By Marcia Angell, M.D.
USA Today, March 27, 2012
The Patient Protection and Affordable Care Act, otherwise known as ObamaCare, turned 2 years old Friday, just in time for this week’s Supreme Court hearings on its constitutionality. The major provisions of the law, meant to increase the number of insured Americans while controlling costs, will be implemented in 2014, but a few are already in effect. What are its prospects, and will it survive intact to its next birthday? The outlook, I’m afraid, is not good.
For starters, the law was greatly weakened before it was even enacted. To win the support of the powerful health insurance industry, President Obama included the unpopular mandate requiring uninsured Americans to buy private insurance. Not only did this set off a legal battle, it preserved and expanded the central role of the insurance companies, whose abuses caused many of health care’s problems in the first place. They will get millions of new customers, many with government subsidies. In addition, the idea of a “public option” — government-sponsored insurance to compete with private insurers — was scuttled, wasting critical opportunities to try to control costs.
Let’s look briefly at the major provisions: First, the law encourages employers to provide health benefits by fining large companies that don’t and subsidizing small ones that do. Second, Medicaid, the federal/state program for the poor, will be expanded to cover an additional 16 million people. And third, everyone else without Medicare or employer-sponsored insurance, estimated as another 16 million people, will have to buy private insurance or be fined. States will create (or have created for them by the feds) shopping exchanges to pool risks and offer a menu of approved insurance plans for individuals and small businesses, with subsidies for people earning less than 400% of the federal poverty level. (Note that of the roughly 50 million uninsured people when the law was enacted, 18 million would be left uncovered.)
Insurance abuses addressed
The law addresses the worst abuses of insurance companies by prohibiting them from excluding people with pre-existing conditions, dropping policy holders who develop expensive illnesses, or using more than 20% of premiums for overhead, marketing and profits. But companies can still set their own prices, and they’ll be allowed to charge older customers up to three times more than young people.
To finance the law, the payroll tax that supports Medicare will be increased for high earners, who will also pay a small additional tax on unearned income. In addition, support for private Medicare Advantage plans will be reduced, and there will be unspecified cuts in Medicare payments to hospitals and other medical facilities, and a variety of fees levied on health companies.
That’s the theory. What’s the likely reality? At the time of enactment, the non-partisan Congressional Budget Office estimated that over 10 years, the new funding would more than cover the cost to the federal budget. But costs to the private sector — businesses and individuals — were not addressed in the CBO analysis, nor was cost inflation. Given the influx of new customers and government money, health costs will likely rise rapidly and quickly outstrip funding. There will, of course, be revisions to the CBO analysis as the law is implemented and conditions change, but none can be more than crude estimates.
Monday’s Supreme Court hearing was just the beginning of a torrent of legal challenges to various provisions of the law. For example, many states, particularly Republican ones, have indicated that they will not establish state insurance exchanges or cooperate with the federal government in doing so, and that will be litigated, too.
Regulating the law will be a bureaucratic nightmare. Even in friendly states, establishing insurance exchanges will be a complicated job involving multiple state agencies. Monitoring insurance companies will be even harder. The prohibitions against abuses can almost certainly be skirted, and insurers have a strong incentive to do so.
So I fear that this 2-year-old law will unravel before it is fully implemented. As state exchanges falter, individuals and businesses could be faced with prohibitively high premiums or punishing fines. The most vulnerable Americans will be those in their 50s and early 60s, who will have to pay the highest premiums and are most likely to have chronic illnesses.
Of course, if there is a Republican sweep in November, ObamaCare will be systematically dismantled.
When Obama was an Illinois state senator, he favored a single-payer health system — such as Medicare — for all. Even as president, he admitted in the summer of 2009 that a single-payer system was the only way to provide universal care. He was right then.
Medicare outperforms private insurance on every measure. It insures nearly everyone older than 65 for the entire package of benefits, no one can be excluded or dropped from coverage, and its overhead is very low. When ObamaCare inevitably fades away, it will be time to revisit the single-payer option.
How about lowering the Medicare age gradually, one decade at a time, beginning with age 55?
Marcia Angell, M.D., is senior lecturer in social medicine at Harvard Medical School and former editor in chief of the New England Journal of Medicine.