Archive for the ‘ health care ’ Category

The AHCA: Obamacare Minus Assistance to the Poor and Middle Class

After a week of studying the Republicans’ Obamacare replacement, it is clear that their strategy is to keep many things about Obamacare intact-  the insurance regulations, state based marketplaces, penalty for not having insurance. They just want to cancel the financial assistance that helps people afford insurance and send it to rich people as tax cuts.

After years of complaining about mandates, Medicare cuts, regulation-Oh the regulations!– Republicans decided that they were fine with all of that. No, what’s really bothering them about Obamacare is that it makes insurance too affordable.

Things the Republican bill changes:

Things it does not change:

So, if your view of Obamacare is that it is great, except insurance is too affordable and too many people have it, then this is the bill for you. However, that sentence seems to describe Republican members of Congress and no one else.

The Obamacare Replacement’s Purpose is to Lower Taxes on the Rich

This is one of those conclusions that’s kind of hiding in plain sight, but no one is talking about. The Republican replacement bill for Obamacare, abbreviated AHCA, is so terrible as a health care bill that it has been savaged by everyone who cares about health policy. For instance, doctors and hospitals, even down to conservative wonks and media have all come out against this plan. Conservatives hated Obamacare! Why can’t Republicans design a healthcare plan that at least makes them happy?

The reason is that the AHCA, despite its name and the coverage surrounding it, is not a healthcare bill at all. It is a tax cut bill. Paid for by slashing medical services and assistance.

This is the only lens through which this bill makes sense.  A bill that was concerned about health outcomes could have easily picked a few of these groups and made them happy. However, you can’t even do that when you spend all of your bill’s money on giving tax cuts to the rich. Here’s a breakdown of the plan spends money, per the Congressional Budget Office’s official score of the legislation:

AHCA spending

You can see that the main effect of this bill is to decrease federal spending on healthcare. It replaces Obamacare’s health insurance credits with new credits almost half their size while also taking a huge whack at Medicaid spending. Its no wonder that 24 million people will lose health insurance as a result of this plan.

The largest expenditure item is not even related to health care. It is tax cuts. I separated the tax cuts into two groups. The largest group are non-healthcare related tax cuts. They mostly consist of cuts for people making more than $200,000 per year, with some more for health insurers and other healthcare companies. The second, smaller group (Other Tax Repeals) includes the individual mandate and taxes on other employers, which in fairness, are related in health insurance.

The Center on Budget and Policy Priorities illustrates this dynamic by demonstrating how the top 400 richest Americans fare every year under this bill, versus 800,000 residents of our smaller states:

cbpp aca repeal taxes

If you judge this bill by the effect it has on healthcare in the US, then you will be very disappointed, because taking hundreds of billions of dollars out of our healthcare system will tend to make it worse. However, that is not how Speaker Paul Ryan judges bills. He judges them by their effect on rich people’s pocketbooks. And by that measure, this bill is a resounding success.

 

Yes, Obamacare will significantly reduce our Debt

Today, a former Bush administration official (Charles Blahous) made a big splash when he wrote a new “study” saying Obamacare will increase the United States’ debt by $340 billion over ten years. This is exactly the opposite of what every independent organization has found about the law. The CBO, Washington’s authoritative legislation scorer, says that Obamacare will reduce our debts by $100-200 billion (depending on what time period you use) over a decade. So who’s right?

Not the new guy. Charles Blahous came to his figure using a dishonest accounting trick that does not reflect the costs of the ACA at all. Basically, he assumed that Medicare spending would be cut drastically, starting in 2017. No one in all of America actually thinks (or ever thought) this would happen. Since Obamacare makes it explicit that Medicare funding will not be severely curtailed in 2017, Blahous says that Obamacare will increase the deficit.

His assertion is preposterous. Obamacare makes Medicare spend its money more efficiently, cutting its spending by about $500 billion over a decade. But in twisted Blahous’ logic, Medicare cuts actually increase the deficit! What? If he used this same logic against the Republicans’ budget (which he wouldn’t) he would also find that their budget significantly increases the debt. That’s because his method is a preposterous way to look at our debt.

For a less succinct, more technical account of how this works, read Jonathan Chait or Paul van de Water.

The United States has the worst health care system in the developed world

The title of this post is not hyperbole or an exaggeration. Judging by cost, access and quality of outcomes, the three metrics commonly used to evaluate a health care system, the United States does have the worst system in the developed world. On two of the three metrics (cost and access), the US is not even close to its competitors and the final one (outcomes) is a bit debatable but it still looks like the US is on bottom. (Let’s define “developed world” as the US, Canada, Europe and the highly developed Pacific Rim countries) I’ll knock out the easy metrics first.

