Obamacare not responsible for health care costs

To the Editor:
Mr. Dick Roggensack’s letter (1/29) raised several important issues regarding the out-of-control costs of our health care system, but unfairly blamed the Affordable Care Act or Obamacare for the costs.
The U.S. spends over 17% of its Gross Domestic Product (GDP), some $2.8 trillion, on health care. Most of the cost, however, is not incurred by the federal government. The most accurate and nonpartisan figures I can find (from the Congressional Budget Office) show federal spending for Medicare, Medicaid, the Children’s Health Insurance Program, and the subsidies to the insurance exchanges has been less than 3% of our GDP on average for the past 40 years.  In 2013 it was about 4½% of GDP and is projected to be about 6% of GDP in 2023 and 8% in 2038.  
It is true that over the next 25 years the expansion of insurance coverage under Obamacare will account for about 25% of those increases, but some 9 to 14 million new people will be covered by the plan. The aging of the population explains about 35% of the expected increases, and excessive growth in costs is responsible for most of the increases, or about 40% of them.
The major underlying cause of our higher health care costs compared to other industrial countries is that we have inappropriately let commerce and private enterprise place exorbitant profits ahead of the efficient use of resources for the public good.  This was not always the case.  The change occurred when the medical-industrial complex (the private insurance, hospital, pharmaceutical, and medical devices industries) took off in the late 1960s and early 1970s. Today, the majority of private insurance plans, freestanding private-outpatient facilities, nursing homes, and about 20% of all nongovernmental hospitals are investor owned.
Data show that these investor-owned facilities are more costly, may provide poorer care, and make it difficult for those with low incomes to get adequate treatment. One study, for example, found that investor-owned insurance plans siphoned off 10% to 25% of the premiums for administrative costs and profits before paying providers versus only 5% to 10% for the not-for-profit plans. (Now after Obamacare, insurance companies are required to spend at least 80 to 85% of premium dollars on health costs and claims instead of administrative costs.) In contrast, administrative costs with Medicare are less than 5% of the program’s total expenditures. Another study found investor-owned hospitals charged on average 8% to 24% more per admission than did not-for-profit hospitals.
Those who extol the virtues of the free market fail to realize that health care differs in critical ways from other sectors of the economy, including that the demand for health services are irregular and unpredictable; that patients are highly reliant on physicians for information about their conditions and need for particular medical actions; and that when ill, patients may be in no condition to shop around and independently evaluate their choices.  Choosing treatment for a heart attack is not the same as shopping for a television.
Although Obamacare has cost saving mechanisms to slow the increases (such as new payment systems for Medicare and creating insurance exchanges and accountable care organizations), fierce lobbying by the medical-industrial complex prevented the Act from tackling the fundamental changes needed. The Center for Responsive Politics reported that since 1998 the medical-industrial complex has spent $5.36 billion lobbying Washington.
Many unbiased observers believe that we ultimately will need a publicly funded single-payer system, which is more cost effective, coupled with changes in the way we deliver medical care. Today we have too many specialists who over use high-cost tests and procedures and are paid for each item of service, each procedure, and each pill. In addition, we have no rational system for pricing medical procedures so charges can vary widely from one hospital to another. One study, for example, found a colonoscopy cost $6,385 in New York while another patient in North Carolina was billed $19,438 for it (the same procedure in Europe costs about $400 to $800). One hospital’s total costs for its laboratory work for one year were $27.5 million, but it charged $293.2 million, almost 11 times its costs!
In addition to a single-payer system, we need to move to non-profit salaried groups of physicians and health care professionals who accept single, global payments for a complete course of treatment care, such as for a heart attack or broken hip. To achieve such reforms, however, our representatives in our dysfunctional congress will need to stand up to the medical-industrial complex and their lobbyists. Sadly, I am afraid that will happen only after the rising costs finally drive desperate voters to demand action.