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Monday, February 24, 2014

Obamacare Rationing: It’s Already Here

In “The Coming Push for National Health Care” (The Freeman, January 1990), I discussed the economic consequences of national health programs. Such consequences included “increases in the demand for health care services, price controls, rationing, income controls on physicians, equipment shortages, deterioration of medical facilities, and long waiting lists.” Americans haven’t yet felt what other countries with national healthcare have suffered for decades.

That will change soon, however, as the Affordable Care Act comes online. And, as many people are finding out, one of the most insidious side effects of Obamacare—rationing—has already started.

Rationing takes many forms, and people don’t always recognize it when they see it. Because the insurance companies that have decided to participate in Obamacare must agree to contain healthcare costs, the government is essentially rationing by proxy.

Enrollees in Obamacare are finding out that the physicians and hospitals they prefer to use are not included in their plan. A California insurance company recently told me that, due to my zip code, if I chose an Obamacare-approved plan, I would only be “allowed” to enroll in an exclusive provider organization (EPO) plan (like an HMO), even though I have used a preferred provider organization (PPO) plan for the past 20-plus years. I was also informed that the EPO plan had “a very restrictive choice of doctors.”

Such plan restrictions mean that many of the doctors and hospitals a person might want, or need, to use will not be available to them—either because the insurance companies must contain costs, or because neither the doctors nor the hospitals agree to accept the lower reimbursements paid by Obamacare insurance plans.

The quality of medical care will soon decline as physicians and hospitals that have agreed to accept lower reimbursements for services look for ways to cut corners and reduce costs. Your doctor might discourage certain tests or procedures and adopt more of a wait-and-see attitude regarding your symptoms. Hospitals will reduce their number of beds and combine their treatment facilities to save costs, which could leave some people far away from any healthcare as their local hospital closes. This is already occurring in rural areas.

Obamacare plans will restrict the use of certain medications or costly treatments in favor of lower-cost methods. Some patients who have been receiving a higher-cost treatment for rheumatoid arthritis, for example, may be told that they will now have to use a lower-cost and possibly less-effective treatment for their disease. In many cases, these patients have already found—through trial and error—that the more expensive treatment is the only one that works for them. 

Insurance plans that don’t cover all the mandates required by Obamacare also result in rationed care, as many people have found their insurance policies canceled, with no other plan available that they can afford. This limitation particularly hurts younger people, as they historically have chosen lower-cost, catastrophic plans to save money.

These are only the early effects of Obamacare. What will the rationing effects be over time? All we need to do is look at other countries for answers.

Over the long term, countries with national healthcare inevitably end up with longer waits for healthcare services. When I was in Ireland a few years ago on business, I turned on the local television news. A reporter was urging women trying to become pregnant to lie about already being pregnant in order to secure an ob-gyn appointment. Apparently, the wait for a first appointment with an ob-gyn was eight months. This meant that most women in Ireland could not see an ob-gyn until after their baby was born. 

The politicization of medical care becomes an issue with national healthcare systems. Over time, those who yell the loudest, or have the most political clout, receive the services. Because most people in a country are healthy at any given time, politicians make routine care low-cost or no-cost. As a result, most people will say they like their healthcare system. Several years ago, I met a young Canadian couple in the United States on vacation and asked them how they liked their healthcare. The young man said, “It’s great . . . as long as you don’t get really sick.” Those who are older or less healthy are a smaller, quieter group of people, and therefore are less powerful and suffer more by being denied expensive care.

Robert Reich, former labor secretary for President Clinton, said in a 2007 speech, “We are going to have to—if you're very old, we're not going to give you all that technology and all those drugs for the last couple of years of your life to keep you maybe going for another couple of months. It's too expensive, so we're going to let you die.” In a September 24, 2013, piece in The Irish Times, a reporter said, “Irish people with cancer heard they could be denied medical cards, with one official suggesting a patient’s cancer must have entered the terminal phase before the State would provide the support most people require.”

Obamacare will ultimately shuffle the winners and losers around according to political wishes and the demands of the healthy majority, and bureaucrats will make life-and-death decisions. After seeing the rest of the world struggle with national healthcare systems, and watching them fail, you would think we would learn to work within the natural laws of the market and human behavior and not try to force square pegs into round holes. I think the saying, “the definition of insanity is doing the same thing over and over again expecting a different result,” certainly applies here.

Unfortunately, I’m afraid that we are on track to repeat the mistakes of other countries and will have to learn the hard way that socializing your healthcare system only results in rationing, as well as financial and human disaster. And, like other countries, we’ll then try to return some market-based solutions to our severely damaged system, and we'll find that trying to do so in a now highly politicized environment is most challenging.