The Future Under Obamacare

If you want a glimpse into the future of Obamacare, take a look at the hospital where I was born, in a small coal-mining and smelting factory town outside of Pittsburgh.

The mines and factories closed down long ago, and while fracking is bringing some new, younger faces into the area, it’s still mostly comprised of seniors and low-income people. Consequently, the local hospital relies heavily on Medicare and Medicaid payments, and it’s going bankrupt.

The hospital struggled, doing what you would expect, cutting back on staff, cutting back on salaries, etc. But without a significant private insurance base, the hospital’s value -- in terms of its bonds -- was sinking fast.

A white knight then appeared in the form of Highmark, part of the Blue Cross and Blue Shield Association. And as of April 30, Blue Cross in western Pennsylvania will be transforming itself from being an insurer to actually owning and running hospitals and labs -- and having medical staff on the payroll.

One of the first changes the new management has requested is a 30 percent increase in reimbursement rates for this year, with 10 percent annual escalators to follow.

Of course, those higher reimbursement rates will be passed on in the form of increased health insurance premiums. People with private health insurance have been subsidizing underpaid Medicare and Medicaid expenses for decades, especially if the hospital/healthcare system lacks a robust trust fund. Apparently, Highmark found that the era of a hospital trying to function on nickels and dimes was over. It was time for private insurance patients to fully make up the difference.

What’s happening now in western Pennsylvania is indicative of what we can expect under Obamacare. As more and more people are brought into the Medicare and Medicaid systems, hospitals mainly serving those populations will not survive without large subsidies from those with private insurance. This means, simply, you and me.

As an economist, I fear the shocking increases in private premiums will cause households to rearrange their budgets; delaying major purchases of cars, appliances, etc., which will cause the economy -- and jobs -- to contract, putting us back into a recession.

Under Obamacare, we can expect stratospheric private health insurance premiums, deteriorating levels of care, lost jobs, and a recessionary economy. President Barack Obama and uber-wealthy (former) Speaker Nancy Pelosi will, obviously, never have to experience the adverse effects of their healthcare reform.

But the rest of us will.

Joanne Butler is a graduate of the Kennedy School of Government at Harvard University and a former professional Republican staff member at the U.S. House of Representatives Ways and Means Committee.