Unintended consequences

Broken Arrow Family Drug blog

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  • 30 March 2010
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    Unintended consequences

    As Congress was going through the process of negotiating the new healthcare law, Nancy Pelosi famously said……….

    Now that the fog has lifted, folks are finding out what is in the bill – and people on both sides of the political aisle are unhappy.

    Chain restaurants with 20 or more locations are being required to post calorie counts for all of their products. Good law, eh? I mean, who could be against educating the public that the Big Mac they are eating doesn’t only have 150 calories.

    Well, what about chains with 18 locations? What incentive do they have now to grow their businesses? When they get to 20, a government mandate will cost them tens of thousands of dollars to comply.

    What about those chains with 22 locations currently? Do they spend the tens of thousands of dollars to comply, or do they shut down a couple of locations, moving employees to the unemployment lines?

    What about new products? What incentive do the larger chains have now to produce a new dish, when they will have to reprint their menu boards?

    Insurance companies have been vilified for warning that premiums WILL go up now that the new law has been signed. Conditions will be covered that weren’t before – and because of that, the premiums will go up for everyone. Smaller insurance companies will likely consolidate with larger ones, or go bankrupt.

    When President Obama said that, “If you like your coverage, you can keep it”, you probably didn’t consider that his promise is good only if your insurance company is still in business.

    Young adults can expect their premiums to go up at least 17%, since older (and less healthy) folks cannot, by law, have their premiums raised past a set amount. So the young will be REQUIRED to carry insurance, and they’ll have to pay a higher price in order to subsidize the older, sicker generation.

    The Associated Press is now reporting that you’d “better beat the crowd and find a doctor”, ”, because the influx of newly-insured will meet head-on with the same (or lower) number of doctors currently in the medical field. More people insured + the same number of doctors = longer wait times. And that’s assuming that they continue to accept your (or anyone else’s) insurance.

    Many doctors are already limiting the number of Medicare and Medicaid patients they see. Now that millions more will be added to the Medicaid ranks, it’s entirely possible they’ll have nowhere to go.

    Those who are retired from a large company and receiving their prescription benefits through their retiree plan will probably lose that benefit. The new law eliminates a tax write-off that gave employers an incentive to help pay for their retirees prescription benefit. This write-off was looked at by Democrats as a ‘cost’, and they believe they are going to ‘save’ almost $4.5 billion by eliminating it.

    What will actually happen is that the companies will eliminate the benefit, and these retirees will begin getting their prescription benefit through Medicare – costing the system more money, and costing the retiree higher copays – because their retiree benefit was better than Medicare Part D.

    And stockholders in these large companies will see a hit on their stocks as well. Companies such as AT&T, Deere & Co., Caterpillar, Verizon, and Valero will have to take a hit on their income for up hundreds of millions (AT&T alone will lose $1 BILLION because of this).

    So a feature sold to the public as a SAVINGS for everyone turns out to be a LOSS for everyone, through increased utilization of Medicare Part D (taxpayers pay more) and hits on your investments.

    And because these businesses are reporting their losses, the government is now ordering these companies to produce documents and emails showing proof of the loss, and demanding the leadership of these companies testify before Congress. Somehow I doubt that having these CEOs testify will help Congress understand the basic business concept that when expenses go up, profit goes down.

    A good friend of mine in the pharmacy business always warns of ‘unintended consequences’ when making business decisions. Unfortunately, unintended consequences can and do happen when we have a healthcare bill written by folks who have never held a job other than a government-funded one for their entire lives. They’ve never written a payroll check, never owned a business, probably never filled out their own tax returns.

    And the rest of us pay.

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