Analysis: We're stuck with Obamacare, which means we need to succeed

Analysis: We're stuck with Obamacare, which means we need to succeed

Summary: The doctors couldn't fix healthcare. The lawyers couldn't fix healthcare. The politicians certainly couldn't fix healthcare. So now it's up to us in IT.


Healthcare delivery in America is broken. While our doctors and medical professionals are able to conduct some of the most amazing and effective procedures, a shocking number of Americans don't have access to quality medical care.

We have the technology, science, and medical skills. The problem is not medical. The problem is economic and political -- and it's brutal.

Back in 2009, I spent more than twelve months researching healthcare delivery as an essential element of my book, How To Save Jobs (free download). Because healthcare is so inextricably linked to employment, it was a necessary area of research. The conclusions I came to then were disturbing.

Back in 2009, about 46 million Americans didn't have access to health insurance. That's roughly the population of America's 44 largest cities. Even worse, one in three Americans went without health insurance sometime during 2007 and 2008. That brings the number up to 86.7 million people, or all the people of our top 273 cities.

Of course, one issue with all these folks experiencing gaps in their coverage is that many of them lost coverage for conditions previously covered. Once they resumed their health coverage, they suddenly had preexisting conditions that were no longer covered.

This is one area where the Affordable Care Act is critically important because it no longer allows insurance providers to discriminate against preexisting conditions. The 2007-2008 stats aren't unique. Because health insurance is so tightly linked with employment, whenever Americans lose their jobs and their COBRA runs out, they lose their healthcare.

In other words, it's not just the "great unwashed" who need help, it's people just like you and me, people who have worked for large corporations and small businesses.

Here's another interesting statistic: because so many companies in America are small businesses, in reality, only about 12 percent of US companies actually offer health insurance to their employees. That one surprised me.

Our healthcare cost is uniquely expensive. Remember that Americans are now competing for jobs all across the world. Yet it costs a typical American company 24 times more to provide a health insurance benefit to an employee with a family (not counting that employee's actual pay) than the the total cost of wages for a typical Chinese employee.

Combine that with the fact that most other first-world nations offer some sort of government-provided healthcare coverage, and you realize that American companies employing American workers are competing at a severe disadvantage, simply because of how much healthcare costs add to overall expenses.

What's worse, even when healthcare is delivered, it might not be all that good. In a nationwide survey of nurses a few years ago, almost half said they, "would not feel confident having someone close to them receive care in the facility in which they work." Ouch.

I'll give you one more one-two punch and then we'll move on to the issue.

The American Journal of Medicine did a study that looked at bankruptcies. They used data from before the economic downturn that we've all recently experienced. They concluded that more than 60 percent of all bankruptcies in America were healthcare related.

It gets worse. Three quarters of the people going through those bankruptcies already had insurance. The insurance -- insurance they or their employers paid good money for -- didn't help. They still lost.

I went on to write a couple of hundred pages on this topic, showing example after example of just how troubled the American healthcare system was. I also pointed out that the American healthcare industry was the largest single industry in America, which makes it the single largest industry in the history of mankind.

And that brings us to and Obamacare.

I've said this before and I'll say it again here. The Affordable Care Act was bad governance. It went out of its way to accommodate the healthcare industry to the detriment of American citizens. It was negotiated by lawyers and politicians, which is never good.

But regardless of whether Obamacare is good governance or not, the fact remains that Americans were and still are in deep trouble when it comes to healthcare. If 87 million people drop out of coverage relatively regularly, if 60 percent of our bankruptcies are health-related and of those, 75 percent had active healthcare insurance, something is very wrong.

Obamacare, kinda-sorta, aims to fix that. In my opinion, based on my research, it goes the wrong way. My analysis shows that for America to be competitive globally for the next hundred years, we're going to have to have some form of Medicare for all. Obviously, that's not where our politicians took this thing, and instead we have mandatory insurance buy-ins and a crappy website.

But, for now, it's all we've got. And it's in trouble from at least three vectors.

The first is simple. It was built by the government after going through the normally terrible government procurement process. It's badly designed and full of compromises. That comes as no surprise, but it's troubling nonetheless.

One problem is that, on the back end, has to interface with hundreds of insurance companies and all the states. It's a data interchange nightmare, made worse by the fact that the entities it's exchanging data with don't want it to succeed. The insurance companies never wanted this thing, and so they've certainly not put their A-teams on getting the data interchange right.

Now comes the unsurprising news that on the front-side, has been the subject of a number of poorly executed distributed denial of service attacks. According to Bloomberg, various social networking sites have been distributing a really poorly implemented "Stop Obamacare" DDoS toolkit. So far, this thing hasn't done much harm because (a) it's really badly designed code and (b) the site hasn't been up enough to be brought down.

