Heartland Daily Podcast

This is the Heartland Daily Podcast.

AnneMarie Schieber: Hello, everyone asked. This is Andy s Sheer from healthcare news. Obamacare has had so many problems since it's been in effect about now that it doesn't take an expert to ask, was this program designed to fail? I mean, why would politicians do that? With me today is Heartland Policy Advisor and healthcare economist, Devin Herrick.

Welcome back to the podcast, Devin.

Devon Herrick: Well, thanks, Anne Marie. Thanks for having me.

AnneMarie Schieber: So, you know, the Affordable Care Act is nearly 1, 000 pages long. Can you make a case that this program was designed to fail as massive as it is? And why would Congress and President Obama sign it at the time? Why would they do that?

Devon Herrick: Well, you have to go back, you know, more than a dozen years during the debate, you had two schools of thought. You had, I mean, I'm, I'm assuming they were, they meant well, you had some people, you know, I think Obama was probably one of them who thought I can, I can solve this age old problem of people with preexisting conditions.

And then you had others. In the among the Democratic Party and including the progressives who thought, well, why would you solve want to solve it with, you know, stop gap gap measures when what we really need is a single payer universal health coverage. So, within the Democratic Party, you had these different, you know, fact factions arguing among themselves.

And, of course, not all the Democrats who voted for it thought it would fail. Some naively thought it would work wonderfully. Others thought, you know, this is not going to work. And others wanted something far more, you know, progressive, let's say. So, I don't think it was... I think most of those who voted for it probably...

Didn't expect it to fail, didn't hope it would fail, but there were definitely some who did expect it to fail and thought it would be a stepping stone on the way to universal coverage through a government program like Medicare for All.

AnneMarie Schieber: And I guess we can say it's, it's failing. It hasn't lived up to its promises.

It's not affordable and people aren't gravitating to it. Let's talk about some of the evidence we now have that Obamacare was maybe meant to fail and maybe a good place to start would be expanded Medicaid. Now, they, they pitched this as an expansion of the safety net, but, but what has actually happened?

And do you think that the healthcare industry in the country has been harmed entirely by this expansion?

Devon Herrick: Well, it, it probably depends on the sector. I mean, absolutely. Some areas of the, of our health care sector. I mean, you'll, you can talk to hospitals, you can talk to doctors, nobody is making a lot of money off Medicaid patients, they're stopping some of the losses for patients who otherwise maybe wouldn't pay anything or would be charity care write offs.

But for the most part, a lot of the big public you know, charity hospitals pushed for it because they wanted the patients they were already treating to at least pay something. At the time they were getting what's called dish pro, which is disproportionate share hospital funds. Because they were treating a disproportionate share of the uninsured.

Well, Obamacare was supposed to take care of that, but of course, you know, they're still complaining that they need more money. So, apparently, it didn't really take care of all that. I

AnneMarie Schieber: guess they didn't. I know they all lobbied for Obamacare. They were all on board with it, and I guess they didn't anticipate how many people would be on it.

In 10 years, so I can imagine that this is not to what they were expecting Let's talk a little bit about the exchanges now this idea Was that people would never have to worry about not having the ability to buy insurance because of pre existing Conditions or age or health status and we had naysayers early on Saying this was gonna be an actuary, actuary nightmare.

Impossible to pull off. But you know, we still have the exchanges today, so can you say it at least in that regard, it might be working.

Devon Herrick: Well, I guess it depends on your definition of working. I actually have an Obamacare policy, and it is, I forget now, something like 8, deductible, and it has a cost of between 8, 000.

So, I have to spend, you know, 7, 000 and then another 8, 000 to 9, 000 before I get any benefit out of it. So, I mean, the only thing keeping me... In that market is the fact that I'm of the age that, you know, something could happen. And so I'm it's like, it's just, you know, my biggest fear is not that I would get sick and not be able to afford it.

Pay for it. It would be I would be paying list prices that, as you know, can be just astronomical, three, four times, five times what what an insurance company would pay or 10 times what Medicaid would pay. So from that standpoint, it's not really what proponents envisioned. It is not affordable, as you said, and neither is the what the Once you have Obamacare, the, the, the care that you have to, you know, your cost sharing, you know, seven, eight, $9,000, that's just crazy.

