Heath Care Mandate
“The ACA will be implemented and we will learn to deal with it.”
A Supreme Surprise?
Ok. Let’s digest the Court decision upholding the Affordable Care Act (ACA), also lovingly known as Obamacare. Is this good news or bad news? Let me be totally non-ideological here. We need a better health care system. The goals of increasing access and keeping costs in line can be accomplished under the ACA. They could also be accomplished under a private system. There is no one perfect solution despite the sharp rift between left and right.
So the issues are how we will actually implement the ACA. Will government mandates be so onerous as to cripple business? Will it lead to rationing because of the number of new people added to the roles and the coverage for pre-existing conditions? Will we give up quality of care? Will physicians lose their ability to do what they think is best? Will we get price controls? Will it cost so much as to put major financial strain on budgets?
I think reasonable people will eventually deal with all these issues and we will have a workable health care system under the ACA. It will be more based on cost effectiveness and less on quantity of services. Physicians will be required to use more effectiveness data and be compensated more on outcomes. Consumers will not be able to get whatever tests, procedures, and drugs that physicians want. Government and private insurers will reduce choice. Insurance companies will raise premiums and still survive. They must eventually level premiums or else Americans will rebel and demand government cap them.
For drug companies, it may be a short term positive because of increased coverage. Longer term, I fear drug price controls will be implemented because costs will be higher than forecasted and the drug companies are an easy target for punishment.
In essence, to afford to add more poor people and those with pre-existing conditions will require all of us to accept a bit less in services and choice. The ACA really needs to be tested in practice before we can really say it is good or bad. Frankly, it makes sense to provide affordable care for all Americans. The issue is can the ACA deliver? I think we need to all take a deep breath and work as Americans to solve the problems of access and affordability. It is clear we over-treat in America because physicians and hospitals get paid for services not outcomes. If the ACA provides more outcome based fees I think that is a positive.
The major loss for the ACA was the Court said you cannot threaten states by withholding Medicaid funds if they do not add new poor people. This could reduce the access goal of the ACA. The Feds will pay for the new people for five years but then expect the States to pay beyond that period. Under the ACA, the Feds could withhold all Medicaid funds if states do not add the people. The Court 7-2 said the ACA cannot do that. This may mean states do not want the long term cost burden and will keep Medicaid roles as they exist now. That would mean the major goal of increasing access is not achieved, a blow to Obamacare.
The bottom line is that the 2012 election will really decide if Obamacare continues. A Romney victory would mean gutting of the ACA because the new Secretary of HHS will reduce its effect to the maximum. If Obama is re-elected, the ACA will be implemented and we will all learn to deal with it. Since we must eventually live within our means, the ACA will be tailored to what we can afford. That would mean some rationing and some reduction in speed of services, like we see in Canada. It will not be the disaster the right is predicting but will increase the cost of business because premiums must go up to cover all the new people, many sicker than average.
Bob Ehrlich, Chairman
DTC Perspectives, Inc.