Looking for revisions to Obamacare

The problem with the Affordable Care Act is that it was based on a false premise.

It sought to expand access to health care for Americans without doing enough to reduce the high costs that make health care in the United States far more expensive than in other Western nations.

In order to finance the expansion of access, the system included a major tax increase - the so-called "Cadillac tax" placed on expensive health insurance plans. But that politically toxic tax has been postponed till 2018.

That is why a Massachusetts Democrat, Rep. Stephen Lynch, voted against Obamacare.

As he said in a video interview with the Boston Herald, "The problem has always been paying for it. You've got to rely on the other individuals who already have health care to pay for it, and at the same time you've made a promise to the 270 million people who already have health care that your health care will either be the same or be improved by it. And I think that is a very tough promise to live up to."

In fact, fulfilling all of the major promises is impossible. Lynch said during congressional hearings that leaders of both small businesses and unions fear the impacts of that Cadillac tax on their plans.

Lynch says Obamacare is not likely to be repealed, but he supports reform.

That is the position of the Times-Union editorial board.CREATING A REAL MARKET

One incisive book on the subject comes from John Goodman, author of "Priceless: Curing the Healthcare Crisis."

He writes that America has used two models for health care, both with their own perverse incentives.

The HMO model gives providers an incentive to underprovide services.

"Imagine grocery insurance where you're confronted by a team of bureaucrats prepared to argue over every purchase," Goodman writes.

Fee-for-Service gives providers an incentive to overprovide services.

Goodman says that deductibles "become perverse" once they are reached.

He supports vouchers for health insurance as a way to create a real market. He compares this to food stamps.

"Low-income shoppers can enter any supermarket in America and buy almost anything the market has to offer by adding cash to the voucher the government gives them," Goodman wrote. "But we absolutely forbid them to do the same thing in the medical marketplace."

Goodman concludes there are three reasons for high medical prices:

- Government regulations.

- Malpractice liability.

- Inefficiencies in third-party payment systems.

Goodman writes accurately that the Affordable Care Act tries to deal with rising Medicare costs by squeezing providers. This will only cause doctors to refuse to cover Medicare payments or cut back or retire from their practices. So Obamacare, by driving away physicians, may actually decrease access to care.

Rather than use markets to force prices down through competition, Obamacare simply shifts costs of an already broken system.

Medicare, through a secretive pricing system that is often incomplete or inadequate, helps to create an inefficient pricing system.

"Every lawyer, every accountant, every architect, every engineer - indeed, every professional in every other field - is able to do something doctors cannot do," Good man writes. "They cannot repackage and reprice their services."

"Even if a patient has several chronic disease - diabetes, congestive heart failure, high blood pressure - the government's payment rules allow him to only charge for one," Goodman writes.USE OPTIONS TO PRESSURE PRICES

Goodman's suggestion is to allow providers to make a better offer to Medicare. The offers should be accepted provided:

- Total cost to government does not increase.

- Quality of care does not decrease.

- The provider ensures that those first two conditions have been satisfied.

What happens in an open market? Take Lasik surgery where the price has declined 30 percent in the last decade.

Studies have shown that large variations in health care prices have little connection to mortality.

If trends continue, health care will consume more than half the federal budget by 2050. Part of that is due to rising numbers of seniors, which means there is even more reason to cut costs smartly.

There are two ways to suppress costs: use government control or the free market. The experience in America is that markets are nearly always more efficient than a group of government bureaucrats. And if the market is not efficient, it provides consumers more choice than working through bureaucracy.

In a real market, we see something like employers sending workers to special surgical centers that have negotiated deep discounts for surgical procedures.

Goodman has found that price competition begets competition in quality as well.

A real health insurance market would look something like car insurance where routine expenses are handled out of pocket but major expenses are insured.

As for poor quality, Goodman writes that the malpractice lawsuits are highly inefficient ways to compensate for poor medical service. Instead, he proposes a no-fault alternative in which providers will write a check without the legal system getting involved.

Using the market is the way to go.QUOTABLE FROM GOODMAN- "The Affordable Care Act uses cuts in Medicare to pay for more than half the cost of expanding health insurance for young people, but it contains no serious plan for making Medicare more efficient. All it really proposes to do is pay less to doctors and hospitals."- "To make matters worse, the health reform bill did nothing to increase the supply side of the market to meet the increased demand."