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June 14, 2009

The price of Obama's health care 'savings'

Cliff Thier
Okay. Everyone who thinks that Obama's take-over of the health care system in America is a good thing, pay attention. Here are some imporant facts from the Wall Street Journal article on Obama's plan:

The new proposals would decrease payments to hospitals and others that provide Medicare services in a variety of ways.

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"We are disappointed to see cuts of this magnitude to hospitals, especially in these tough economic times," said Alicia Mitchell, a spokeswoman for the American Hospital Association, the industry's main trade group. The proposed cuts would hurt hospitals that provide intensive, pediatric and trauma care for recipients of Medicare and Medicaid, she said.

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The White House suggests the government save $110 billion over 10 years by increasing payments more slowly to hospitals, device manufacturers and others who provide services to Medicare patients. The change would come by adjusting the payment formula to take into account increases in productivity.

Huh? What increases in productivity are they talking about? Less time per patient per doctor? That's what an increase in productivity means. Each doctor sees more patients. What else could it possibly mean?

In addition, the president is proposing to reduce subsidies for hospitals that care for the uninsured as the number of uninsured falls. That would generate $106 billion over a decade, the White House said. Payments would be slowed beginning in 2013. By 2019, payments would be 25% of what hospitals had received in 2013, updated for inflation.

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The White House is also proposing $75 billion in savings on the Medicare prescription drug program, by reducing reimbursements to pharmaceutical companies. Mr. Orszag said there are several ideas for policy changes that would achieve these savings and promised to detail their preferences soon. One possibility would be to reduce reimbursement rates for drugs used by patients who are eligible for both Medicare and Medicaid.

"If the drug makers pay their fair share, we can cut government spending on prescription drugs," Mr. Obama said.

A variety of other changes are expected to generate some $22 billion over a decade. Doctors who offer imaging services and skilled nursing facilities would be among those affected.

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Mr. Obama prefers to talk about how his plan will cut the cost of health care, but most of those changes he emphasizes are long-term goals aimed at altering the way medicine is practiced. In the short run, he and his congressional allies need to find immediate savings to pay for the subsidies they want to offer the uninsured to buy coverage.

These cuts to government spending are not expected to reduce the cost of care for people with private health insurance. In fact, some would argue that health care providers will simply increase rates they charge others to make up for cuts from the government.

For those of you who have never taken a course in basic economics, let me point out a law of economics: when you pay less for a good or service, you will get less of that good or service. So, when you pay pharmaceutical companies less for drugs, you are going to get fewer new drugs.

The risk for developing drugs is already substantial. Most drugs costs tens or hundreds of millions of dollars to develop and never get into the marketplace because the drug fails to treat the disease as hoped, or it proves to be dangerous. And, it often takes years before the companies learn if their bet will pay off.

Developing drugs is risky. The reward must be substantial to justify the risk.

Reducing the reward means fewer risks will be taken. Smaller risks. Many diseases will attract fewer research dollars. Fewer drugs will reach the market and people will die as a result. It's not complicated. Is that too difficult to understand?

Drugs for diseases that hit the poorest nations of the world will also see a slow-down in development. Every day that development of a new drug is delayed, thousands of people will die, most in the poorest parts of the world.

And, if drug companies are paid less for their drugs, they will have to pay their researchers less as well. And, that means that fewer of the smartest people will do into those careers.

So, if you support the Obama plan to nationalize health care, and years from now a loved one, your wife or husband, child or parent, dies because a new drug is still a few months away from approval, you can look yourself in the mirror and know that you share in the blame for that death. Less money for drug companies means less money for research and fewer bets on possible new drugs and devices. New, important, life-saving drugs will be slower to reach the market. And, those delays will kill thousands here and millions across the planet.

Got it?

And, what do you think will happen if you pay doctors less? You're going to have fewer doctors. Is that too complicated or you?

Fewer of the smartest college students will choose to enter medicine. That's because choosing a career in medicine is extremely expensive and risky. You will have to pay high tuition fees for medical school and then spend years as an intern and resident with very little pay. For seven years or more, you will be spending more than you are earning. If you can't catch up once you can practice medicine you'd be a fool to choose that career.

Fewer doctors means longer waiting times to see one. And that means more people will die as result. It's not complicated.

Obama will increase our mortality rate. When it happens just don't say you weren't warned.

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