Ken Abramowitz on the Pitfalls Inherent in Obamacare

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  • 01/31/2012
Remember when Obamacare was topic in chief in Washington?  Today, the administration and single payer supporters are avoiding the subject like the proverbial plague.

Hence,  Ken Abramowitz, our guest blogger reminds us of the pitfalls (and pluses) of Obamacare.   Ken is a co-founder and Managing General Partner of NGN Capital. He joined NGN Capital from The Carlyle Group in New York where he was Managing Director from 2001 to 2003, focused on U.S. buyout opportunities in the healthcare industry. Beginning July 2003, he transitioned to Senior Advisor at Carlyle in order to devote the time necessary to create a dedicated healthcare fund on behalf of Carlyle. Prior to joining Carlyle, Mr. Abramowitz worked as an Analyst at Sanford C. Bernstein & Co. where he covered the medical-supply, hospital-management and HMO industries for 23 years, after which he was an EGS Securities Healthcare Fund Manager. 

We look forward to his future posts on health care reform and medical innovation.

ObamaCare imposes European socialism “lite” on the U.S.  The plan involves 2,800 pages of legislation and, soon, 10,000-15,000 pages of regulation.  It is a massively underfunded $900 billion program that relies on stealing $500 billion from a grossly underfunded Medicare program and it does not recognize the $200 billion cost of offsetting the 21% Medicare physician cut.

Rather than making medicine more affordable, It will bend the cost curve upward by taxing insurance carriers, medical device companies, and pharmaceutical companies.  It also raises costs in the individual market by imposing insurance mandates (guaranteed issue, narrow underwriting bands, no lifetime benefit limits).

Worse it sets up grossly underfunded individual insurance exchanges that will quickly exceed projected spending.  therefore they eventually seek to control cost under dysfunctional price controls.  Thereafter insurance carriers will exit the market, tempting the government to take over as it did after the collapse of the housing market. These exchanges offer a costly defined benefit that is 65% subsidized by Federal and State governments, but should have been financed by a more affordable defined contribution.

On the positive side, the bill does provide genuine subsidies to finance and facilitate the “meaningful” use of EMRs and IT integration.  On the really positive side, the massive government overreach we will see voters continue to reject Obamacare as they did in 2010.   Hence, while the plan is guaranteed to blow up by 2015 fortunately 50% of the bill will be repealed before then. Though no one knows which 50%.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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