What Retirees Need to Consider When Looking at Healthcare Under the Affordable Care Act

Dennis Miller |

It's all too easy to get lost in the misinformation and politicking surrounding Obamacare. Dr. Vliet, an independent physician and the past director of the Association of American Physicians and Surgeons (whom I had the good fortune to meet when she spoke at the last Casey Summit) graciously agreed to sit down and clear the fog shrouding the new healthcare law for us. A warm thank you to Dr. Vliet for carving out time in her busy schedule to chat with us today.

Dennis Miller: Thank you for speaking with us today. I've been fielding reader questions on Obamacare, and, as with all topics, I strive to give straightforward answers.

Betsy McCaughey, Ph.D., former Lt. Governor of New York, has written a book titled Beating Obamacare: Your Handbook for the New Healthcare Law. According to her research, seniors will be hit the hardest. McCaughey recommends that seniors get hip and knee replacements and cataract surgeries done before January 1, 2014, as these procedures will become particularly hard to get.

I want to set cost concerns aside for a moment and focus on care. There's no point in worrying about money if medical care is unavailable or inaccessible. Can you expand on the issue of care being denied, particularly for seniors?

Dr. Vliet: The goal of the new healthcare law—AKA Obamacare—has been to reduce expenditures for medical services to seniors and shift those funds into the Medicaid expansion providing medical care for younger people. Ezekiel Emanuel, Rahm Emanuel's brother and Obama's initial White House Health Policy Advisor, has described this fundamental transformation of American medical care in detail. He wrote a number of medical papers describing his "Complete Lives System," in which he outlined two major goals for the delivery of medical services in the United States:

  1. Medical care is to be "attenuated" (i.e., rationed) for those older than 45 and younger than age 15, so that medical resources can be concentrated on those whom bureaucrats deem most "valuable" to society.
  2. Doctors should be taught to do away with the Oath of Hippocrates and its focus on the individual patient. Doctors should instead be taught to make medical decisions aimed at what is good for the "collective," or society as a whole.

Emanuel's views underpin the philosophy behind the Obamacare law. They are the primary reason that over $700 billion was cut from Medicare (source: the Congressional Budget Office) and shifted into the Medicaid expansion for medical services for younger people. The older (and "less valuable" to society) one is, the harder it will be to have medical care approved.

Many people have been satisfied with Medicare as delivered in the past. However, Medicare as we have known it ended with the 2010 passage of the new healthcare law.

Keep in mind: You simply cannot have today's level of medical services going forward when over $716 billion have been cut from the Medicare budget over the next decade. These Medicare cuts reduce hospital, skilled nursing care, home health, hospice, and other services for seniors that have been covered by Medicare in the past. The priorities in the 2010 healthcare law were very clear: seniors have already lived their lives, so healthcare dollars are being shifted to medical care for younger people.

And that doesn't just include the surgical procedures Betsy McCaughey mentioned. It is also medications, treatments, and procedures for cancer, cardiovascular, neurological, and many other conditions. For many years, patients in the UK and Canada have been denied the latest drugs for breast, prostate, lung, and stomach cancers. They do not have access to the same medications for early treatment of macular degeneration, MS, rheumatoid arthritis, or Alzheimer's disease that American patients currently have. Nor do Canadian nor UK patients, under the National Health Service government-controlled approvals, have the early and frequent screenings for breast and prostate cancer currently available to American patients. Consequently, survival rates with these common cancers are much better in the US than in either Canada or the UK.

Dennis: If Medicare or our insurance companies say they will not pay for the treatment, can we just go ahead and pay for the treatment out of pocket?

Dr. Vliet: The rules and regulations are different for patients using Medicare (i.e., over age 65), Medicaid (i.e., under age 65), and for those using non-Medicare, non-Medicaid, ACA-compliant health insurance policies. For Medicare patients, payment regulations under federal law vary depending on whether the patient sees a Medicare-contracted doctor, a doctor who has legally opted out of Medicare under the federal rules for doing so, or is seeing a doctor who simply hasn't enrolled in Medicare.