Cost

Cost is where the US does the worst, and I mean the absolute worst compared to any other country. You’d think that since we aren’t even covering 18% of our population, our total health care costs would be less than most other countries, but as it turns out, our market-focused health care economy is remarkably inefficient and wasteful. Here is our per capita spending on health care:

From the Kaiser Family Foundation

The price the US pays for its strange private/public jumble of a health care system is that we spend twice what the Europeans spend for (less of) the same product. We almost spend three times what Japan and Italy do per capita. There is no question that the US has the most expensive health care system in the world by far. We spend huge sums of money on health care that could be going towards education, consumer spending, capital for new businesses or any other productive end. Instead, we waste a lot of money on health care for no apparent gain. Clearly, our approach to health care has failed on this front.

Now, the counter-argument to this is that we may spend a lot on health care, but at least we have choice in our health care market. At least the government doesn’t control our health care economy. But even if choice and limiting government intrusion into the marketplace are your goals, the US still fails miserably.

As for choice, how many Americans actually have a choice in their health insurer? Everyone over 65 doesn’t. They have Medicare. People that get health care through their job don’t have a choice. They get whatever their employer chooses for them. People with pre-existing conditions have no choice. They get no insurance unless they are lucky enough to qualify for a government plan. The poor have no choice. They are lucky if they qualify for Medicaid. The few people with a small say in their insurance provider are the handful of healthy (and somewhat wealthy) people under 65 whose employer does not provide them coverage. If that describes you then congratulations!  You get to choose from among a bunch of inexplicably complicated plans with astronomically high prices. And you better hope that your provider doesn’t find a loophole that will allow it to retroactively cancel your coverage once you get sick!

As for limiting government spending (the most important thing to many conservatives) the American system also surprisingly…. fails. Take a look:

US public sector spending exceeds or matches countries with universal coverage

Government health care plans control just as much of the US economy as they do everywhere else. That’s right. The US public sector spends just as much to cover the very old, *some* of the very poor and some veterans as most countries do to cover their entire population!

Our health care system is so inefficient that even our government spends more than most other countries’ governments. Amazing. The US could, for instance, completely adopt Canada’s health care system and actually see government spending drop as a result. If the US switched to a universal health care system, conceivably, we could reduce government spending as a proportion of the economy.

Access

The US is the only developed nation that does not guarantee its citizens access to health care. About 50 million Americans or one-sixth of the population lacks health insurance. A 2009 study found that there were 45,000 annual deaths in the US because of a lack of health insurance. That’s the equivalent of fifteen different 9/11 terror attacks every year. We expend countless billions to protect our citizens from terrorists. Why not do the same to battle a much larger killer?

Beyond the deaths (which are obviously extremely regrettable and preventable), the US suffers diminished economic productivity because American workers lack access to the care they need and must stay home from work or come to work sick. This is an economic cost that other countries do not have to bear because their citizens can always go to the doctor or buy drugs when they are ill.

Our labor market is also much less efficient than other countries’ market. Since most health insurance is given out through an employer in the US, workers may find themselves in a state of “job lock.” Job lock occurs when a worker wants to leave a job but cannot because he cannot get comparable health benefits anywhere else. For example, if an entrepreneur has a pre-existing health condition he cannot leave his menial job to start a new company because he will have no way to pay his health bills. The US health care system stifles innovation and creativity, and distorts the labor market.

 Quality

As far as quality goes, the US has a multi-tier system. The top tier, which only the most wealthy can afford, probably offers the best health care outcomes in the world. But we are looking at systems as a whole here and not just their effect on the top 1-5%. As a whole, our health care system delivers much worse outcomes than most other advanced systems.

For example, the US has a life expectancy of 78.3 years from birth. That’s good enough to put us in a tie with the communists living on Cuba. We’re ranked #36, which puts us behind the rich Pacific Rim nations and every European country that wasn’t formerly part of the Soviet bloc.  The US ranks similarly on measures of infant mortality. These deaths are immensely tragic, not the least because they are so preventable.

Recently, a study came out that ranked 19 developed nations according to how well they prevented the deaths of citizens with treatable conditions. “In establishing their rankings, the researchers considered deaths before age 75 from numerous causes, including heart disease, stroke, certain cancers, diabetes, certain bacterial infections and complications of common surgical procedures.” Predictably, the US ranked last. 19th out of 19.

There are differing opinions, of course. One of the most common responses is that the US system is better at treating disease once it has  been identified. Sometimes people claim that care  is “rationed” in other countries. One example put forward is that the US has higher survival rates for some types of cancer than many other countries. Many claim that this shows that treatments in the US are superior to those in other countries. It is very likely that this is not the case.

