April 6, 2010

The Healthcare System Sinking In

Justin Katz

It's probably not really worth mentioning, but Joe Baker's column in yesterday's Newport Daily News is an astonishing bit of cheer leading for the policies of the Obama administration. Most of it has to do with the economy and how wonderfully the stimulus program worked. Perhaps it's enough to note that he claims the recovery on which he's so bullish is "in the rebound a lot quicker than was being forecast when we were in the pits of despair last year."

My recollection is that, in the pits of despair, economists were predicting a clear recovery before 2010. If we find ourselves emerging from the darkness only a couple quarters later, that'll be wonderful, but I'd advise against managing your finances as if flush times are just around the corner.

What's really astonishing about Baker's essay comes when he decides that singing about rainbows in the economy isn't adequately partisan:

Republicans who went to the wall in an attempt to kill the health care reform measure were hoping for a rising backlash from its passage. But that hasn’t materialized, and as the reality of the program sinks in and nobody sees the dire consequences predicted by its opponents, methinks a lot of the remaining anger will float away.

Does this guy get his news purely from Obama press releases? Put aside the fact that he ignores the delay on most of the bill's provisions. One gathers that Baker missed the financial statements of major companies expecting billions of dollars lost to their bottom lines because of the legislation. Moreover, on the same day that Newport County's major daily paper handed its readers Baker's bubblegum, the state's major daily paper was informing its own of the following, on its front page:

While some experts are predicting better times for hospitals from the national health-care overhaul, an analysis conducted for the Hospital Association of Rhode Island predicts that the state's 11 acute-care hospitals stand to lose $465.7 million over the next 10 years.

The study found that any gains from more patients coming through the doors with insurance will be more than offset by cuts in payments the hospitals receive from the federal government, according to Edward J. Quinlan, the association’s president.

An accompanying article suggests that the government has a history, in this area:

Quinlan traces the hospitals' troubles back to the passage of the federal Balanced Budget Act of 1997, which led to steep cuts in Medicare payments. The association estimates that over 13 years, the cuts have resulted in a loss of $700 million. Medicare payments used to provide hospitals 14 percent more than the cost of care, providing a necessary buffer to help pay for general hospital expenses. Now the payments are about 89 percent of the cost of care.

Just wait until employers start dumping their workers into publicly subsidized programs. And just wait until this guy's ilk get the reins firmly in their hands:

Health-care reform may bring some relief. But Nick Tsongias, an executive board member of HealthRIght, which supports comprehensive health-care reform, says there's an even deeper problem to address.

"I think the business model that the hospitals are operating under is now obsolete," he says. ...

... increased competition isn't necessarily beneficial, says Tsongias. In fact, he says, it can be harmful. For example, Landmark Medical Center started a coronary-care unit, but had to close it down because it contributed to financial losses so severe the hospital had to seek protection from the courts, he says.

"It certainly poorly serves the public if the way we determine how many hospitals we have, and what the appropriate array of services are ... is through survival of the fittest," Tsongias says.

Competition leads to efficiency. Indeed, Tsiongas's complaint is that it drives down prices to the point that only the most effective providers can continue to profit from a particular good or service, and what ultimately makes them effective is that consumers wish to spend their money with them. I'm not an expert in hospital finance, but I'd wager that the reason hospitals have chased a narrow collection of identical services is that a mixture of government regulations and insurance company policies have created inadvisable incentives through mandates and the speed and percentage of payments.

The better approach to lowering costs and broadening care would be to allow consumers to pay more directly for the services that they want and need. Further embedding the "insurance" model — really a "healthcare services plan" model — and giving government regulators a more direct responsibility for and authority over the healthcare system will only yield additional strains on providers and higher costs. Which will only yield fewer providers and even higher costs.

I'd much rather live in Mr. Baker's world, in which one can trust that the cool smart guy running the show in Washington would manage of our every worry. We could all relax and be taken care of. Unfortunately, in the world that I've observed, that's just not realistic.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

The Newport Daily News did the world a favor when they decided to strictly limit their on-line product and made Joe "Pravda" Baker inaccessible to the greater population.
Baker is an embarrassing party line hack for the Democrats. What's scary is that he also covers the State House for that paper. Jim Baron also plays that dual role for the Pawtucket Times, State House reporter/columnist.
Baron is also a big supporter and cheerleader for the Democrats though he's not quite the vile partisan Baker is. And then there's Kathy Gregg and Bill Rappleye....
Anyone wondering why the people of this state are so ill-informed about the General Assembly?? Simply take a look at who does the "reporting" on their activities.

Posted by: Tim at April 6, 2010 7:53 AM

Ah, the good ol' game of bash the media. Never gets old, does it?
The people who employ Mssrs. Baker and Baron certainly aren't Democrats, and if you direct your complaint to them, won't hesitate to get rid of these "problems."

Posted by: rhody at April 6, 2010 1:11 PM


The State of Hawaii enacted stringent health care reform in early 1970s on a state-wide level guaranteeing the working population right to health care insurance. It followed up with supplemental health care insurance provided by the state to non-covered individuals. State of Hawaii is the only state in the nation providing almost universal health care about 98% of total population covered by health care insurance in the nation and those who have no insurance are not turned away from health care services but charged on a sliding scale based on ability to reimburse the state.

The health care reforms in State of Hawaii are more stringent than the Federal enacted "Obamacare" health care bill recently passed (but you have to start somewhere and build) therefore State of Hawaii will not lower the state health care standards and will be exempted from federal law. State of Hawaii has close to 40 years experience with health care reform and the insurance industry. It is expected by year 2014 under the federal law health care might catch up with State of Hawaii.

Since moving from RI to HI I have seen my health care insurance drop for the same or greater medical insurance services approximately $100 a month with the same providers not impacting my health care services.

Hawaii is one of the state that has the longest living and oldest populations in the nation but is one of the healthiest states in the nation.

Posted by: Ken at April 7, 2010 1:39 AM
Post a comment

Remember personal info?

Important note: The text "http:" cannot appear anywhere in your comment.