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Monday, May 11, 2015

Obamacare Winners and Losers

Updated 10-25-16
Obamacare was supposed to be the "Affordable" Care Act. The White House has announced that costs for users is expected to increase 25% next year. Obamacare was never affordable from the start. You can't add more people, expand more "free" coverage, and increase insurance coverage limits without also increasing costs. Those in the know predicted this was on the horizon years ago. 

TIME Magazine's Steven Brill did us a great service in writing his book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System. Brill leans left, but his does not pull any punches in pointing out the significant problems with Obamacare. Here are the winners and losers created by the Obamacare mess.


1. Trial Lawyers. Brill estimates that at least 5% of medical costs are due to extra defensive medical testing and other excesses related to dealing with ambulance chasers. Obamacare did nothing to reduce this contributing cost to high health care costs because trial lawyers are big Democrat donors.

2. Drug Companies. Because of heavy contributions to both Republicans and Democrats, congress won't take actions to control the cost of prescription medicines. A proposal to allow people to buy drugs from Canada for significant savings was shot down. A rule that requires Medicare to pay higher than average prices for drugs was also not addressed. As a major buyer of medicines, Medicare should be able to demand significant discounts, just like all insurance companies do, but they are not allowed to in order to protect drug company profits. At one point Obamacare was structured to favor generic drugs. However, in the final version, Big Pharma was able to get co-pay free drugs approved. This means that a more expensive name brand drug would be picked because it was available without a co-pay - no upfront cost to the customer, but higher costs overall that increases premiums for everyone.

3. Hospitals. For years hospitals have had to absorb losses from serving people in emergency rooms who could not pay their bills. Brill estimates this could be 5% of their revenues. Now that many of these people have insurance, they will be collecting fees from insurance and writing off fewer bad debts, resulting in another new source of income. Hospitals were big Obamacare supporters because they recognized they would be getting more customers out of the deal, with hardly any change to their billing practices.

3. Lower Middle Class Families. In pre-Obamacare 21st Century America, many people worked in low paying jobs with no medical coverage. These people went without medical care or used emergency rooms. There is no question these people are big winners. They are getting more access to health care because other people (or future people) are footing the bill.

4. Federal Contractors. Creating cost hundreds of millions of dollars, even when it didn't work! This was a windfall to the federal contractors who won bids to create the program.


1. Obama's Leadership Reputation. Even rabid Obama supporters can't defend the way the Obama administration botch the creation of White House advisers recommended bringing in an experienced high tech business manager to run the operation. Obama instead gave the lead job to a former college professor with no business or tech experience.

2. Secretary Sebelius. Her Health and Human Services job was supposed to have gone to former House Majority Leader Dick Gephardt, a health care reform wonk and Washington insider, but his nomination would not go through. Instead we got a cabinet secretary who was clueless to the disastrous Obamacare roll-out. She was pushed out the door once it was clear it would not overly embarrass the president.

3. Democrat Office Holders. The number of Democrats in congress has dropped by 70 and in the senate by 14 since Obamacare passed. Obama squandered the big lead the nation gave Democrats because they were weary of Bush's wars.

4. Health Care Reformers. All health care experts acknowledge that American health care is too expensive for the results we get for the money spent. Some reformers were naiive and believed that Obamacare would find ways to reduce costs. That might have been possible with a capable leader, but not easy. What we got, from Mr. Lead-From-Behind, was a program that gives more people access to our expensive system. No wonder Obama got no opposition from doctors, hospitals, and drug companies - Obamacare gave them all more customers pretty much paying the same rates, with the government footing the bill.

How bad did Obamacare blow its chance to fix health care? Here is a quote from Confidence Men, by liberal author Ron Suskind where he talks about Dartmouth Method reformer Dr. Jim Weinstein, whose research had found widespread waste and unnecessary procedures throughout the health care industry and was hopeful that Obamacare would address these obvious problems.  However, special interests squelched any chance at these much needed reforms.

     To spend a ¨once-in-a-generation¨ effort on extending coverage to the uninsured--without any real teeth in using evidence about what was effective in reducing unnecessary procedures, and driving down costs--was a ¨stunning error.¨

     ¨It made things worse,¨ he said solemnly.

     And then he got frustrated. ¨I can´t believe how wrong they got it. This was our one chance, and we completely blew it.¨

5. Future Generations. The biggest loser by far is future generations. Too late to be included in Brill's book, last year the Congressional Budget Office scored Obamacare and released a report showing that Obamacare spending is only covered by 1/3 in new Obamacare revenue. The other 2/3 must be paid for by borrowing, to the tune of over $1 trillion over the next ten years alone.

This means that with Obamacare we will be spending health care dollars now and expecting our children and grandchildren to pay it back later. Who really wants to defend this funding system?

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