Rep. Cassidy is wrong on health care

Congressman and U.S. Senate candidate Bill Cassidy has attacked the Affordable Care Act or “Obamacare” as too big, too costly, and too complicated. In the real world, healthcare economics is complicated, because markets in healthcare don’t work without a lot of subsidies and mandates. For healthcare, it’s not realistic to imagine that all we need are family values and hard work.

Market failure is one reason why healthcare is complicated and hard to understand. (US history and politics are other reasons.) One basic example of healthcare market failure occurs if you are sick and there is no law requiring “guaranteed issue” of insurance coverage (which Obamacare requires for the first time in the U.S.) Insurers have no reason to sell you insurance without this guarantee, even though you need health care. Another healthcare market failure, when only sick people buy insurance and healthy people don’t buy any, is the insurance industry analogy to a run on a bank. Healthcare economics proposes remedies for these market failures.

No remedy is perfect. “Obamacare” has flaws, as supporters acknowledge. Perhaps the biggest is a need to do more effective cost controls. The US spends $2.7 trillion on healthcare annually, which increases about 4% per year. Recent stories in Time magazine and the New York Times have publicized the irrationality of healthcare prices. There are many reasons. Healthcare prices are largely secret, although that may be changing. But even if patients know prices and if it is possible to negotiate, only rarely would they have the medical knowledge to make the best choices.

Obamacare takes many steps in the right direction, including the Medicare In­dependent Payment Advisory Board, Accountable Care Organi­za­tions that can coordinate care from many doctors, and limits on the cost of insurance company overhead. Ultimately, patients, hospitals, insurers, and doctors will all need to work together, learn, and adapt, in order to bring healthcare inflation to a manageable rate.

Doctors like Congressman Cassidy are in the best position of anyone to ensure that we get the right care, and not the most expensive care, because these are not the same. The American Medical Association’s Relative Value Scale Update Committee (RUC) already sets prices for many procedures, which accounts for part of costs. (Dr. Cassidy is not part of RUC.) But as a recent Journal of the American Medical Assoc­iation survey show­ed, only 36 percent of physicians believe they have “major responsibility” for controlling healthcare costs, and instead they felt others are res­ponsible.

Instead of working on healthcare costs, Dr. Cas­sidy’s main healthcare idea is about curtailing health insurance coverage for low-income people. Here in Louisiana, ex­pand­­ing Medicaid could bring health coverage to 400,000 uninsured, mostly low-income people. In­stead, Dr. Cassidy’s MAC Act would force cuts on states that offer generous coverage, and require not­h­­­ing from states, like Louisiana, that have re­fused to expand Medicaid to cover the uninsured.

The only conceivable reason for this miserliness is a belief that we are “drowning in debt.” In reality, federal tax rates have fallen steadily between 1980 and today, from an average of 22 percent to an average of 17.4 percent in 2009, and annual federal deficits are currently falling,

That is Dr. Cassidy’s dilemma. He could be helpful in health care reform. But as a politician he is trapped by unrealistic ideology, while as a doctor he is also trapped by conservatism in the profession, which makes physicians unwilling to do the difficult task of finding how to control healthcare costs without denying patients from getting the care they need.

We would all be helping Dr. Cassidy resolve his dilemma, if we did not elect him as US Senator, and he was able to return to full-time work as a doctor.

–– Aaron Lercher
City of New Orleans

This article originally published in the September 9, 2013 print edition of The Louisiana Weekly newspaper.