What concerns me about all this isn't the Three Stooges-level hacking job this toolkit attempts. What concerns me is when China and Russia and organized crime get into the game and try to gain access to the system -- which by that time will store a tremendous amount of personal information about Americans.

That's where this transitions from another vaguely humorous, disturbing story of your tax dollars at work to something that's very worrisome. Americans' identity and health security is now at risk, unless all of the various elements of the online exchanges get their security act together quickly.

So here's where we are. We started with a healthcare system in bad need of reform. We passed a reform bill that itself is deeply broken. We have a new, highly complex, interconnected healthcare exchange system dependent on the interchange partners who would prefer to see the system fail. An entire industry is in upheaval over these changes, and the only alternative proposed by the opposition party is a complete reboot, returning back to the original, very broken system.

The problem with a reboot is that our original system was absolutely terrible for many Americans. A reboot would attempt to reinstall that system, but after all these changes, the collateral damage of a reboot at this stage of the game would be disastrous.

My fellow Americans, we are not in a good place here.

Looking at Obamacare, there are a few components I think are critically necessary for Americans' health security. Elimination of denial of coverage for preexisting conditions could help millions of people. Another element is the elimination of caps on medical care. These two components could reduce the bankruptcy rate considerably -- as long as citizens can get coverage and the insurance companies pay out on covered claims, both of which are, by no means, guaranteed.

The rest is a mess that I think we're going to have to live with. The opposition tried to prevent passage, they tried a case all the way up to the Supreme Court, and they even tried to elect a different president. All failed.

Clearly, is going to need a lot of work, hopefully by people who aren't simply good at landing government contracts. Health will obviously be an ongoing and important area of IT practice in the years going forward.

Interestingly enough, the doctors couldn't fix healthcare. The lawyers couldn't fix healthcare. The politicians certainly couldn't fix healthcare. So now it's up to us in IT. I know how good American IT professionals are, so I know we're up to the task. I just hope that the politicians and insurance companies will get out of the way and let the real professionals go do their work.

P.S. I didn't have space in this article to source all these stats, but they exhaustively documented in my book and you can also go directly to all my research resources.

Topics: Cloud, Big Data, Government, Government US


David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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  • Obamacare is doing exactly what it was designed to do

    Go so badly that people would rather have a one payer system
    It is just a means to that end
    It would be cheaper if I just dropped out of the system and paid my doctors with cash and I have one of those bad pre-existing conditions.
    • re:

      I wish the first thing you said was true. Sadly, it isn't. And I wish you'd follow through on the second thing you said. Sadly too, I doubt you'll put your money where your mouth is.
      Sir Name
      • That you would willingly turn your very health

        over to the state is something I find extremely depressing to hear from an American.
        • Health care is broken in the US

          I agree with the author 100%.

          Going back to the old system is just foolish. We need to fix what we have to remain competitive. Healthcare will fail & lose more with the old ways in the long run!

          Speaking from personal experience. If you land in the hospital for a day in the US it will set you back nearly 10k, The same in another country sets you back 300 bucks.

          Now , in the US, service is spotless clean, dedicated and excellent all the way around (no one likes law suits) no doubt. Though in the end, the outcome is the same.

          Almost everyone of us in the US will end up in the hospital at one time or another during our life time. And we will be set back 10k to millions. The same globally will be 100s to a 50k tops.

          For those who missed it, I'm talking about the old system that healthcare wants back.

          If we become uncompetitive, more people will have less paying jobs and no or very poor coverage, it already has been going on for decades. If we all go bankrupt, our most of us, there won't be clients that pay these bills. Healthcare will collapse.

          Just look at these numbers It's clear how this places us at a disadvantage and will bankrupt all of us in the long run!

          This is why we need to fix what we have now and forget about going back to the old. We need to leave politics aside and make pragmatic decisions so that the US can continue to lead the World we live in.
        • The state of an insurance company. You do have a choice.

          You can let the insurance company make those decisions for you (which is the reality for 85% of Americans who have employer-provided health insurance).

          You can let the Federal Government make the decision for you (as everyone on Medicare already does). If you are poor enough, your state will make those decisions for you (through Medicaid). Or ...

          If you are healthy enough, and have the financial resources, you can pay inflated private rates for healthcare services.

          The only choice for many of those 45,000,000 people is to gamble that they stay healthy - and if they don't, they must choose to "let nature take its course" or to file bankruptcy and place their family's future financial stability at risk.
          M Wagner
    • Paying doctors with cash works until...

      Something really bad happens. I went out for lunch one day. I got back to the office 4 months later. During my absence various healthcare providers billed slightly north of a half million dollars for my care (my health insurance company adjusted that down to slightly less than $150k). Everyone needs at least catastrophic health coverage - bad things happen.
    • Well...

