If you’re like most people, by now you’re probably sick to death of hearing about the details of the arguments surrounding the constitutionality of the Affordable Care Act (the “ACA” or “ObamaCare”) made recently in the Supreme Court, President Obama’s strange and almost imperial warning to the court in reply to the hearings, and the backpedaling “of course the court can overturn unconstitutional laws except it would be very unwise in this case, if you know what we mean” explanation by the attorney general of the President’s remarks.
For although these events have been excellent theater (why else would the President make such remarks given the fact that the Justices had already voted on the matter?) the real importance and the real consequences of the decision still don’t seem to have filtered through the coverage. Perhaps this shouldn’t be surprising. Why bother with consequences when the results won’t be known until June? Surely there will be plenty of time then to rail against the decision, clean up whatever broken glass is lying in the streets after the inevitable reaction by one side or another, and use the decision in an attempt to twist the sentiments of the electorate.
But in their usual fashion the media and most commentators have refrained from discussing what is really at stake based upon the decision of these three justices. We say four because there appears to be absolutely suggestion that the four liberal members of the court – Kagan, Sotomayor, Ginsburg and Breyer – have given even the slightest bit of consideration to the notion that the law might be even a little bit unconstitutional, while Alito and Thomas are supposedly reliable votes for overturning it. That means that the fate of the future of American healthcare is in the hands of justices Scalia, Kennedy and Roberts. What is at stake is astonishingly valuable. Overturning the law means that our country would have the opportunity to try again; a chance to come up with a healthcare system that is fair, sustainable, efficient, effective, affordable, and preserves some modicum of individual choice. For if one thing is clear, it is that none of those descriptors will apply to ObamaCare if it is allowed to continue to roll out as designed by its creators.
Let’s face facts, the bill that “had to be passed so that we could find out what’s in it” was packed with items that represent an impossible mix of the unworkable, the untenable, the arrogant and the just plain stupid. Consider just a few of the highlights:
- The CLASS Act, which was to account for $86 billion of Obamacare’s claimed $210 billion in deficit savings from 2012 -2021, was found by the CBO to be something more akin to a Ponzi scheme than a legitimate means of deficit reduction, and had to be put to euthanized by the Obama administration itself.
- The ten year cost of the law has gone from the $940 billion projected by supporters at the time of its passage, to over $1.7 trillion as of today, and will exceed $2 trillion next year as the ten year window slides forward another notch. But even these new estimate are clearly too low. The Independent Payment Advisory Board – the unelected and unaccountable group of individuals who are supposed to save Medicare $500 billion solely by cutting payments to providers – faces a rocky future, even though its demise would add another half-trillion dollars to the cost of ObamaCare. Republicans in the House have already passed a bill to repeal it, and even Democratic legislators are getting cold feet about the prospect of reducing Medicare payments below those of Medicaid, and well below the cost of actually providing healthcare services. President Obama has promised to veto any legislation abolishing the panel that manages to make it to his desk, but even he can’t force the delivery of healthcare goods and services at below their true cost indefinitely.
- Despite the passage and implementation of ObamaCare, (or more likely because of it), private insurance premiums have continued to grow at double-digit rates, becoming less and less affordable even before insurers are forced to incorporate the most expensive measures of guaranteed issue despite the presence of pre-existing conditions, unlimited benefits and the need for any sort of waiting period for those who may not have bothered to purchase insurance prior to being hit by a truck. In dollar terms the freebies that the law has handed out thus far – complete coverage of preventive care and requiring that children up to 26 years old be coverable on their parents’ policies – are small potatoes. Even if the individual mandate is not overturned by the Supreme Court, the laughably small penalties for failing to purchase health insurance practically guarantee that large swaths of the population will gladly pay them rather than pay annual premiums an order of magnitude larger. For example, in 2016 a family of three (two parents and one child under 18) would have a flat dollar penalty of $1,737. The current average premium for that same family is roughly $1,200 per month today, some four years earlier.
- One of the primary mechanisms ObamaCare uses to reduce the number of uninsured Americans is to place millions of us into the already teetering Medicaid program. Unfortunately, as Avik Roy has written about at length, the scientific evidence available to date suggests patients with Medicaid are actually more likely to die, even after adjusting for other factors, than those with no health insurance at all:
“Despite all of these adjustments, surgical patients on Medicaid were nearly twice as likely to die before leaving the hospital than those with private insurance.
