The Supreme Court's decision to uphold the Affordable Care Act, aka Obamacare, puts me in mind of the old proverb: Be careful what you wish for. Democrats on a victory lap should watch their step, because John Roberts may have given Mitt Romney a gift. The impact on the health system will be much smaller than the political fallout, because with or without Obamacare, the American health system will continue to unravel -- quickly if Romney is elected, slowly if Obama is re-elected.
First the policy, then the politics:
Obamacare is simply incapable of doing what it is supposed to do -- provide nearly universal care at an affordable and sustainable cost. The problem is that three years ago, in his futile efforts to win over Republicans (remember the embarrassing courtship of Olympia Snowe?), Obama gutted the law before it was even passed. He made the private insurance companies the linchpin of the new system, and promised them millions of additional customers and billions of taxpayer dollars. He also did nothing to rein in the profit-oriented delivery system that rewards providers on a piecework basis for doing tests and procedures. So with all the new dollars flowing into the system and no restraints on the way medicine is practiced, the law is inherently inflationary.
Although there are some provisions to curb the worst abuses of the insurance companies, such as excluding people with preexisting conditions, there is nothing in the law that would stop insurers from raising premiums. A senior executive of the industry's trade association, America's Health Insurance Plans, told me privately that that's exactly what the companies will do if regulations cut into their profits. Thus, costs under Obamacare will almost certainly rise even faster than at present. No reform can work well or very long if its costs are unsustainable.
In fact, it is unlikely that Obamacare will ever be fully implemented as it stands. If Romney is elected, with a Republican Congress, it will be quickly overturned. If Obama is re-elected (and I hope he is, despite my disappointment in his health plan), it will come apart more slowly. But unravel it will, as costs rise and it becomes clear that there are still tens of millions of Americans priced out of the system.
Here's how the unraveling will look:
Many of the uninsured who are subject to the mandate to purchase private insurance will choose to pay the penalty/tax instead. That will lead the insurance companies to raise their premiums, demand that the penalties be greater, or both. Deductibles and co-payments will increase to the point that many people will have insurance they can't afford to use. (This is the case in Massachusetts.) Many employers will simply stop offering health insurance, since our high unemployment means workers no longer have the leverage to demand it, or they will stop insuring dependents (thus avoiding having to cover grown children to age 26). In addition, because insurers have a strong financial incentive to evade the new regulations requiring them to take all comers, it will take a huge bureaucracy to monitor them.
Next year, states are supposed to set up insurance exchanges to pool risks and offer a menu of approved insurance plans for individuals and small businesses. But they are unlikely to be functioning by 2014, as called for in the law, either because Republican states simply refuse to set them up and hamper federal efforts to step in, or because of the administrative complexities. Some states may also refuse to accept the funds to expand Medicaid, as called for in the law, since the Supreme Court found that they could opt out without losing their existing federal Medicaid funding. Here again, the bureaucracy necessary to aid and monitor state compliance will be huge, diverting resources from health care. In addition, there are likely to be multiple legal challenges to nearly all provisions of the law.
Obamacare partially offsets the costs of federal subsidies to insurance companies and Medicaid costs by cutting Medicare reimbursement to providers. That means hospitals and other health facilities will take a hit, and many are already struggling.
So that's how it will unravel. There will be efforts to patch it up as we go along, but because Obamacare leaves our current inflationary system largely in place, they are unlikely to be successful.
Now for the politics. Even though the Supreme Court decision will have little long-term effect on our health system, the political ramifications will be great. To be sure, it's a victory for Obama, but that will be evanescent. Now the Republicans are on the offensive, and greatly strengthened by John Roberts' insistence that the mandate is a tax, not a penalty. Remember how hard Obama tried to avoid the T-word? Republicans are adept at painting Democrats as tax-happy, and Roberts has helped them to do just that. Pundits wonder what got into the Chief Justice. Was he just trying make the Supreme Court appear to be above politics, given all the recent evidence that it's not? Or did he do a favor for Romney and the Republicans?
It's very hard to read, but I think the Democrats would have been better off if the Supreme Court had overturned Obamacare, and I think it would have been better for our health system, as well. The base would be energized, and Democrats would take the offensive. More important, no one would be under the illusion that the health system has been successfully reformed, as many good liberals now are. That mistake will become clear as the system unravels. Democrats will suffer the death of a thousand cuts, rather than a quick blow that could be blamed on our politicized Supreme Court. If the law had been struck down, we could have started right away to work on an effective reform.
The only way to provide health care to all Americans at an affordable cost is by instituting some form of publicly-administered nonprofit system like those in other advanced countries. After all, they manage to provide universal care at less than half the cost, on average, and their costs are rising more slowly. I have long advocated expanding Medicare (which is a single-payer program) gradually by lowering the eligibility age one decade at a time, while phasing out for-profit health facilities and changing doctors' fees to reward primary care more and specialist care less.
On July 22, 2009, Obama said in a press conference, "Now, the truth is that unless you have what's called a single-payer system in which everybody is automatically covered, then you're probably not going to reach every single individual." Bingo. Too bad he didn't hang on to that insight, and use his rhetorical skills to make the case strongly to the American public. If he had fought for single-payer health care at the beginning of his administration, while he had both houses of Congress, and mobilized public opinion behind it, he might have made it. After all, the only thing members of Congress need more than industry money is votes.
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