ObamaCare Is Already Damaging Health Care

ObamaCare Is Already Damaging Health Care

Many of its changes don't kick in until 2014. But the law is forcing dramatic consolidation and reducing choice in the industry.

By LLOYD M. KRIEGER February 23, 2011 Wall St Journal

The Republicans who now control the House of Representatives hope to repeal or defund ObamaCare, but the law has already yielded profound, destructive changes that will not be undone by repeal or defunding alone. Active steps and new laws will be needed to repair the damage.

The most significant change is a wave of frantic consolidation in the health industry. Because the law mandates that insurers accept all patients regardless of pre-existing conditions, insurers will not make money with their current premium and provider-payment structures. As a result, they have already started to raise premiums and cut payments to doctors and hospitals. Smaller and weaker insurers are being forced to sell themselves to larger entities.

Doctors and hospitals, meanwhile, have decided that they cannot survive unless they achieve massive size—and fast. Six years ago, doctors owned more than two-thirds of U.S. medical practices, according to the Medical Group Management Association. By next year, nearly two-thirds will be salaried employees of larger institutions.

Consolidation is not necessarily bad, as larger medical practices and hospital systems can create some efficiencies. But in the context of ObamaCare's spiderweb of rules and regulations, consolidation is more akin to collectivization. It means that government bureaucrats will be able to impose controls with much greater ease.

With far fewer and much larger entities to browbeat, all changes in Medicare and Medicaid policies will go through the entire system like a shock wave. There will be far fewer individual insurers, doctors, hospitals, device makers, drug manufacturers, nursing homes and other health-care players to resist.

Many doctors and hospitals have decided that they cannot survive unless they achieve massive size—and fast.

There is little mystery how the government will exercise its power. Choices will be limited. Pathways to expensive specialist care such as advanced radiology and surgery will decline. Cutting-edge devices and medicines will come into the system much more slowly and be used much less frequently.

This is why simply defunding enforcement of the individual mandate and other upcoming directives will not be enough: Given all this consolidation, limits on treatment choices are already becoming hardwired into the system. Lawmakers must take concrete steps to stop and reverse this.

On the provider end, this means enacting tax and other economic shields for insurers and providers that choose not to succumb to the financial pressure encouraging consolidation. It means unwinding all of the rules—about data compilation, reporting and compliance requirements, and information technology—designed to increase overhead to the point that only massive and easily regulated provider organizations can survive.

Legislators will have to scrub the 2,700-page ObamaCare law line by line to remove all of the disincentives for medical practices, hospitals and others to remain smaller and independent.

On the consumer end, reform means re-establishing choice at all levels of the system. Lawmakers at a minimum should change the individual mandate so that people can choose what type of coverage they buy. To do this, legislation has to ensure that all consumers have access to a menu of options for varying types of coverage, and that they are free to purchase policies across state lines. There should also be tax breaks for people who purchase medical care not covered by their insurance, so there is reasonable chance of escaping government-imposed limits on treatment choices.

System-wide, collectivization will be dismantled only by limiting the power of government agencies to determine what care gets funded. That means new legislation to supersede Section 1311 of the Patient Protection and Affordable Care Act, which requires herding everyone into "qualified plans" and forcing doctors (via fines, penalties and nonpayment) to follow care guidelines determined by the secretary of Health and Human Services.

ObamaCare is already doing great damage, even years before its individual mandate and other controls kick in. Its systematic undoing is an urgent necessity.