So that's not affordable either. But if you look at who is in Obamacare, well, the problem that the Biden administration had going in was that the middle class couldn't afford it. It was just so extensive that the only people who were enrolling. for those getting generous subsidies. So after, you know, COVID and then, you know, the big monetary expansion that seemed to be part of and really, and followed COVID.

So now they are subsidizing really the middle class. So the only people that Obamacare is a halfway decent deal, and I'll say, use the word affordable, are those getting generous subsidies. And those that are quite ill and going without coverage would be far more costly. But for the, but what you need to have those people in the market, you need a lot of healthy people paying premiums.

And healthy people just weren't willing simply because it was such a bad value. Yeah. So yeah, we do have exchanges. They are. Theoretically working, but the offerings in the exchange are really not what most people want.

AnneMarie Schieber: And so the alternatives to the exchanges are go get an employer, employer health insurance.

You could go on Medicaid and not work and qualify. You could get a short term plan, or you could go into a health sharing program, which is not really insurance. But you know, they're trying to get rid of the short term plans or reduce them because I guess they've been pretty popular and they're, it seems like they're just doing this to drive more people into those exchanges and maybe get more of those healthy people that you talked about to kind of make it work.

I mean, the insurance companies are taken care of, right? The subsidies go right into their hands. And there really isn't much competition, really. And so it is very expensive, and it's just like much of an option. Now you wrote a blog on this, and you make a really interesting point. Because if all of this is working why in the world are so many states introducing, or have introduced, system.

Just recently in my home state, the state is looking at one of these and people are kind of freaking out over it because it's going to be very radical. And this has been attempted and turned down Vermont. You said tried it and California found out it was just going to be way prohibitively expensive Colorado.

You know, why would nearly half the country be moving to do some of these things after Obamacare? You know, like, obviously they're admitting that, you know, Obamacare just isn't the be all and end all that it was promised to be.

Devon Herrick: That's a really good point. There's a, I think it was Of course, you know, Vermont Senator Bernie Sanders and I think Washington Representative Jayapal have introduced the, I forget now what it's even called, Single Payer of Act of 2023.

It was reintroduced and I think it was And they have around, I forget now, I mean, over a hundred co signers, you know, are co sponsors, I should say, so that, you know, that's close, you know, nearly a quarter of the members of Congress, Congress apparently think that Obamacare is not working because they have co sponsored legislation yet again to bring in a, what they call Medicare for all.

And really, I sometimes derisively call it Medicaid for all because what, what seniors have would probably not be the same system because it would be unaffordable for the most part, but back to your question, you know, why do all these states? Well, they, first off, they don't really understand how the healthcare system works.

They don't really understand the financing, which is Obamacare should be proof of that. You know, where I'm paying, you know, 7, 000 for 9, 000 worth of deductible. So, I think that the problem... Is states become lulled into thinking or the progressives within the state think we can do it better if only we had the power of government to create a monopoly.

Technically, it's called a monopsony, you know, monopoly is one seller. Monopsony is is one buyer. If the state has held the power to set payments to be the, you know, if you're the only ballgame in town, people have to own it. You either leave the field or, yeah, they either have to leave, you know, leave the field or accept what you give them.

And so, That is really the secret sauce of the single payer healthcare proponents. You know, I think Obamacare didn't do it because you have all these insurance companies, so that didn't work. And here's the secret about all these state plans. They're not really thought through because for it to really be a single payer system, they have to go to the federal government and say, Hey, could you give us all the money you're paying for, for Medicare in our state?

Could you give us all the money you're paying for Medicaid in our state? And then they have to go to the employers and say, Oh, you need to give us all the money that you and your workers are putting into the system for your high quality coverage. And we will decide what they get back. And oftentimes, what they have done or what I've seen mostly is a lot of these proposals call for a payroll tax of about 10%.

And what they have found repeatedly is 10 percent is not enough, at least not for what they want to do. They want a Cadillac health plan, you know, at bargain based prices. Like Vermont, it was just going to be cost more than double what they thought, as I recall. The proposal in Colorado was going to cost way more than the proponents advertised, and so the voters voted it down.

And in California, it was... It seemed like it was quietly dropped when it was going to triple the state budget just for health care, or that was the health care budget would be triple the current budget. Yeah,

AnneMarie Schieber: I mean, I look briefly at the Michigan plan and what stood out to me right off the bat was it was it made had a bullet point just talking about the transgender stuff that would all be included.