Each situation is different, so there is no easy answer—and of course, that in turn makes it difficult for patients to plan for medical expenses that a particular policy does not cover. It's likely to become very frustrating and more costly for patients.

In some situations, like lab tests and imaging studies (MRI, CT scans, etc.), it is possible for patients to sign an Advance Beneficiary Notice, or ABN, in which patients agree to pay for tests that Medicare doesn't cover. If Medicare does not cover a test and the patient does not want to pay for tests, it is more difficult for a doctor to make an accurate diagnosis. Patients sometimes think they can pay cash to get in to see a doctor who has stopped taking Medicare patients, but doctors are not allowed to use the ABN forms for services like office appointments that Medicare does cover just to allow patients to pay cash or a higher fee to be seen by that doctor. The details of these complex rules are beyond the scope of this interview.

As the Medicare budget cuts continue, I fear the list of non-covered services will quickly grow and we will see fewer doctors participating in Medicare, making it harder for patients to find doctors. In fact, that is already happening.

On the non-Medicare or "private" insurance side of the coin, most polices have clauses called "enrollee hold harmless" clauses that prevent patients from paying cash for medical care that a plan reviewer has deemed "medically unnecessary" based on age or condition. Frank Lobb covers the details of this hidden problem in depth in his book The Great Healthcare Fraud.

Patients don't have an easy way to find out about these obstacles to paying cash. These clauses are not found in patients' contracts with their carriers, they are only in the contracts between doctors and insurance companies or between hospitals and insurance companies. When hit with this situation, a patient's only option is to seek the medical treatment they need from a hospital or doctor independent from that particular insurance plan.

Dennis: Who makes these arbitrary decisions, and how can we appeal them?

Dr. Vliet: The Center for Medicare and Medicaid (CMS) and the newly expanded Department of Health and Human Services (HHS) are the ones who write these rules. Even the people who work for Medicare and HHS can't keep up with the complexity of it! No wonder patients are confused and bewildered.

What I find really frustrating is I get different answers from Medicare offices in the different states in which I practice medicine. If I cannot get a straight answer, then I can't very well explain it to a patient. So I legally opted out of Medicare in 1997. I answer only to my Oath to serve the patient "to the best of my ability and judgment."

Private insurance plans have always had appeals processes, and most physicians use those regularly to help patients get medical services that might be denied coverage the first time around. But once the Independent Payment Advisory Board (IPAB) goes into effect in 2015, there is no appeal to decisions made by IPAB: that's why they are called "independent"— not even Congress nor the Supreme Court is allowed to override the IPAB decisions.

Betsy McCaughey writes that the law says IPAB "recommends," but what isn't addressed is their "recommendations" automatically become law unless Congress passes a different plan to achieve the same cost reductions as IPAB recommended, and Congress must pass this plan with a three-fifths supermajority vote during a two-week window in 2017. That's unlike anything we have ever had before. McCaughey points out that the IPAB is an unelected group of political appointees essentially making law and usurping the role of Congress, yet isn't accountable to anyone except the president.

Dennis: Wow! Let's discuss cost for a moment. My friend Jeff White has voiced a concern shared by many. With no risk selection and underwriting permitted; with forced acceptance of people who clearly are not taking care of themselves or have costly medical conditions; with loss of cost controls in general, health insurance costs will have to go through the ceiling. What is your take on this?

Dr. Vliet: He is exactly right. We have not had "insurance" in the correct sense of the term for more than 40 years. What we really have is prepaid healthcare—but a perversion of this since we pay the premiums and they (government bureaucrats or insurance clerks) decide what they will "reimburse" to cover medical services our doctors think we need.

Most of us in the medical profession acknowledge medical care wasn't the problem; it was our broken payment system. People in the individual (vs. employer-based) market were having a hard time getting individual coverage if they had significant medical issues. People also don't realize two other fundamental problems in the health insurance market:

  1. These problems were not a failure of the free-market system, but rather were due to government intervention and distortion of the free-market system, primarily government regulations that affected the cost and type of insurance available to consumers.
  2. The 2010 healthcare law prohibits any private insurance company from offering a policy that does not comply with the Obamacare rules for coverage. That is why so many policies—for perhaps as many as 93 million Americans—are being canceled. It's the healthcare law itself that is forcing insurance companies to cancel policies that do not comply with the expanded coverage requirements. When a government-required level of insurance requires the policy to cover almost all preventive services, plus medical/surgical and psychiatric treatment for the entire population, the cost is going to be exorbitantly expensive.

