IPAB: Independent Payment Advisory Board. MLR: Medical Loss Ratio. ACA: Affordable Care Act. Can you say George Orwell? Let’s take one at a time.
IPAB: First, there is nothing independent about this proposed outfit. Selection of the folks on this panel will make senate confirmation hearings look apolitical. These seats, like almost everything in Washington, will be sold. Not really sure why Blagovich is in jail….selling seats and positions of influence is standard operating procedure in D.C. Second, there is nothing advisory about this outfit. What they say goes. And they will be wrong. No one and no group can possibly determine the “moving target” of the market clearing price (that price that is “correct,” in that at this price there are neither surpluses or shortages) and get it right. What is the “correct” price today may not be the “correct” price tomorrow. What’s right in Baton Rouge may not be right in Camden Maine. They should all read Mises’ “Socialism” prior to taking the job…not that it would make any difference. Here he clearly shows that socialism’s failure is due to the absence of a rational system of pricing. In fact any economic system without rational market-determined pricing will fail. IPAB, however, is not a board intended to maximize the utilization of resources. It is intended to intentionally ration care by setting a price below that required in the marketplace. One would have to be incredibly naive to believe otherwise.
MLR: You should know what this means. It has two meanings. What those in government say it means to effect and then what it is really meant to do. Two really different things. What the government says: no more than 10-15% of a health insurance company’s revenue from premium collection can be used for administrative overhead. 85-90% must be paid out to satisfy claims. HOORAY for the consumer, right? Wrong. Here is what MLR really does. It puts the little insurance companies out of business. 10% of 20 billion dollars is enough to pay administrative expenses at the big boys. 10-15% of 8 million dollars may not be enough to get it done for the little player. Result? All of the little guys clients go to the big boys. Less competition in the marketplace. Consolidation in the marketplace. Why do you think the giant insurance companies supported this aspect of the newest health care legislation?
Affordable Care Act: Even the government’s own studies show that this legislation will add at least 1 trillion in health care spending. This will be primarily absorbed at the state level with wildly increased Medicaid expenditures. Companies providing health benefits to employs are anticipating huge increases in their obligations. Many companies will begin seeking insurance products that are insurance in name only, with little or no benefits attached. EPO’s(exclusive provider organizations) are an example of such a product, an unimaginative twist on HMO’s.
I think that in his worst nightmares, George Orwell never imagined such unapologetic and false labels issued by the state.
G. Keith Smith, M.D.