ObamaCare Subsidies Rob the Middle Class

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By Alieta Eck, MD

As the controversy rages between those Republicans who want full repeal and those who want to retain what might be “good” about ObamaCare, we are not asking the right questions. While they are arguing whether or not to keep the ObamaCare subsidies (or the equivalent as “tax credits”), is anyone asking what it is we are subsidizing?

Why has medical care in the United States gotten so expensive? Why did the cost of a hospital stay go from an average of $17,000 in 2000 to $33,000 in 2010, while the average length of stay declined? Why do our hospital stays cost three times more than in other industrialized countries?

The dirty little secret is that having insurance might be a guarantee that the insured pays MORE. And because deductibles have risen dramatically along with premiums, a family needs to pay thousands of dollars out of pocket before insurance kicks in. But how does this work?

Most insurance companies have networks of “preferred providers.” One would assume that a “preferred provider” is a doctor or a lab that gives better rates, but the opposite is the case. As an example, one patient spent a day in the emergency room where the total bill came to $12,000. The “preferred provider” rate brought the bill down to $10,000, which happened to be that patient’s deductible. Upon further scrutiny, the breakdown of the bill showed a lab fee of $3,500—labs that would have cost less than 100 cash on the outside.

When the hospital patient advocate was queried, the answer came back, “Your insurance company negotiated $10,000 and, since you have not met your deductible, you are bound it pay it. Paying the cash price is not an option.” She acknowledged that this seemed unfair, but would not budge.

Another patient discovered that his insurance had lapsed and was given a cash price of $75 for an office visit. Once insurance was restored, the submitted fee was $275. Since he had not met his deductible, he was expected to personally pay the higher fee.

Since 92% of people will not incur more than $5,000 per year in medical expenses, the middle class has been fleeced under ObamaCare in so many ways. Many patients have received subsidies. But this just means that taxpayers are forced to pay part of their premiums, and the patients are still stuck with those deductibles and the higher negotiated fees.

So what is really happening?

Insurance premiums have soared, and the insurance companies love it. They keep a percentage of the bloated premiums for “operating costs.” Hospitals are buying physician practices, and Medicaid and Medicare have agreed to pay the hospitals higher fees for the same service in the same location. No government official has been able to explain why.

The ratepayers and taxpayers are the “forgotten men” in our medical system. Hospital and Insurance executives are now commanding compensation that exceeds $1 million. One CEO of a consolidated hospital system in central New Jersey receives $9 million per year. What exactly does he do to merit this high salary? The usual reason for lavish executive pay is that the official brings lots of revenue into the business. The big hospital systems are businesses that profit massively at the expense of patients and taxpayers—although the excess might be called something other than profit if the hospital is tax-exempt (allegedly “nonprofit”).

Our politicians are complicit in this heist, as last year insurance companies and hospitals were among the ten greatest contributors to the campaigns of legislators who allow this scam on the middle class to continue.

The best recommendation would be for patients with high deductibles to hide any connection with an insurance company and negotiate the best cash prices for services. Find a physician who is in no network and who can help navigate where to find cash-friendly sources of medicines, labs, and x-rays.

Patients with their doctors need to take control of medical care once again.


Dr. Alieta Eck graduated from the Rutgers College of Pharmacy and the St. Louis University School of Medicine in St. Louis, MO.  She studied Internal Medicine at Robert Wood Johnson University Hospital in New Brunswick, NJ and has been in private practice with her husband, Dr. John Eck, MD in Piscataway, NJ since 1988, affordablehealthinc.org.  She has been involved in health care reform since residency and is convinced that the government is a poor provider of medical care.

  • Dr. Eck testified before the Joint Economic Committee of the US Congress in 2004 about better ways to deliver medical care in the United States. In 2011, she testified before a Senate Health Committee chaired by Senators Bernie Sanders and Rand Paul– about ways to avoid non-urgent visits to the emergency rooms.
  • In 2003, she and her husband founded the Zarephath Health Center, a non-government free clinic for the poor and uninsured that currently care for about 300 patients per month utilizing the donated services of volunteer physicians and nurses. It is only open 12 hours per week. zhcenter.org
  • She is working to pass NJ S239, a bill that would provide medical malpractice protection for the private practices of physicians who donate 4 hours per week in a clinic like the ZHC. njaaps.org
  • Dr. Eck was the 2012 President of the Association of American Physicians and Surgeons and serves on the board of Christian Care Medi-Share, a faith based medical cost sharing ministry.
  • She was the Republican nominee for the US Congress for NJ12 in 2014.
  • In March, 2015, she chaired a meeting of the National Physicians Coalition for Freedom in Medicine, about 30 physicians, who gathered in Washington, DC to draft a “One-Page Plan” to restore affordability, promote patient choice and retain quality in medical care. https://aaps.wufoo.com/forms/m11okp2x1yjc8qf/
  • Dr. Eck spoke at the National Press Club in Washington, DC in June, 2016 to help unveil the Wedge of Health Freedom, an initiative of the Citizens’ Council for Health Freedom, with President Twila Brase.  JointheWedge.com