Dennis: As a capitalist, I can see there will be a need for health care that is denied by the system—maybe doctors banding together in clinics or small hospitals, for example. Can physicians and patients just opt out of the system?

Dr. Vliet: Obamacare regulations severely limit doctors from starting new doctor-owned hospitals in the US. Some enterprising groups are beginning to develop such clinics in Mexico and other countries, and it may be possible to set up clinics in "medical freedom zones" on the sovereign lands of Native American tribes that avoid Obamacare restrictions. Right now, however, such options are very limited and certainly cannot serve the huge number of people who will likely need them as medical care is further rationed (especially for older people).

Regarding physicians and patients opting out altogether: Patients who opt out and do not buy an ACA-compliant health insurance policy will have to pay the penalty (or tax) for not doing so. For now, physicians can opt out of Medicare, Medicaid, and even private insurance contracts and simply do "fee for service" agreements with patients, like lawyers and accountants already do. But if the US moves to the same model as Canada, doctors may be denied a license to practice medicine unless they are part of the government-controlled Medicare and Medicaid.

Dennis: I have Canadian friends who tell stories about family and friends needing eye surgery or heart bypass surgery and having to wait months for those procedures. So they come to the US for care instead. In many cases, had they not done so, they wouldn't have lived long enough to keep their Canadian appointment. Is this where we are headed?

Dr. Vliet: Most certainly, that is exactly where we are headed. Long delays are the fundamental flaw in all government-run medical systems. It is only the free-market, voluntary delivery of medical services that has brought the price down and improved availability of services. Just look at Lasik eye surgery and lap band gastric surgery and note how competition and comparison shopping have brought prices way down over the last decade.

Dennis: I like to think of myself as a practical guy. What can we do to stay as healthy as possible and get affordable, quality health care on our terms?

Dr. Vliet: The most critical thing everyone can do is take responsibility for lifestyle choices. Our "bad choices" are the biggest cause of most of the diseases that hit us as we age and rob us of health and vitality. These are things we can all actually do that will help lower medical costs and keep ourselves healthier and better able to recover if we do have an illness.

These are things my grandmother taught me—they aren't rocket science—and you will even save money if you do them. Eat less, eat a balanced diet, always eat breakfast, exercise more, maintain a healthy body weight, get enough rest, don't smoke, don't drink alcohol in excess, don't overuse prescription medicines, don't use street drugs, practice stress management, engage in a regular spiritual practice. While this advice sounds boring, these commonsense lifestyle choices have been shown in many research studies to prolong life, preserve quality of life and vitality, and to reduce medical costs.

In addition to these practical tips, for the last several years I have encouraged my patients to set up international health insurance policies to give them options later on. Not everyone has the money to pay cash for medical care, even when going to lower-cost countries. But you have to get international policies before you're too old or too sick to qualify. Most companies do not offer these policies if you're over 70, or in some cases 75. There are many companies offering such plans.

I also encourage my patients to set up international bank accounts so they'll have money overseas in the event they need it for to pay for medical care that may be denied or delayed here at home. Call this account your "international health savings account." Even if it won't have the tax advantages of HSAs under US rules, at least the money will be there if you need overseas medical care. Overseas bank accounts are legal as long you comply with US reporting rules. This is a step to take before the US government further limits our ability to move money into other jurisdictions.

Dennis: Thank you for taking your time to fill in some of the blanks regarding Obamacare.

Dr. Vliet: Thanks, my pleasure!

Obamacare is just one of many subjects of particular importance to today's retirees and soon-to-be retirees. If you want commentary like this on the news that is most important to you, sign up for the free weekly newsletter Miller's Money Weekly.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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