Tuesday, May 07, 2013

Crystal Ball vs ObamaTax

Here's the thing: the ObamaTax doesn't "bend the cost curve" so much as it distorts the health care delivery and financing market. Case in point:
"[T]he hospital where I was born, in a small coal-mining and smelting factory town outside of Pittsburgh ... relies heavily on Medicare and Medicaid payments, and it’s going bankrupt.

[A]s of April 30, Blue Cross in western Pennsylvania will be transforming itself from being an insurer to actually owning and running hospitals and labs -- and having medical staff on the payroll."
We used to call this a staff model HMO (Thanks, Ted!) and quite a few or them popped up in the 80's. Now we've apparently come full circle. I don't think there's anything intrinsically evil about these arrangements, but they do call into question the role of "choice." That is, if the insurer is also the provider, there's a strong incentive (and concomitant ability) to keep things under tight control.

And, of course, there's the little matter of cash:

"One of the first changes the new management has requested is a 30 percent increase in reimbursement rates for this year, with 10 percent annual escalators to follow."

Since we already know that health care costs drive health insurance costs, this will mean significant premium increases for those who actually pay for private insurance. This is nothing new, really: as the article notes, those of us with insurance have always subsidized those on public plans. The problem now becomes how that's going to play out under the ObamaTax, with its tens of millions of new Medicaid participants. Think of it as squeezing a balloon:

The air (money) has to go somewhere, else it will pop.

blog comments powered by Disqus