We don't know what the long term prognosis for those radical treatments are. And we'd be stuck with the bill and you know, even politically half the people don't want this stuff. They don't want to pay for all the so called reproductive health measures and that would be in there. So I, I don't know how they think they're going to get it through.

I mean, Michigan, their situation right now is the Democrats have a very slight hold on power for about, who knows, maybe till the end of November. We don't know yet quite. But they're pushing a lot of stuff through and this could be one of the things so. Who knows? We may be one of the first states and they kind of have single payer health.

What about, you know, why do you suppose a large segment of the population gravitates to big government programs when something doesn't work out? Like Obamacare or, you know, ten years ago it was just the private health insurance industry. People complained about it. And why do you think they don't see that liberating markets like free market health care would do, would probably benefit them more?

You know, we have, we've, we've seen it work in the retail sector with Amazon and Costco and all kinds of companies, the tech sector is same. But for some reason, people aren't making the same. analogy with health care. And you know, you go out in the street, I bet you interview 10 people and I bet you find five to seven people say, Yep, I would want Medicare for all.

I think the government should pay for health care. And I think it could be

Devon Herrick: perfect. Well, I think part of the problem with people and their view on health care is that they have no experience. I mean, you know, the experience that we have with Our own health care tends to be you work for an employer that has a good health plan.

And so, you know, people and workers assume it's free. They don't, are they, are they assume that their contribution is really all health care costs? Well, it's not, you know, it's not free. Their wages are reduced long before they, kick in their share of the contribution. So they have this idea that someone else paying the bill is is ideal because they have well, for one thing, whenever they have tried to use free market principles, they've run into a roadblock.

They call their doctor, well how much will this cost me, this procedure cost me? And the doctor says, well what's your insurance plan? And they are, you know, not the doctor, the health, the business office. And they look up the health plan and And they, they they oftentimes can't really tell you, they have no idea what it's going to cost because it's, there's no package deals.

What they do is, is they say, well, technically the surgery is this, but they have no idea, you know, what about the anesthesia? What about the band aids? I mean, because of our convoluted healthcare system. Healthcare providers have disaggregated all the services into, you know, a page, two or three page long you know, bunch of charges, you know, and in our, well, you know, in any other, any other market.

They give you a bundled price because it's just too inefficient to say, okay, I'm going to fix your car, so I'm going to charge for taking this bolt off and this new gasket and taking that hose off. Well, you know, it sounds ludicrous. But in healthcare, it's the norm simply because, you know, it's what they're doing is they are maximizing revenue against reimbursement formulas.

Well, that's not a free market, of course. So I think. People, whenever they try to compare prices, they run into a roadblock and so they don't, they assume it would be the same. If they had to, you know, if they had a real free market in health care, they can't look beyond the current system and realize that the reason they have problems is because of the third party payment.

But you raised another good point about the transgender care, and that is the

architects of these proposals. They can't envision a market where maybe the government would insure you against catastrophic problems and people would compare prices for the small incidental things. So, and that, that makes it unaffordable. If, if You have first dollar coverage that pays for, you know, the aspirin their doctor prescribes, that pays for the office call to see your general practitioner.

Those are going to be very, very expensive plans, whether they're Obamacare or Blue Cross or whether they're Medicare for All. And I think that is the trap that the proponents fall into. They can't envision. The, the idea that the only role for government would be those things that people themselves could never, you know, negotiate themselves, you know, like your heart attack treatment, but as far as going to my, you know, general practitioner, I mean, the other day I discovered that a office up the road for me was, is, you know, it was built by a investor, but it's a, it's a physician's office, our medical office where doctors rent, you know, an exam room by the hour, You know, you can work on the weekends.

You can, I thought it was a great idea. I thought, you know, I'm going to check into it to see if I can go, you know, one mile up the road for me and find doctors that take cash. Because it's a lot easier than trying to use my insurance that requires, you know, 9, 000.

AnneMarie Schieber: Yeah, I mean, you, you said a lot of good things.

I mean, the, the, the thing I would argue that when you have a third party paying for stuff, you don't make good decisions because you don't have to take responsibilities. So when you go out and buy big ticket items. You're going to do your research. You're going to make sure it's the best thing for you.

