Summary
The polls are showing healthcare reform is losing its support on main street. The country is realizing the cost of universal coverage is going to be high, and the national debt and annual budget deficits are at unbelievably high levels even without health care reform. The consequences of healthcare reform are either the deficit will grow more, or shortages will develop with the healthcare industry. What does the future for taxpayers, patients, and providers look like?
Analysis
The issue of universal coverage for healthcare has been debated in our country for most of my career (I entered the healthcare field in 1980), with some of the brightest minds in America working on this problem and not being able to solve it. The goal, as stated by President Obama, members of Congress, consumer groups, and healthcare providers is to have “quality healthcare, at a low cost, and available to everyone.” Not many people can disagree with this goal. The problem with this goal is it does not agree with the laws of economics, of supply and demand. The reason we refer to the forces of supply and demand as laws is that supply and demand behavior is not a theory, the laws have been proven to be true throughout history. In a May 4, 1993 Wall Street Journal article economist James Ukockis, who worked in President Clinton’s administration and was commenting on the Health Security proposal from Hillary Clinton’s task force, stated “you can’t repeal the laws of economics sufficiently enough to control both price and quantity.” What scares me about the current leadership in Congress and the president is they believe they can do so. The Washington Post article, “Deficit Plays into Healthcare Reform” by Lori Montgomery, further illustrates this. The politicians supporting healthcare reform are more concerned about strategies on how to get the provisions of the reform passed than on economics driving people’s fears about healthcare reform. The problem every country has with healthcare is there is not enough money in a government’s treasury to pay for all the healthcare its citizens feel they need once they no longer have to worry about paying for it. The demand growth resulting from providing access to healthcare for everyone at a low price would out-strip a country’s ability to supply the healthcare resources and shortages will develop. I used to work at a hospital 60 miles from the Canadian border and we had a constant stream of Canadians coming to our hospital for service because the wait times for service in Canada were horrendous. I heard Gail Wilensky, an economist who served as President Bush’s healthcare policy advisor, describe the difference between the Canadian healthcare system and the American system in a speech to the Montana Hospital Association in 1992. She said at that time, there were six MRIs in Montana and in the whole country of Canada there were only six. I have a sister-in-law who lives in England and wait times for specialist care are terrible there as well. A physician related to me a story about a friend of his who lives in New Zealand. He had chest pains and went to an emergency room. The physician gave him some nitro pills and told him it would take six months before he could see a cardiologist. President Nixon’s wage and price controls of the 70s and the communist experiments also proved that shortages develop where the laws of supply and demand are not allowed to operate unhindered. I could go into detail about how this would happen in our country under universal coverage. Briefly, lowering the cost of care means paying providers less, as stated by President Obama. Again, in the Washington Post article, Senator Mark Warner stated “It's not good enough that it's just paid for; it actually has to start driving long-term costs down." Our physicians are some of the brightest people in society, they were the “A” students in college. Physicians have the talent and work ethic to go into any field they choose and be successful. If the economy, or government, does not adequately reward physicians for their talent and commitment, they can go into other fields. The shortages happen because, as our government tries to lower costs and demand grows, there become fewer doctors to take care of more patients. This is not theory, it is taking place today. The government programs of Medicare and Medicaid do not reimburse doctors adequately for their time. Nationally there is a shortage of primary care physicians. At my hospital, we have been trying for over a year to recruit an internal medicine physician to our market area and have been unsuccessful. Physicians I talk to have told me that due to the burdensome regulations, the threat of being sued, and low reimbursement, they are advising their children not to go into medicine as a career unless they do so as a mission. Make no mistake, healthcare reform will make this worse.
The choice we have as Americans is to either create universal coverage where everyone has access to quality healthcare at a low price and must wait for services (and hope we do not suffer while we wait) or to enhance our current system where people have relatively quick access to quality healthcare (compared to other countries) but where people self-deny themselves healthcare because they cannot afford it (and hope they do not suffer too much). Each person needs to decide how they feel about these two positions. Both positions have ethical questions, the ethics of making everyone wait for their healthcare verses the ethics of some not being able to afford healthcare. Economics cannot decide this question, it can only tell you the consequences of the decision you make. The consequence for healthcare providers (physicians and hospitals) is that reimbursement will be tighter. The consequence for investors is your healthcare stocks will not do well, even with the growth in demand from the retirees (baby boomers) and the formerly uninsured. Reimbursement will not keep pace with input cost inflation.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.