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  • Bob Nelson

    Dr. Eck, thanks for the well-reasoned and well-articulated discussion about the economic dysfunction of our insurance billing system. It is indeed a cartel that gaits access and controls the flow on money and effectively sets prices by the artificially pushing up CPT billed charges to maintain the illusion of discounts. A maxim of supply side economics states that if you tax something, you get less of it. If you subsidize something, you get more of it. Well, we’ve certainly see this play out in real life with college education costs and healthcare cost. The effect price subsidies in these industries is to, in effect, cause higher prices. Combined with the price insensitivity of the CPT billing cycle and you’ve got the perfect storm for inflated costs.

    One thing we can likely bank on is that subsidies, in some form, will continue. At least we should push for money to follow people, instead of an insurance policy. This can only happen with plans that use a fixed-sum tax credit based on age which is paid directly to the individual. And if we can get portable/owned insurance, this will at least marketize those dollars so that insurers must compete.

    Thanks for a great review of the issues before us.

    • Lisa

      Although I agree with these sentiments, I am not sure Obamacare can take all of the blame. Greed can take a lot of it, too. Must CEOs be regulated to be human and not demand and get absurd wages?Should corporations be able to donate and line the pockets of politicians for influence? The Citizens United case and Supreme Court ruling can be added to the blame list. Lots of things to blame.

      • Lisa

        Sorry, Bob. I was replying to the article in general.

  • Edamame

    Thank you for stating the fleecing of middle class people by insurer practices. When we here in California were fighting AB72, a legislative gift to insurers disguised as a way to stop surprise medical bills, I wrote 3 editorials against the misleading bill. In each one I brought up high deductibles as the real culprit in the majority of surprise medical bills. The authors of AB72 were heavily supported by donations from insurers and other risk bearing groups. When the bill passed both the assembly and the senate the insurers and our bought legislators won, and doctors and patients lost.
    It is really crucial that our patients know how little we as doctors contribute to their healthcare costs and how insurers and hospitals are colluding to keep profits up. We must call for complete healthcare cost disclosure and transparency in order to empower patients to make affordable decisions. Regulating reimbursement by fiat is not the solution to health cost problems.

  • Dr. Kristine Severyn

    In 2015 the Ohio legislature passed the Health Care [Price] Transparency Law (Ohio Revised Code 5162.80). Although Governor Kasich signed this common sense legislation, which was to take effect January 1, 2017, he apparently succumbed to intense lobbying by Ohio’s powerful health care industry and ignored the July 1, 2016 deadline for his administration to write rules for the law’s implementation. Citing such rules as necessary to comply with the law, eight organizations representing Ohio’s health care industry (hospitals, physicians, psychologists, and physical therapists) filed suit against the state in December 2016 to block the law. With the State of Ohio and the Ohio Department of Medicaid named as defendants in the lawsuit, the office of Ohio Attorney General Mike DeWine defends the state in court on behalf of Ohio citizens. How can the Ohio Attorney General properly defend the case if the Governor works with health industry plaintiffs against Ohioans? The bill’s sponsor requested that the Ohio Attorney General hire outside special counsel instead of in-house counsel. Since the Governor and the health care industry are evidently on the same side, the lawsuit may erase or limit the scope of the Transparency Law, thus interfering with the General Assembly. The lawsuit smells of collusion and conspiracy and represents a failure of the executive branch to enforce a valid law passed by the legislature and signed by the Governor. In the meantime, Governor Kasich promotes “market-driven” healthcare nationally in the New York times and on NBC’s “Meet the Press” (March 12, 2017), but blocks its implementation in Ohio. (Watch the following one-minute video.)

    https://vimeo.com/199704865

    • Edamame

      Thank you for this information on Ohio’s healthcare cost transparency law. It is not surprising to see the health care special interest groups have interfered with the implementation of the law. I wrote and had support for similar legislation here in California, but the hospitals and insurers scared everyone an so the bill went unbacked.

    • Annette Teijeiro, MD

      When you list physicians in the same group as hospitals you are misrepresenting most physicians that are in small physician practices who do not have the financial resources or intent to block transparency. The Special Interests that file such lawsuits are large corporate group practice enterprises with “employee” physicians and the AMA-like corporate/academic accomplices who collude with hospitals & third party payers but are less than 20% of physicians. So we who are the 80% need to speak up to our patients and expose the charades!