      The US doesn't rank very high at all in healthcare quality overall, but we do have a good reputation for last resort cancer treatments. I personally know of an Balkan family who had a relative come over for treatment for his liver cancer. This was all done as outpatient, no hospital stay, and in a few cycles over about a 4 month period. Cost? About $200,000 when all was said and done. (And very unfortunately, the treatment failed to help.)
  • We need to look at why it's so expensive to begin with.

    Problem is, we let politics cloud our judgement - we're sitting here trying to put band-aids on things, but never trying to get to the root of the problem.

    We need to solve the problem of why it's so damned expensive to begin with. We don't need to be fiddling with insurance or coverage or any such nonsense. Ideally, I should be able to pay for my health out of pocket without having to break the bank.

    But nope - we don't focus on making it cheaper - we focus on ways around its heavy expense. We pile on band-aids upon band-aids, and it's still bleeding to death.

    The only thing that will come out of the ACA are taxes that most of us won't be able to afford. If we aren't able to afford it now, what makes anybody think we'll be able to afford it if the bill comes from the IRS instead of the doctor's office?

    Meanwhile, the wound keeps on bleeding.
    • Partisanship is what clouds our judgement

      Politics is about how we govern ourselves, not about which faction should be in charge.

      I actually agree with your assessment of the situation and where you think we should be going. The challenge is figuring out how to get there. I don't think that "Medicare for all" (essentially single payer) as David and others have proposed is the correct solution, but neither is the ACA the Democrats are wedded to, or status quo ante, which is what Republicans have been effectively advocating ever since the ACA was passed (I'm guessing that it's all they can agree on). We have to figure out how to reduce the need for insurance by making routine care truly affordable (meaning that the vast majority can pay for it out of pocket and the rest can get whatever help they need) and how to do it in a way that doesn't cause financial panic among those whose livelihoods depend upon the status quo (the usual complicating factor).
      John L. Ries
    • A lot of folks already know why it's so expensive.

      Government interference in the market. You want health care costs to decrease, start treating health insurance like insurance again. In other words, you buy a policy to protect you against something you hope never happens, not something that subsidizes your day to day expenses. To put it even more simply: Pay for your doctor visits out of your own pocket, and buy a cancer insurance policy. Just in case.
      • Great if you can afford the out of pocket costs

        Most people can't.
        John L. Ries
        • Great if you can afford the out of pocket costs...

          Saying that most people can't is an admission that the system is automatically a long term failure. Whether health care is paid for in taxes (confiscated from you and may or may not be returned to you in the form of health care) or paid for out of pocket (you pay directly for what you get), the total health care system costs must be less than or equal to the total amount paid by everybody for health care.

          Debit spending works for a short while until the person on the receiving end of the shortfall gets tired of holding the empty bag.
          thinking about consequences
          • I never said otherwise

            The very fact that most people need insurance to afford routine care indicative of a serious problem in the system, which is that a necessity is priced as a luxury item.
            John L. Ries
        • It depend a lot on your plan but ...

          ... today the typical group policy for a family for four costs about $1000 per month in premiums and has a deductible of around $3000. Then a 10% co-pay once the deductible is paid. Maximum out-of-pocket is often $5000 or more. The total ANNUAL outlay for that family of four could easily run from $12,000 to $20,000!

          It's less about whether or not people can afford the premiums, and maintain an $8000 cash reserve just for healthcare, than it is about whether, given the choice, a family WILL take those steps to protect themselves.

          Once the healthcare calamity hits, it is too late. And most people, sooner of later, will incur major medical expenses.
          M Wagner
  • Obamacare has nothing to do....

    with healthcare. It is about forcing people to pay for insurance that they can't afford. It doesn't do a thing to insure that you can find a doctor that will accept it. Why spend all that money for insurance when you can't use it?
    Test Subject
    • Step away from the TV

      Turn off Fox for a while and go outside for some fresh air.
    • The fact that any doctor can turn away a patient because of ...

      ... the healthcare plan they are on - or because they don't have insurance is a big part of the problem.

      Still, families should have cash reserves set aside for healthcare emergencies. The choice then becomes whether it is cheaper to pay insurance premiums in addition to keeping cash reserves or is it cheaper to have a larger cash reserve for medical emergencies?
      M Wagner
  • One point missed

    The insurance companies are already a doomed business in health care, and their own actuaries will tell them that. The reason is that ALL insurance works on either then number paying in exceeds the number drawing benefits, the amount being raised from the payers exceeds the amount being paid in benefits, and investment income making up for the difference in premium intake vs. benefits paid. Much like Social Security, the idea here is that there will always be more healthy people coming in than older, less healthy people using the service.

