The Seesaw in Healthcare

Government insurance: The Affordable Care Act (ACA, colloquially Obamacare) was signed into law in 2010
but was not fully implemented until 2014. In 2010, the U.S. uninsured rate was 16 percent. [2] By 2017, nearly 20 million Americans had gained government coverage dropping the uninsured rate to 9 percent. Roughly 90 percent of the increased coverage was due to Medicaid expansion: the rest resulted from ACA subsidies. In 2017, Merritt Hawkins measured wait times to see a doctor and acceptance rates of Medicaid patients by physicians. [3] Patients’ maximum wait time for a primary care physician in a mid-sized city increased from 99 days in 2010 to 122 days in 2017. Since then, wait times have gotten longer. [4] In 2011, the Medicaid acceptance rate was 69 percent nationally [5] and has fallen since then. In nine of 14 major cities studied by Merritt Hawkins in 2017, less than 50 percent of physicians would accept new Medicaid patients into their practices. Doctors cited two reasons: [6] excessive regulatory/administrative burden [7] and low payment schedules, often below cost-of-doing-business. Association does not equal causation. Nonetheless, the fact that access to care has declined is alarming. The seesaw relationship – government coverage up, access down –
is worrisome especially given data on death-by-queue. The phrase death-by-queue refers to people dying while waiting in line for technically possible medical care that is not provided in time to save them. This has been
reported particularly in government-insured Americans in both Medicaid [9] and Tricare. [10] Death-by-queue is due to excessively long wait times and low Medicaid acceptance rates. If patients wait too long for care or don’t have a doctor at all, their health suffers. Even a four-week delay in a cancer diagnosis increases mortality. [11] Imagine what a four-month delay does to patient survival. [3]

Insurance profits: A 2023 Kaiser financial analysis showed that Medicare Advantage had the highest gross margin in the health insurance market. [12] Gross margin, often used as a proxy for profit, is defined as revenue retained after paying for goods sold and services provided. It does not include administrative costs or tax liabilities. Bottom line for non-economists: selling health insurance is highly profitable. Another metric of insurance profitability is stock price. People will pay higher prices for a stock when they anticipate higher returns (more personal profit) in the future. Between 2007 and 2017, stock prices of the seven largest health insurance companies rose 157 percent to 635 percent. [13] Over the same time, the S&P 50 index rose 82 percent.As noted previously, during the 2007 to 2017 period, wait times increased and Medicaid acceptance rates fell. Thus, access to medical care declined as profits increased. Keeping in mind that association isn’t causation, a Pearson chi square test (χ2=24.5582) of stock profits versus access to care indicates a very strong seesaw correlation, p < 0.0001. [13] Insurance premium rates are set by federal and state agencies. Thus, revenue for insurance companies is determined solely by how many people they sign up. They generate profits when they don’t spend money. Typically, they use a “three D” strategy to increase profits: delay, defer, and deny paying for patient care. [14] The economic incentive structure of insurance third-party payment in healthcare
exposes another seesaw relationship: insurance profits increase when sellers reduce delivery of care. Federal regulations There is a common misconception that writing a federal regulation somehow directly causes the effect regulated. By this reasoning, passing a mandate for price transparency will immediately make health care price lists available to the public. Such magical thinking does not recognize the process called BARRCOME between passing a federal law and having an impact on the public. BARRCOME stands for bureaucracy, administration, rules, regulations, compliance, oversight, mandates, and enforcement. [15] After passing a law or issuing an executive order, Bureaucrats are hired to populate a new Agency. Lawyers are tasked with writing
Rules to reflect the law’s intent. Then others are hired to create actionable Regulations (second R). Compliance must be assured requiring new Overseers. Mandates must be Enforced by additional new hires, including penalizing the non-compliant. BARRCOME costs money, particularly for the tens of thousands of new bureaucrats, administrators, agents, lawyers, and overseers. One look at the organizational chart of the ACA confirms the massive size of the non-clinical healthcare workforce. [16] Nationally, BARRCOME cost between 31 percent [17] and more than 50 percent [14] of all U.S. spending on its healthcare system, which totaled $4.5 trillion in 2023. Thus, Washington expended $1.4 trillion to $2.25 trillion healthcare dollars to pay people who provide no patient care. Where does all that money come from? It is diverted to pay bureaucrats stealing money intended for care providers. [14] To pay for ACA BARRCOME, former President Obama took $716 billion from the Medicare Trust, money intended to pay for seniors’ hospital care. [18] On the healthcare seesaw, as the BARRCOME money side goes up, the patient care side goes down.