Opinion: The fat lady has sung

By Francis M. Miller

Detractors of Obamacare have been acting like medieval barbarians using a stolen siege machine to assault the town. The Supreme Court ruling on King v. Burwell thwarted their diabolical plan.

Now states that choose not to set up exchanges can continue to obtain subsidies for their citizens by using the federal marketplace.

Francis M. Miller

Francis M. Miller

What is truly unfortunate, though, is that this and other absurd lawsuits have had a chilling effect on sincere considerations to improve the Affordable Care Act.

Oh, to be sure, there is a never-ending buzz about relatively immaterial issues on the periphery. Should insurance companies be allowed to market across state lines? Should insurance agent licensing be reformed to include navigators? What will the annual premium increases be this year?

None of it gets to the heart of the matter. That is to reduce health care costs.

We should not be surprised at the current state of affairs. The real architects behind the ACA were building a Great Wall. The fully insured market has long sought protection from those who promote self-insurance.

The seven large carriers that constitute the insurance cartel have, since the enactment of the ERISA self-insurance law in 1974, lost market share in the large group market segment. The continual downsizing and merger of large employer companies has been a double whammy.

The ACA was sought by the cartel as a countervailing force. Imposing mandates, subsidies, exchanges and cooperatives were the weapons of choice.

The ACA also created a militarized zone where the insurers could wage war to take back market share. The logic is that if the self-insured group market could somehow be put up for grabs, millions would migrate to the individual market and into the waiting arms of the legacy insurers.

Forget that after a seven-year ramp-up of Obamacare, insurers and exchanges still lack any semblance of functioning systems or staffing to transform themselves from wholesalers of group plans into retailers of individual plans.

The drama has a script right out of Shakespeare. Greedy insurers are constantly trying to merge to concentrate their power. Associations for the retired, lobbyists, attorneys, computer contractors and all manner of vendors wander onto the stage as bit players.

Now for Act II. The change of leadership and majority status as a result of the 2014 elections has produced zip. Not a thing.

Conservatives have advanced no ideas. Like a matador waving a red flag before a bull, they dance around the big issue: rising health care costs. We all know they are intellectually bankrupt.

The Republicans think that if they can keep dropping lawsuits, they can take Congress off the hook and shift the focus of the discussion to the presidential candidates. But, does anyone believe a single one of the Republicans running for president has any idea what to do about health care?

Hillary Clinton knows more about health care than all of them put together. You can bet she hopes she can change it from Obamacare to HillaryCare, with the slogan: “Caring for America Since 1992.”

The Republicans look like they are organizing a circular firing squad.

Noticeably absent from the stage is state government. This is the real tragedy.

The health care marketplace is local. It is manufactured at a hospital near you.

Medicare, Medicaid and VA programs along with ACA subsidies are all federal transfer payments that multiply in the local economy when spent. Health care transfer payments have long been a major source of economic development for Colorado.

When former Gov. Bill Ritter formed the 2008 Blue Ribbon Commission, the grand conclusion was that Colorado should wait for the federal government to do something. Looking back, both political parties watched and waited through the administrations of both Gov. Bill Owens and Gov. Roy Romer. For two decades absolutely nothing of significance was legislated.

Eventually wise men on camels came from Washington, D.C., and assuaged our concerns by telling us that Obamacare would be local. Colorado took the bait.

Rather than empowering multiple exchanges, Colorado created an unregulated monopoly and was aghast when it turned out to be a Frankenstein. Only a fool would not have anticipated that Connect for Health would be corrupted by a force-feeding of federal funding.

Now, those who govern the entity realize they lack a viable business model. They will need far more funding to cover their fixed labor costs and technology maintenance.

By the way, California, Oregon and Hawaii are also in deep trouble. Rescuing the exchanges will require more than validation by the Supreme Court.

The cooperatives are also in a swamp. The cooperatives unleashed by the ACA are largely run by ex-Medicaid and Blue Cross operatives. They are the red-headed step children of the insurance industry.

Most of them are insufficiently profitable to repay the startup funds they were advanced and many are now dipping into reserves. Colorado’s HealthOP has been put on the insurance commissioner’s watch list because it made a strategic assumption it could disrupt the market by discounting insurance to build market share.

Time will tell whether the daring move will pay dividends or suck them under as they shoot the rapids.

The irony in all of this, of course, is that Colorado has the power and means to reform health care irrespective of what the federal government does. We don’t need a new president to lead us nor do we need the judgments of the Supreme Court. And, we really shouldn’t give a damn what the U.S. Congress does.

Beginning with former Gov. Richard Lamm’s administration in the 1980s, Colorado spelled out what would be necessary to reform our health care market. Periodic attempts were made every few years to implement the ideas.

Our failure has largely stemmed from dealing with a seemingly impossible situation that we could not figure out how to finesse.

Not surprising, vested interests in the insurance and health provider communities have been unwilling to transcend their selfish interests long enough to negotiate a grand bargain. Lacking an honest broker who could serve as a loyal agent, Colorado was never able to muster the necessary leadership for the effort. Every insurance broker, benefits consultant, hospital administrator and politician believes he or she has the answer. In the end, we were a day late and a dollar short.

Unknowingly we allowed a vacuum to develop and we gave our precious sovereign powers to outside interests. Now, it is the Washington, D.C., lobbyists and politicians who have been bought lock, stock and barrel. The proprietary hospital chains and the mega insurers have become our puppet masters.

The health care industry is nearly 20 percent of our GDP and the vested interests are very powerful. The people with the most to gain or lose in the very long run are the patients and the doctors.

But, if patients persist in milking their benefit and entitlement plans, there will be no motivation to be an informed, ruthless, self-maximizing consumer. Only the discipline of competition can shape markets to reduce costs and improve quality.

Self-interested patients must be allowed to pocket the savings that accrue from their sacrifices. It is not sufficient to allow investors to take them.

As a society, we also will not win this game by having large corporate employers repatriate the savings from their benefit plans to their bottom line. Large players have long enjoyed the luxury of cost shifting toward small businesses and individuals who lack negotiating leverage. They need to be allowed to organize and create cooperatives.

The solution lies in creating many cooperatives and multiple exchanges and forcing market players to compete for the affections of the consumer.

We must not be seduced by the false promises of those in control that this year’s savings will somehow be factored into lowering next year’s premiums.

Change will only happen if consumers are allowed to put cash into their pockets and do what they want with the savings. Empower the consumer and you will unleash a torrent of power that will reshape the health care market within a decade.

In the long run, an efficient health care system could become a global export industry. This would be a virtuous source of economic development rather than relying on transfer payments.

In the very long run we could enjoy celebrating health care becoming 40 percent of our GDP, all the while serving the world at large.
Francis M. Miller is the past president of the Colorado Business Coalition for Health and the vice chairman of the Colorado Health Data Commission. He founded the first consumer cooperative for health care called the Alliance and is the current president of Health Smart Co-op. He blogs on www.thethoughtczar.com.

Opinions expressed in Health News Colorado represent the views of the individual authors.

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