2010-09-17 / Columnists

It’s My Turn

Healthcare Reform And New York: The Challenges Ahead (Part I)
By Dr. Harold Paez

Dr. Harold Paez Dr. Harold Paez Dr. Harold Paez, a podiatrist, is a Republican candidate for the Assembly. This is the first part of his op-ed column.

The second part will run in this space next week. The Healthcare Reform Law (The Patient Protection and Affordable Healthcare Act), passed in March of this year, will have a lasting impact on the economic health of New York State. Many policy makers and experts are at a loss to explain the details of the new sweeping law and what its impact will be on New York State. While some states see the law as an affront to State’s rights and are actively challenging the law on constitutional grounds other states find themselves with the uneasy realization that the law’s mandates, when looked at closely, have the potential to place a significant and even unsustainable burden on the state economy.

To start, let us understand that the basic premise of the Healthcare Reform act was that we were in a healthcare “crisis” which necessitated immediate action. While there is no doubt that healthcare costs have been a significant burden on our nation over the past few decades and that costs have been rising, there is equally compelling evidence that there was no widespread dearth of healthcare availability to those in need and that those who fell through the social safety net could be absorbed into the already established welfare, emergency service policies, non-for profit agencies and medicaid programs for those at high risk.

This last point should be emphasized because those in “need” are at the crux of the entire raison d’etre of this legislation. That number, once touted at 47 million has come down to 30 million in the Obama administration’s latest numbers while estimates from opposing camps calculate the true number of those in need to be closer to 15 million.

Also important in understanding the overall theory of universal healthcare is the mathematical and statistical concept behind insurance policies.

The idea that only a given percentage of the population will be in need of the coverage at any given time. If we think of the last time we filed a claim for fire damage to our home we will quickly realize that for the vast majority of the population, the need to file a claim for fire damage is thankfully low.

Medical coverage while utilized much more frequently, follows similar actuarial models of use and minimal/maximal utility to ensure that coverage is there when the need arises. The new model of “universal” healthcare coverage sets up a paradigm shift in the underlying idea of insurance as it proposes to provide coverage for all citizens while not taking advantage of obvious and logical cost cutting measures that are inherent to traditional actuarial insurance models. These are existing models that have evolved in response to needs over the past century.

In fact, the new model for coverage is one which does not appear to take any advantage of basic mathematical analyses of insurance use patterns for maximal economic savings. This is evident in the fact that the new healthcare reform bill will establish a slew of new agencies (163 by last count, all with their own permanent cost burden) to administer an enormously complex new healthcare system. This is also evident in the fact that history has taught us that economies of scale, while proven effective in the private sector, have proven to be massive economic drains when translated into the government bureaucracy. Think of Amtrak and the US Postal Service to name two examples of large scale government enterprises which fail to pay for themselves.

The Healthcare mandates commence to effect our state with the expansion of the Medicaid eligibility pool to 133% of the federal poverty guidelines. This expansion will add an estimated 900,000 new patients to the New York State Medicaid program which will necessitate the expansion of a bureaucracy that already spends billions more than the state of California which has twice our population.

The expansion will burden the state with even more debt at a time of huge deficits which have been papered over with job killing taxes and borrowing from dedicated state funds.

A pattern which is unsustainable by any accounting method. Furthermore, the new Medicaid expansion does nothing to discourage the abuse and overuse of the Medicaid card privileges since the bill does not address one major cost driver of medical costs; the practice of defensive medicine.

As tort reform was avoided entirely in the law’s formulation, there is no effective means of limiting the huge costs associated with doctors ordering expensive tests and performing costly procedures to limit their exposure to liability.

While the law details “utilization panels” of doctors to determine which treatments are more effective and recommend changes to healthcare delivery patterns, the law does nothing to shield doctors from the litigation involved with bad outcomes that are inevitable in any method of healthcare employed.

For instance, the Utilization Panel may recommend a conservative treatment of a foot fracture with casting as opposed to a surgical open reduction of the fracture, but it will not limit the liability the doctor will face for following that recommendation and perhaps being sued by the patient for developing an infected pressure ulcer from the cast.

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