    We are not in that dynamic now. Insurance has risen to the point where, unless they are forced to (which Obamacare tries to do) the younger people are choosing to pocket the insurance premium and pay for the rarely needed visit to the doc themselves, making more on that on the stock market or getting more use out of that than tying it up in mostly unneeded insurance. Then when they realize they need insurance, it is after something that becomes a "pre-existing condition" and before Obamacare, they were hosed. Now the insurance companies have to take them, so it is the worst possible scenario. And investments in the current environment are nowhere near making up the difference. So definitely, Obamacare has to fail. Or (and watch this happen) more and more companies will leave the health insurance field.

    Funny, but as much as it is maligned, Medicare may have the right ideal. A basic, safety net set of healthcare services that are (or attempt to be) regulated in cost and in benefits covered. For example, if it can't take care of a condition that causes you to leave the planet, it is mostly out. It's not perfect (look at recent issues like creating a fleet of seniors with scooters) but it does work. Then step out of the way and let the private sector do its thing. Look at Medicare Supplement and at Medicare Part D coverage. The latter was fought against like the plague. But Bush got it passed. Now it, like Medicare supplement, is ferociously competitive for the insurance industry. And it wouldn't be if someone wasn't making money off it.

    And why did the government get into the insurance Web site business anyway? You know, you could have just made a part on the 1040 where you enter the insurer and policy (or group) number as proof and left it to industry to do the rest. But we have this site that seems to be more for collecting data than selling insurance. We already had sites for that, from to state sites to insurers themselves. We didn't need at all. But it doesn't matter. In the end, age and economics will "fix" it anyway. Has to.
    • Health insurance companies aren't doomed.

      since most of it's participents are on company plans, not individuals. Many really don't do individual to any large scale, (if at all?)

      What is doomed are the lower profit invidual plans, somethng which the ACA factored in, which is why it was written to force insurers to cancel lower cost/profit plans.

      You cant have more people paying in then it is paying out if X amount of people don't come in due to having a lower cost plan already straight from the insurer.
  • Govt (single payer) health care solves nothing

    Consider for a moment the 4 most prevalent single payer systems already in the US - Medicare (for those 65+), Medicaid (for the poor), Veterans Adminstration, and Department of Defense (the last two are NOT linked).

    Although I have no personal experience with Medicaid, Medicare is known for its remimbursement rates being too low, and being riddled with fraudulent charging and other issues. Medicaid has reportedly even lower reimbursement rates. Practices have to watch how many Medicaid/Medicare patients they allow because they will go broke if the ratio of Medicare/Medicare patients to private insurance patients gets too high. Medical care is effectively rationed based on what insurance plan you have/don't have, and your age. Medicare is a particularly important study, because the coming of Medicare destroyed employer-sponsored retiree health care.

    The VA supposedly rations its resources by classifying veterans by degree of health issues. If you are not a disabled veteran, you will never see a VA doctor, despite your elegibility and the promises made to veterans. So despite rave reviews by some, and acknowledged good care for the worst-off veterans, the VA is not serving much of its legal mandate.

    The military health care system supposedly rations its resources by importance to the military mission. Active duty military personnel have the highest priority, retiree dependents have the lowest. The past 15 years have seen the imposition of fees for "employable retirees" (under 65) and their families, and the mandatory departure into the Medicare world for retirees over 65. Again, DOD health care is not even close to serving its mandated populace despite recruiter and Congressional promises (and laws). And courts have ruled Congress does not have to honor promises.

    Since the VA and DOD health care systems are inadequate for their intended populations, ugly politics and favoritism is used to bypass the stated priorities. Those without the clout (positive or negative) to secure the health care they want get left out. It really sucks to see a frazzled 22 year wife of a deployed soldier with a sick 3 year old getting the run-around because they don't know how the system works - but it happens occasionally in even the best-run DOD facilities.

    I see no way that an unlimited services for a pre-paid fixed fee can be a successful, reasonable-cost model in the long run. All utilities have learned this, many of them the hard way. Unlimited service for fixed-fee (especially when pre-paid) is the most costly model, because maximum capacity must be provided. This is where government-run health care always fails. Demand for services continues to rise until every inidividual desire for additional care is satisfied. To deal with this unmeetable demand for services, bureaucracies and rules are instituted as roadblocks, which become hindrances to be gotten around for those determined to do so. Everybody else suffers these hindrances, regardless of medical need.

    Like it or not, the fee-for-service model rations health care by money, not by politics. You may not like the result (poor people struggle to get the care they want or need), but the individual has much more control than under rationing by bureaucratic fiat. If you want to spend 50% of your income on health care, nothing prevents you from doing so. At the opposite extreme, "young invincibles" don't pay for services they don't use.

    Under the fee for service model, there is a need for catastrophic insurance - which is not the same as the typical pre-paid health services policy today. I really like the combination of the HSA plus catastrophic insurance. You budget and plan and pay for your routine health care needs. Insurance prevents you from going broke. That is the model we use for automobile, life, flood, home, etc., insurance.

    my thoughts and experiences, your choices
    thinking about consequences