ObamaCare and the centralization crusade

Dr. Scott Gottlieb, a resident fellow at the American Enterprise Institute, writes in the Wall Street Journal that ObamaCare is positively crushing independent physicians, very much by design.  The horde of little collectivist grubers who boiled forth to craft the Affordable Care Act are big believers in “consolidation,” a crusade Gottlieb entreats Republican reformers to resist:


The law’s defenders view this consolidation as a necessary step to enable payment provisions that shift the financial risk of delivering medical care onto providers and away from government programs like Medicare. The law’s architects believe that doctors, to better bear financial risk, need to be part of larger, and presumably better-capitalized institutions. Indeed, the law has already gone a long way in achieving that outcome.

A recent Physicians Foundation survey of some 20,000 U.S. doctors found that 35% described themselves as independent, down from 49% in 2012 and 62% in 2008. Once independent doctors become the exception rather than the rule, the continued advance of the ObamaCare agenda will become virtually unstoppable.

Local competition between providers, who vie to contract with health plans, is largely eliminated by these consolidated health systems. Since all health care is local, the lack of competition will soon make it much harder to implement a market-based alternative to ObamaCare. The resulting medical monopolies will make more regulation the most obvious solution to the inevitable cost and quality problems.

Kindly forgive the good doctor for referring to ObamaCare as a “law” – it’s an enabling act, rewritten at will by the lawless executive to authorize whatever he feels is politically necessary at any given moment – and consider his profound point about centralization.  Contrary to popular liberal myth, Big Government planners love monopolies – provided, of course, they obey the dictates of the political elite.  Forcibly restricting markets is a source of enormous wealth and power for politicians and their close friends.  The modern labor union depends heavily on friendly politicians using government power to protect it from competition.


Consolidation opens two-way exchanges of money and power between big corporate entities and Big Government.  Few sights warm the heart of a politician more than lobbyists working for huge, wealthy corporations approaching the altar of centralized power with their hats in hand.  Big players can afford to spend big bucks currying the favor of Big Government.

Large corporate business entities are also better positioned to shoulder the burden of government regulatory schemes.  They often quietly desire such burdens, because they know smaller competitors can’t handle them as easily.  Gottlieb mentions a few such burdens dumped by ObamaCare onto independent doctors, with an eye towards pushing them into larger medical organizations:

For one thing, providers who want to participate in the “reformed” physician payment plan must control their own IT infrastructure to comply, as opposed to collaborating freely across space rented in the cloud. This practical need can require IT infrastructure that costs millions of dollars. It makes participation absurdly expensive for anyone but a hospital that already has its own server hub.

Also, waivers of certain anti-kickback provisions (that prevent doctors from forming needed business partnerships) only apply when providers qualify as an Accountable Care Organization. Not surprisingly, ACA qualification is largely dependent on requirements that create the same need for physical infrastructure and bureaucratic overhead that is hard to replicate outside the hospital setting.

To implement real reform, Congress must give independent, private-practice doctors an equal footing. One legislative proposal would let a new class of “independent risk managers” act as third parties to help individual doctors analyze and share the risk of caring for these patient pools. This would make it possible for independent medical offices to band together and bid against hospitals for a pool of patients. Private companies specializing in analyzing and pricing medical risk could serve as brokers and help the doctors know what they’re getting into. But ObamaCare deliberately crowds out this sort of market innovation in favor of hospitals and their existing networks.

Individual, provider-owned medical practices also deserve equal footing when it comes to reimbursement. Right now, Medicare is paying much more for many procedures when performed in a hospital outpatient clinic rather than an independently owned medical office. Things as common as heart scans ($749 versus $503), colonoscopies ($876 versus $402) and even a 15-minute doctor visit ($124 versus $70) all pay more when done by a hospital-based doctor than a privately owned medical office. Obama officials know that hospitals are buying doctor practices to take advantage of this difference. But they favor hospital ownership of doctors and see it as a small cost to pay to drive that migration.


There are many areas of the private sector where such forces have been unleashed to squeeze out small entrepreneurs and independent contractors.  (For another example, look at the staggering burden that will be imposed on small Internet companies if online sales are taxed – a heavy load of reporting and auditing requirements that large corporations can handle far more easily, and in fact are already handling, if they have nationwide brick-and-mortar sales operations.)  Everywhere you look, it’s harder to start a business, more expensive to bring your first employees on board, and more difficult to comply with the regulatory burden of the micro-managing State.  ObamaCare turns up these pressures on doctors, and is fairly explicit about using the leverage of cost and regulatory burdens to crush independent operators.

Market distortions are nothing new to American industry in general, and health care in particular.  It’s always good for a chuckle when ObamaCare apologists try to excuse this massive failure as a necessary government corrective to free-market medicine – as if anything resembling free-market medicine had existed for decades before Barack Obama took office!  For that matter, such a market did not exist within living memory before Hillary Clinton’s unsuccessful takeover attempt in the Nineties.  Medicine is perhaps the paramount of example of government creating problems so it can advance itself as the only solution.

Like every other market, health care (including the separate but related industries of health insurance and medicine, both of which ObamaCare wrecks) would benefit from robust competition.  Robust competition has a number of ingredients, including abundant supply (i.e. we want lots of doctors) and informed, aggressive consumers (no more blowing off health insurance as an ugly bit of business for employers and/or the government to handle.)  Surely the government has a role to play in fostering such competition, especially in a marketplace as complex as medicine – we want doctors to be properly certified, and insurance companies to conduct themselves in a reputable manner.  But there’s no question the first step toward creating a more competitive marketplace is removing artificial barriers created by central planners who think they already know what the outcome of the competition should be.



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