You're going to shop it out, make sure you get the best price. But when it comes to health care people don't want to make decisions about what they should do to treat their illness. They'll just take whatever is told to them and say, yeah, because you know what, I'm not paying for it and if it doesn't work out, I've got insurance.

It's going to take care of all the problems that might result. So you have. You have that aspect of it, which, of course, drives up the cost of all health care. And then, you know, these single payer plans that are now coming down the board. They're including everything under the sun. And you know, You could have, you're right.

If, if it's done independently, you would be amazed at the ingenuity that providers would have in meeting the demand. And doctors can do that. You know, I know Chuck Goodman wrote recently about that. Why don't we let doctors figure out the market? And do and serve their customers and their patients as they see right in front of them instead of trying to micromanage it on some larger level.

Devon Herrick: I tell a story about, I guess it was years and years ago. I was in graduate school at the time and I had an issue that I needed to see my doctor. I called my doctor's office and the office manager said, Oh, I'm sorry. He's out of town. He's on vacation right now. But here's a number of a doctor who is doing, I don't know, who's on call and taking his calls.

And so I called up that doctor and that doctor, well, that office said we don't take appointments. We don't take insurance. It's cash. First come, first served. And I'm thinking, what? I've never heard of that before. So I, it was something that I really needed to see a doctor for. So I, I went into the office.

I found a waiting room. It was pretty small. There were ten people. Maybe, not even ten in there. Took me ten minutes to see the doctor. I saw the doctor for probably a good ten to fifteen minutes. And I paid my bill. It was like thirty five bucks. Wow. And, you know, it worked for, you know, this system worked for him.

It apparently worked for his patients on on that particular day. It worked very well for me. And I think that his cash price was about the same as my insurance co pay. So, you know, and that's just one example of, you know, you have doctors that are doing direct primary care. I mean, I know some doctors that, Or, you know, they specialize in one area, they're, you know, cash only, they don't take insurance for this particular and, you know, and that's, that's, that's your practice.

Yeah. And it's, it's, you know, and it sounds, well, to me, it's innovative. I guess other people might think, well, that's just strange. I mean, I can't use my insurance card. And I literally went to a doctor one time that had a sign in the waiting room. We are not a Medicare provider. You cannot get reimbursed.

And I wasn't a Medicare patient, obviously, but this was, he was making sure even I had the sign that I recognized the fact he was not a Medicare provider. Simply because he wanted to give every person who walked in that door three or four different opportunities to know You aren't getting reimbursed through Medicare if you were over 65 because I don't do that.

Yeah Yeah, and he could get it, you know, it would because and I think Keith Smith of the Surgery singer of Oklahoma. I heard him speak one time and and at that time, which is a few years ago He said, if a Medicare patient comes in, we have to turn them around and send them back out because the bureaucracy of treating a Medicare patient, even for cash, is so difficult that we don't want to risk it.

Yeah. There are provisions that make it, you know, very difficult.

AnneMarie Schieber: Yeah, I, for the last five years, I've not carried traditional insurance. I, I use short term plans. I have to renew them. Pretty frequently here. And I use direct primary care, which is phenomenal. Just phenomenal and we, and the practice has been so successful that they started another surgical center.

That's cash pay, very transparent pricing. They've got a menu of items, very similar. And And they're being asked to expand. So people are getting it. And it's a totally different experience, your scale, but I'm hopeful, you know, we got some good bills out there besides Medicare for all there's the Pete Sessions bill and Ted Cruz and Chip Roy introduced, I don't remember the name of it, but that would also open the door a little bit.

So all good stuff, Devin, I really appreciate we've, we've run out of time, but I always appreciate you coming on the podcast. You're, you're so knowledgeable about healthcare insurance industry. You worked at a hospital for a long time in the accounting department and appreciate your thoughts on all this stuff that's been happening.

So you'll have to come back. Well, sure. Anytime. All right, Devin Herrick actually wrote about the topic we talked about and I will include a link in the podcast notes about her possibly being designed to fail. You can read all about it in the interesting comments that have as well. Thank you all for joining us here on the podcast and for tuning in.

If you liked what you saw, keep the work that we do on free market policy solution from this is Anne Marie Schieber. It's time with another topic in healthcare.