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Nurse Rachet

June 28th, 2012 - 1:18 pm

US stocks sag on healthcare rule, euro dips — “(Reuters) – U.S. stocks fell on Thursday after the U.S. Supreme Court upheld the Obama administration’s healthcare overhaul law … U.S. healthcare sector stocks were generally weaker after the ruling, while stocks that stand to benefit from more government business rallied.” The WSJ has a discussionon where the dollars will go. Experts are divided on the effects of the law.

More money will flow to “pharmaceutical companies, doctors, hospitals, the people they employ, and even insurers,” said Joseph White, Luxenberg Family Professor of Public Policy and chair of the Department of Political Science at Case Western Reserve University. …

IT services companies that can take health-care information and turn it into actionable data will benefit, Mr. Birkmeyer added …

“This is a real-money loser for manufacturers,” said Gerard Anderson, a professor of health policy and management at the Johns Hopkins University Bloomberg School of Public Health.

“Medical-device companies will hire fewer people.” In addition, the health-care law will help usher in a different reimbursement model, where providers may get paid on a per-member, per-year basis, rather than the traditional fee-for-service model …

That may cause surgeons–who formerly had no reason to care about implanting a $5,000 hip from a U.S. manufacturer–to choose less-expensive models from an overseas manufacturer, resulting in a potential loss of U.S. jobs, Mr. Birkmeyer said. …

Some studies show a lot of newly hired health care workers — as many as 5.6 million — will immediately become part of the Obamacare program — “4.6 million of these empty positions will require postsecondary education, like a bachelor’s or master’s degree.” That many employees dependent suddenly on the system it will be difficult for any post-Obama administration to roll the program entirely back.

Government programs are like a ratchet. Once they are created they can never be shut down. Long after the paper letter has been mailed it is possible that the US Postal Service will still be in operation.

One possibly unintended consequence of the health care law is the creation of a vicious circle in which health care insurance costs bankrupt companies even as a new class of employees who are dependent on their now missing taxes are being created.

Certainly the existing laws will create step-traps for companies who will seek to operate under the sweep of its provisions. Since ome requirements apply “only to firms with more than 49 full-time employees” some firms may refusing to expand beyond that number or make part time employment the norm even if they would have done otherwise without the regulations.

Another effect might be to drive people who don’t want to participate out of the system.

the penalty for not signing up for insurance, $750 a year, is too small relative to the cost of health care coverage — about $5,500 a year. Because insurance companies are required to take all applicants, healthy people (especially the young) would be wise to pay the penalty rather than buy the insurance. This makes the pool of insured individuals sicker and more costly, on average, and their premiums will higher. With higher premiums, more people will choose to pay the penalty, and a downward spiral will unfold.

The main selling point of government health care was that it would “bend the cost curve”; and make things more affordable. It may do that by transferring the burden of who pays. But in reality none of the European health care systems have been able to prevent more and more money from being spent on their systems. A study by the Economist summarized the European experience showing health care costs as a percentage of GDP.

 

2001

2002

2003

2004

2005

2006

2007

2008

2009

Denmark

9.1

9.3

9.5

9.7

9.8

9.9

10.0

10.3

11.5

France

10.2

10.5

10.9

11.0

11.1

11.0

11.0

11.1

11.8

Germany

10.4

10.6

10.8

10.6

10.7

10.6

10.5

10.7

11.6

Netherlands

8.3

8.9

9.8

10.0

9.8

9.7

9.7

9.9

12.0

UK

7.2

7.6

7.8

8.0

8.2

8.5

8.4

8.8

9.8

 

The unanswered question is if that if you can stop it where does it end up? More to the point where does it end up when European states are running out of money?

Having “reformed” their health care systems all of studied countries have embarked on a yearly tinkering of each system.  “All five healthcare systems, however, have one commonality that transcends the specifics of structure. Each of their governments has engaged in repeated, substantial reforms for more than a decade. “We have had the most healthcare reforms in the world,” says Professor Dr Norbert Klusen, CEO of Techniker Krankenkasse, a German insurer, tongue-in-cheek.” Gotta bend that cost curve.

Ultimately “reforms” on a static economic base involve rationing. Given a fixed or slowly growing pie, the only way to make it go around as populations age and chronic diseases become expensively manageable is to either limit treatment or pare it down.  The UK Independent writes that “more than 30 NHS trusts could be forced to merge, devolve services into the community and make job cuts as part of a radical restructuring of hospital care across England.”

Yesterday the Department of Health said it considered 21 hospitals to be “clinically and financially unsustainable” and in need of radical restructuring.

However, the list did not include another five foundation hospitals – run independently of the Department of Health – which are also considered to be failing financially. A further five foundation hospitals also have severe financial problems.

In the end health care provision is not independent from the ability of an economy to sustain it.  If government gets to the point where it stunts the economy, then government itself cannot collect the money it promised to the voters. The United States may still be fortunate in being able to observe whether or not the European health care systems are viable in the long run.

And if not, there’s always Switzerland, the refuge of last resort.

Anyone who has ever traveled in Switzerland cannot help but to have remarked upon the overwhelming tranquility of the country. But this tranquility is illusory. As John McPhee writes in La Place de la Concorde Suisse, a rich journalistic study of the Swiss Army’s role in Swiss society, “there is scarcely a scene in Switzerland that is not ready to erupt in fire to repel an invasive war.” With a population smaller than New Jersey’s, Switzerland has a standing army of 650,000 ready to be mobilized in less than 48 hours. The Swiss Army, known in this country chiefly for its little red pocketknives, is so quietly efficient at the arts of war that the Israelis carefully patterned their own military on the Swiss model. You’ll understand why after reading this outstanding book. …

“The Swiss have avoided fighting a war for almost 500 years. To preserve that enviable record of peace, they maintain one of the world’s largest armies, on a per capita basis. This paradox . . . is the core of McPhee’s engaging La Place de la Concorde Suisse.”Jack Schnedler, Chicago Sun-Times

“‘Switzerland does not have an army,’ says one of John McPhee’s informants in La Place de la Concorde Suisse. ‘Switzerland is an army’ . . . McPhee put his reader inside Switzerland with elegance and insight.”—Jonathan Steinberg, The New York Times Book Review.

Maybe one day politicians will discover that the best way to have a viable health care system would be to have a growing economy. Now that would be a radical idea.


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