while patient cost-sharing will shrink,” Hertzka said.