Patients on Medicare were 45% more likely to die than those with private insurance; the uninsured were 74% more likely; and Medicaid patients 93% more likely. That is to say, despite the fact that we will soon spend more than $500 billion a year on Medicaid, Medicaid beneficiaries, on average, fared worse than those with no insurance at all.”
Not to mention that this expansion clearly threatens to decimate state budgets in the not-too-distant future.
- Most recently, the General Accounting Office (GAO) published its Spring 2012 update on the long-term fiscal outlook for the Federal Government. In it, it expressed considerable doubt about the viability of “savings” likely to be realized as a result of the ACA, conceding that: “The Trustees, CBO, and the CMS Actuary have expressed concerns about the sustainability of certain health care cost-control measures over the long term.”
We could go on and on and on in this vein. The 2,700 pages of the original bill, (or alternatively the small-print 900-page version of the actual law as published in the Federal Register), contains one convoluted page after another of sham savings, benefits of questionable value (for example, why on earth would anyone try to solve the problem of insuring young adults up to the age of 26 by allowing them to be covered on their parents’ policy, rather than devising an affordable means of providing them low-cost catastrophic coverage of their own?), expansions of insurance programs that are already known to be defective, and mandates that are guaranteed of increasing the amount of confusion and bureaucratic overhead with no real evidence that they will improve care or reduce costs. If anyone really doubts this we strongly encourage them to take the time to read the actual law and look at the evidence, both historical and scientific, that speaks to the probable impact of its provisions. (If you can even figure out what they are. Many, if not most, of the law is implemented by unelected officials such as the Secretary of HHS in the form of regulations We have written about many of them on these pages. If they can come away from the exercise feeling confident, reassured and able to defend their optimism with facts, then we hope they’ll send us a guest post about it. We’ll gladly publish it. But the odds are that 99% of potential readers will be defeated by the measure’s length and indecipherable prose before they make it halfway through. With the possible exceptions of dictionaries and cookbooks, few works are better defended against being read cover to cover.
“But surely it would be better to fix this legislation than to overturn or repeal it?” supporters might say. “Look how long it took and how hard it was just to get this!”
If only it were true. The Affordable Care Act is a stone castle built upon a foundation of sand. There can be no stable, affordable and sustainable system of healthcare without taken into account – and making use of – the innate psychological and economic forces that regulate the behavior of both patients and the individuals and businesses who care for them. Regulatory control – and ObamaCare is completely and utterly based upon regulatory control – has three inherent defects.
The first is that regulators are always regulating the past rather than the present. Regulation works have having human being look at data collected in the past, making determinations about how to address problems, and implementing those fixes into the future. However collecting and analyzing this data is always associated with a time lag – even with electronic reporting systems. Taking the time to formulate good regulatory decisions takes even longer. The result is that no matter how good they are, regulators are always addressing today’s problems with solutions based upon yesterday’s information. By the time those solutions are canned and implemented the problems have changed and they no longer work. Surpluses have become shortages. Deficits have become gluts. The individuals involved have moved on. The science had changed. The policies and procedures so carefully formulated are inherently obsolescent.
The second problem with regulatory control is that it is performed by people. President Obama may be perfectly happy with the decisions made by Secretary Sebelius, but he and his supporters may be dismayed by the actions taken by her Romney-appointed successor. Imagine the destructive impact of changing insurance regulations, provider payment and preventive care policies every four years. Since the Secretary decides what qualifies as “preventive medicine”, those birth control pills may not be a covered benefit after all in a year. Continuously whipsawing one-sixth of the U.S. economy is hardly a recipe for optimizing productivity.
The third and final problem with regulatory control is that healthcare is just too complicated. According to the Bureau of Labor Statistics, over 11% of all private sector workers are in the healthcare business. (That doesn’t include healthcare workers employed by the Veterans Administration, military, HHS, CDC or other public agencies.) That’s about 17 million people. There are only about 3 million people employed by the Federal government. If anyone thinks that any government regulators, no matter how gifted, can successfully manage not only their own activities but those of a private industry five times the size of the government itself, they haven’t yet heard about the Las Vegas meeting of the GSA in 2010.
As President Obama likes to say, let’s be clear. What’s really at stake in the decisions of those three Supreme Court Justices is whether our nation will be allowed to put this massive mistake behind us and start over with a clean slate. In our next post we’ll discuss how even two warring political parties might be able to do something constructive with respect to overhauling healthcare.