Note: Dr. Lee Hieb's new guide to surviving Obamacare is a must-have for the new year. Order your autographed copy now.
As a resident of the state, I tried to warn Iowa of the fiscal insanity of Obamacare state exchanges. I wrote to Gov. Terry Branstad, and also published an open letter to him ("What's really at stake with Obamacare") on the number of reasons to oppose Obamacare and not to institute the state exchanges. But (just like the issue of raising gas taxes) Branstad and his advisers didn't wish to accept economic reality. Now, predictably, the state exchange is failing and is being taken over by the state's new insurance commissioner.
CoOpportunity's bankruptcy is Obamacare's largest government co-op failure in America. CoOpportunity was the only insurance co-op in multiple states and had the largest enrollment. Under this ridiculous scheme, a 64-year-old couple pays one-sixth the cost for insurance than does a 25-year-old couple in Ames with a $60,000/year income. Now only ONE insurance company is on the exchange in Iowa, and it uses the HMO model of "Gatekeepers," which no one has liked in the past and which increases cost while delaying and decreasing care.
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Under the co-op, roughly 100,000 Iowans are insured, and 27 people have been working for the company! They don't seem to be answering the phone. Meanwhile, the new insurance commissioner wisely advises people to get off the state exchange issued insurance.
Remember that insurance is not the same as medical care. Insurance is supposed to help you afford catastrophic losses; it is not meant to pay for every lost shingle, every car's oil change, or every sniffly nose. Like most physicians and people of some economic understanding, I have an insurance policy that only pays for big-ticket items – I pay the rest with cash. If everyone did this (as it was done when my father was in practice and charged $3 for an office visit), the cash cost would dramatically drop so nearly everyone could afford to pay this way.
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Today, it costs on average $68 for a provider to bill third-party insurance. So a small visit that should cost $35 now costs $104. That is like buying $5 of tomatoes in the grocery and paying $65 for the bag. Hospitals and doctors who take Medicare and Medicaid are stuck with supporting a billing system to accommodate the 160,000 pages of government requirements.
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Those doctors who have opted out and only accept cash can decrease their costs considerably – but as long as government runs the show, the costs will remain inflated. By having a real insurance policy with a high deductible, I can seek out doctors that take cash and I can bargain for better pricing. Most importantly, I can go get the care I need where I want to go. Try using state exchange insurance to take your child with leukemia to MD Anderson or the Mayo Clinic.
There really are solutions to this government-created "health care crisis," but as
Ronald Reagan famously opined, more government is not the answer. Gov. Branstad may have an "R" behind his name, but don't look to his administration for economic sanity or even fiscal reality. It is easy for politicians to sell emotionally satisfying rosy colored utopian answers. The truth is a harder sell. There are real costs to goods and services that government always makes artificially higher. Government doesn't produce one iota of medical care. Obamacare and Iowa's version of it is just one more layer of bureaucracy overlying all insurance being sold today. How ironic that, in the land of the free, where state exchanges are in place, Americans can only buy insurance between the months of November and February.
It is a basic principle of economics that whatever is taxed (or regulated) becomes scarcer. Obamacare is a tax, and medical care is already becoming scarcer. There are only two ways to actually decrease the cost of good and services – true free-market competition or slavery. We can hope that as Obamacare fails – and takes down hospitals and doctors' groups nationwide – we have the moral fiber not to choose the latter.