  • L BRODY MD

    An excellent and timely article. It is daily that I hear a story of how insurance doesn’t protect and the fees of the protection “racket” are profound.

    Yesterday’s story was of a man who had a severe nosebleed. This 50+ year old had let his insurance lapse, because he couldn’t afford his modest lifestyle and insurance both. A trip to the local ER revealed a BP of 210/120. He was told to go home and contact his doctor. He didn’t have a doctor.

    He immediately applied to California Obamacare and was quoted a premium of $2,000 a month, and a substantial deductible for him alone.

    He called a retired cardiologist friend about his dilemma. He knew vaguely about the risks of “high blood pressure.” He became desperate. He felt medically “stranded.”

    We consulted and suggested to the desperate patient, that for far less he could find a doctor who was trained in hypertension and its treatment. He found a Board Certified Internist and made an appointment. He applied as a

    “Cash patient”: He was offer a 50% discount. He was given an appointment the next day. The doctor was about an hour’s drive away in a larger city.

    He was worked up on the spot, and had several tests including EKG and lab. Medication was prescribed. An appointment for next week was given and instructions on self-monitoring. He gladly paid the bill of $375, and felt he had received value rather than the label of a stranded uninsured patient. Now he has become a “preferred patient.”

    My retired cardiologist friend reviewed what happened and what was prescribed and felt he was in good hands. The patient pocketed the $1600 left of the proposed first month premium. If hospitalization were needed, he could immediately get Obamacare. He would rather be a cash and carry patient and have the doctor’s interest and respect without middlemen.

    The insurance companies are a profit making business, and I bear them no ill will, but if you can self-insure, you can save yourself a lot of hard earned after tax money. After all, you can become a preferred patient with cash, and imagine the savings for a cash and carry business without the intrusions of a 3rd party. The insurance companies can afford lobbying for their industry, and their profession is to know how to protect them.

    Not everyone can get care as described above, but many who are cost conscious can get necessary care if gotten early. There are many, maybe a majority who feel that insurance is a guarantee, but insurance without access and high deductibles is not insurance but probably a legal form of the protection racket. You also need someone to tell you how to get the care you need and from whom, and maybe not off a list provided by someone who does not totally have your interests at heart.

    This solves the problems of the motivated, but not patients who depend on government to protect them.

    I enjoyed Dr. Eck’s article as it is accurate and timely. I wonder what tomorrow’s medical phone call will bring.

  • Ray Chrusniak

    In Maryland, retired teachers on Medicare will be losing their prescription program due to ‘Obama Care’ in 2020 and are advised to join the government program under section D, but if the Obama Care is repealed, will Maryland rescind their decision to maintain the prescription program? Also, Blue Cross in Maryland for retired teachers as secondary insurance no longer pay 100% after Medicare, but now pay 80%, passing the cost of 10% to the teachers. This is due to greed.

  • Katherin Kirkpatrick

    Thank you for this article. The fight over who pays for insurance indeed seems like a distraction from the deeper dilemma, of why do we get so little of meaning in return for our health dollars?

    There are so many problems in health care that the insurance debate ignores.

    –Patients are required to pay up front before receiving service, thus providing little incentive for providers to perform and little recourse if they don’t.

    –Private insurance companies won’t pursue fraudulent billing for amounts under $20K.

    –Medical schools have no competition, protected as they are by protectionist policies (preventing competition from community colleges), and benefiting from subsidies (land grants, student loans) without any expectation from the communities they serve that, in return, they will put the creation of a locally trained medical work force before the lucrative selection of high-tuition-paying out-of-state and foreign students.

    –Medical recordkeeping has ceased to be meaningful as it has become paradoxically voluminous; rendering it little more than a cover-your-butt repository for providers concerned about malpractice, rather than a tool to serve the patient’s interests; and leaving patients with little recourse when inaccurate, incomplete or defamatory information is put into their permanent record.

    –The medical education system selects candidates based more on their likelihood of surviving and paying for a dysfunctional and sadistic medical education system, than on their likelihood of making good consultants and caregivers.

    –Certificate of Need regulations grant virtual monopolies to health facilities, further reducing competitive market forces.

    I truly think that legislators and regulators enjoy the insurance controversy. It lets them pretend to be doing something without having to look to deeply at health care’s real problems.

  • BdgrGrrl

    Something that doesn’t ring true is when a patient hasn’t met a deductible yet and is then billed for the “sticker price” of the bill. That’s never happened to me since PPO or HMO insurance became a fact of life. For example, say a bill is $100. The insurance company has a managed care rate of $60 with the provider. I would only be billed for $60, not $100. On the other hand, only $60, not $100, would be applied to the deductible, so this could be seen as a double-edged sword.

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