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Bankrupt Healthcare
What “Affordable” Health Care Looks Like

In the era of the Affordable Care Act, rising health care costs are threatening California’s state budget. The LA Times reports:

Enrollment in the state’s healthcare program for the poor, known as Medi-Cal, has exploded by 50% since President Obama’s signature law took effect. Although the federal government picks up most of the tab, state costs have also been growing, and faster than expected.

Meanwhile, the annual bill for healthcare for public retirees — a benefit promised decades ago — has more than doubled in the last decade. Current and retired workers have accumulated $71.8 billion in healthcare benefits as of June last year, and the state has set aside almost nothing to cover the costs.

In other words, it’s not just individuals who are seriously strapped by rising health care costs, but states too. Obviously, the ACA isn’t to blame for the fiscal strain posed by public sector retirees, but it will leave states with even greater financial burdens when the federal government cuts back on the support it provides. These facts show how misnamed the ACA is. Meanwhile, wonks are celebrating the national slowdown in the rate of spending growth, and missing the point. On the ground level, costs are getting worse, and there’s no politically viable solution in the offing. In that respect, at least, the post-ACA reality is no different.

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  • ljgude

    Well, start with a healthcare system that costs twice as much as the OECD average on a per patient basis and massively disrupt it with the aforementioned misnamed act across 50 healthcare markets and unsurprisingly you get an increase in costs as every healthcare player from the insurance companies and hospitals, through the MDs, down to the janitors scrambles to protect their rice bowl. As it happens its the law which caps spending to 17.5% of GDP by 2017 up from 16% when the law was passed. What this article tells me is that big states like California can, as some government Johnny will no doubt term it, experience disproportionate financial impacts. They knew it would increase costs when they wrote the bill; they just didn’t realize the extent of the unintended consequences.

  • FriendlyGoat

    Unfortunately, you are correct that the one thing which could do the most to control costs—–national single-payer—-is probably not politically viable with the conservative spin machine we have presently dominating thought in this country. We are doomed to endless repetitions of empty platitudes about “selling insurance across state lines” or other poppycock while continuing to ignore what cost control even means.

    When I was a young accountant, the company I worked for was audited regularly by a top CPA firm. The auditors reviewed estimates we necessarily made for financial statements—-such as, say, the reserves for potential bad debts or obsolete inventory items. One of their favorite phrases for notes in the work-papers to describe such things was “adequate but not excessive”.

    Well, “ADEQUATE BUT NOT EXCESSIVE” is the elusive reimbursement levels we should be shooting for to compensate medical providers. We need a financing mechanism from which NONE of them can escape and payment levels which cover the actual cost of providing the services, with reasonable profits included, and excesses simply unavailable. We need the “demand” of all people’s conditions attracting the “supply” of plenty of providers who will ALWAYS be more than willing to make an “adequate but not excessive” income commensurate with their fields and contributions.

    So far, we just keep playing games of imagining we can squeeze employers, or squeeze insurance companies, or squeeze individuals, or squeeze state budgets, or squeeze the various individual government plans (Medicare, medicaid, tri-care, VA) and we are failing miserably at cost control. We tolerate so much secrecy in the pricing that we have profound excesses all the time and can barely even discover where they are (despite some journalists who are TRYING to expose the inexplicable variations in billing).

    This does not have to be as much of a mess as it is. Republican politicians could help. They could have helped 5 years ago or 35 years ago.
    But they didn’t. Their endless deliberate obfuscation of the actual steps needed for cost control is one of the many, many reasons I disdain their whole party. You can’t find a single

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