Article

Buckle Up: Obamacare will be Here in Six Months

Natalie Gochnour

June 6, 2013

In less than six months, many of the most critical components of the Patient Protection and Affordable Care Act, otherwise known as Obamacare, will begin. Mandates for coverage, the end of pre-existing conditions, a community rating and richer subsidies take effect next year. As we move closer to 2014, many Utahns and Utah businesses sense the mighty change. I’m telling people to buckle up—one of the largest social policy changes in our lifetime is here.

Over the past few years, I’ve collected several quotes about the Affordable Care Act that are helpful in explaining what it is and how it affects us. Here are the quotes along with my commentary:

“Keep your government hands off my Medicare.”

This classic statement was spoken at a town hall meeting in South Carolina during the 2010 election cycle. It’s as unbelievable as it is funny. The misunderstanding is also a serious problem.

Many people in this country don’t have the slightest idea how our healthcare system is financed. Medicare is government. So is Medicaid, the Indian Health Service, the Veterans Health Administration, Children’s Health Insurance Program and all of the research provided by the Centers for Disease Control and National Institutes of Health. In fact, nearly half of our nation’s healthcare expenditures come from the public sector, a proportion that is growing every day.

We may not like government, but we have a lot of it. Americans need to improve their understanding of healthcare financing so we can fix it.

“The Affordable Care Act is an oxymoron and we all know who the moron is.”

The joke is clever, but not cool. That’s the president of our country you’re talking about. On the other hand, shame on the president and other Democrats for not creating a more balanced piece of legislation while in control. Not a single Republican crossed over in support.

Obamacare, a title that both supporters and opponents of the law now call it, is divisive. To date, the U.S. House of Representatives has repealed the law 37 times.

These are the ways of Washington, D.C. in an age of division. We need more problem-solving and civility within
the beltway.

“The future of the American economy lies in the hands of doctors.”

I concur with this statement made by healthcare policy expert Zeke Emanuel. Approximately half of all healthcare expenditures provide no value. The key to containing costs and strengthening the Utah economy is for doctors to make correct decisions. But the incentives are all wrong.

Doctors are motivated to provide lots of care—medical liability, fee-for-service, self-referral and patient expectations all lead to excessive care, sometimes to a patient’s detriment. At the same time, patients lack information and spend other people’s money. No wonder we over consume; people respond to incentives.

Very little in Obamacare changes this. The focus is access, not cost control. We’ve put more people inside a very expensive and broken vessel. I’m certain healthcare reform will require many mid-course corrections in the years ahead.

“We can have a hard decade or a bad century.”

This Thomas Friedman quote says it all. Our healthcare system must change. It requires sacrifice in the short term (that’s the hard decade part) so we avoid even harder challenges in the future (that’s the bad century part).

My friend and mentor Mike Leavitt often says, “There is no place on the economic leaderboard for a country that spends 20 percent or more of its wealth on healthcare.” We must bend the cost curve. Every problem we ignore becomes harder to solve in the future. It’s time to reform Medicare and Medicaid.

“Utah is the cream of the crap.”

Former Utah House Speaker Dave Clark used to be fond of saying this when he led the passage of landmark healthcare legislation in our state. The healthcare system in this country is broken, but the healthcare system in Utah is also very good. Our costs are low and our quality is high. We are fortunate to have major health systems like University of Utah Health Care, Intermountain Healthcare and others providing state-of-the-art care at high value. The Huntsman Cancer Institute is another feather in our cap. We have a lot to be thankful for in Utah.

The countdown for 2014 has begun. Brace yourself for higher premiums as more people are loaded into our expensive system. A slew of unintended consequences is about to take hold. The first will be disruption in the workforce due to the employer mandate. Many full-time, non-benefitted workers will have their hours or positions cut. More disruption will follow. The healthcare landscape is changing, and we still have a lot of work to be done. Put on your seatbelts and keep your eyes on the road. 


Natalie Gochnour is an associate dean in the David Eccles School of Business at the University of Utah and chief economist for the Salt Lake Chamber.

 

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