By Paul Peanick, Staff Writer for The Current
Dr. John C. Goodman joined faculty, staff, students and visitors of the University of Missouri-St. Louis economics department on Feb. 20 to deliver a talk titled “Why Obamacare Won’t Work.”
Goodman is an American economist and founder/president of the National Center for Policy Analysis, an independent, conservative-leaning think tank based in Dallas. The NCPA proposes and supports various health-care, social security, retirement, environmental, tax and education reforms.
Goodman has been called “the father of Health Savings accounts” by the Wall Street Journal and is “widely considered a foremost expert in the field of health-care economics, a man who understands the big picture,” Dr. David Rose, UMSL professor of economics, said.
“Obamacare,” a colloquial term for The Patient Protection and Affordable Care Act, and the nature of its effects have been the subject of fierce debate amongst some economists. Goodman is a vocal critic of the plan and calls it another instance of “perverse incentives” with regards to health care in the U.S.
“The Obama administration pursued this legislation aggressively, but they did not create the health-care crisis in this nation,” Goodman said. “Even so, this legislation is the opposite of what we need to solve the health-care crisis.”
Goodman argues that the individual mandate (the requirement to buy insurance or pay a tax penalty) is weak; it will not create the types of large insurance pools that will drive down costs. The IRS has publicly stated that the mandate will be hard to enforce, and the penalty itself is only $2,000. Goodman argues that this is low enough that many people will opt out of getting insurance when they are healthy. If they become sick, they will buy into insurance exchanges set up by Obamacare and leave once they are recovered.
Obamacare mandates that insurers cannot deny based on pre-existing conditions. “They already have this in Massachussetts; these people are known as ‘Jumpers and Dumpers,’” Goodman said. “This is a market failure and will be unsustainable.”
“Doctors are the only professionals who cannot choose what bundles of goods and services they offer. A doctor who goes out into the community and teaches patients how to be healthy will not be reimbursed by Medicare. ‘That’s social work,’ Medicare says. A doctor could teach a mother how to control her son’s asthma, rather than treating an asthma attack. But Obamacare, Medicare, they don’t pay for that,” Goodman said. “There’s no room for innovation and no competition amongst doctors to lower prices.”
Goodman argues that the suppression of prices has led to a situation where demand for services is rising but caregivers are offering less because of fixed reimbursement for their services. This, argues Goodman, can only lead to shortages or reductions in care.
“We have been paying more for health care, just not in terms of prices. We are paying more in terms of time, waiting, travel and in reduced quality of care,” Goodman said.
Goodman argues that costs will continue to rise faster than income and faster than reimbursements from Medicare, Medicaid, and Obamacare. This, he claims, will mean reduced care and more rationing.
During his talk, Dr. Goodman offered a solution by proposing health vouchers (government subsidies) and Health Savings accounts. “Look at food stamps, a successful voucher program. The government provides some set amount of money, and consumers choose what goods and services they want to buy. The supermarkets must compete with each other to bring those customers in, deciding what to sell and what to set as the price. This helps drive down prices. And supermarkets, as we see, are not turning down new customers,” Goodman said.
Goodman proposes an individual, 100 percent refundable tax credit for the first $2,500 dollars of medical expenses. For a family of four, that credit would be $8,000. On average, a family of four pays $16,000 for health care coverage per year now. For expenses beyond $8,000 per family, regular insurance would kick in. Insurers would compete to bring down premiums for that second $8,000 of medical expenses and beyond.
Health Savings accounts, the second part of Goodman’s picture, are tax-advantaged personal savings plans. These, according to Goodman, would help encourage consumers to take more responsibility for their own health, fitness and medical needs. “Getting the patient involved in their own care is key to controlling these spiraling medical costs,” Goodman said.
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