Uniquely, the US over-diagnoses certain types of cancer through excessive screenings. These screenings lead to an inflated number of diagnoses and the over-treatment of small abnormalities that would never develop into cancer if left alone. This problem has even led prominent doctors groups to recommend that their members cut back on the number of screenings and tests performed on populations who are not usually at-risk of developing cancer. Naturally, you are very likely to survive if you never actually had cancer in the first place, and that’s probably why the US ranks so highly.

As for other measures of care being “rationed,” it would seem to be the US that is doing the rationing. The US has fewer hospital beds per person than almost every other developed country. And despite our higher salaries, the US has fewer doctors per person than almost every other country. As a result, we get fewer annual doctor’s visits than most.

All in all, Americans pay much, much more for health care that is not available to the entire country and which produces no better results than in other developed nations. Clearly, this is a system in need of monumental reforms.

(Edit: Added some more information under “Quality”)

The legal case against Obamacare is ridiculous

As far as I can tell, the legal case against the Affordable Care Act (Obamacare) is based on a string of technicalities, half-truths and strange distinctions. Very little of it appears to be based in reality or on previous case law, for that matter. Bear with me as I lay out just how crazy it would be to strike down this law. Here are the charges Republicans have brought against health care reform:

  • They argue that the individual mandate is not a tax, (as it certainly appears to be) but some form of legal coercion distinct from Congress’ taxation powers.
  • Building off that, they argue that Congress does not have the power to coerce people into buying health insurace. Congress, they claim, only has the power to regulate economic activity, not economic inactivity. They say that the decision not to buy health insurance is an example of economic inactivity.
  • Finally, they argue that there is no “limiting principle” behind Congress’ use of the “Commerce clause”  to enact the individual mandate. In other words, if Congress can force you to buy health insurance, they can make you do anything  and that is against the principle of a limited government.

All of these claims are bogus to some degree or another. Here’s why:

Wait, the individual mandate isn’t a tax?

The individual mandate is the common name for the part of the ACA that is meant to pressure the uninsured into buying insurance. It is a tax penalty equal to $695 or 2.5% of your income, whichever is greater. If you have enough money but still choose not to buy health insurance (starting in 2014), then this penalty will be added to your tax return and will be collected by the IRS.

For the life of me, I can’t figure out why this isn’t a tax. The mandate’s challengers allege that it would have been Constitutional if Congress had raised everyone’s taxes by $695 and then given a rebate to every person that gets health insurance. Then, only people without health insurance have to pay the extra tax. But that’s just a more roundabout way of doing  exactly what the individual mandate does! As even this blogger from The American Conservative agrees, the mandate clearly is a tax. But at the Supreme Court we heard this exchange:

JUSTICE SOTOMAYOR: Here we have one where the Congress is not denominating it as a tax; it’s denominating it as a penalty.

MR. LONG: That’s — that’s absolutely right, and that’s obviously why, if it were called a tax, there would be absolutely no question that the Anti-Injunction Act applies.

Ah, so the problem is that Congress didn’t specifically call the mandate a “tax,” they called it a “penalty.” Well, that’s an open-and-shut case. Courts obviously can’t be expected to use their own powers of deduction and logic to conclude that something is a tax, when its not explicitly called that…… O wait, they do that kind of thing all the time. AND there’s even a Supreme Court decision saying:

In a 1941 decision on “the constitutionality of a tax law,” the Supreme Court ruled that it was “concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it.”

If it walks like a tax, talks like a tax and acts like a tax, then it IS a tax and the Supreme Court is allowed to say so. Except when it doesn’t want to for some reason.

“Economic inactivity”- I wonder if this is a well-founded legal doctrine?

If the mandate isn’t a tax, then it has to be justified under Congress’ powers outlined in the Commerce clause of the Constitution, which reads:

[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States…

As established by the Supreme Court in Wicker v Filburn, Congress even has the power to regulate private economic activities which are never intended to cross state lines or to enter into the open market, as long as it is part of a broad national regulatory scheme. But the law’s opponents claim that this is something different. Conservative scholars claim that instead of Congress regulating someone’s actions, here it is regulating their inaction.

The court has never upheld a federal law that punishes Americans for exercising their God-given right to do absolutely nothing. Even the furthest reaches of the Commerce Clause have extended only to affirmative actions, such as growing wheat or possessing illegal drugs.

Of course, the Supreme Court has never held that there is a difference between “economic activity” and “economic  inactivity.” After all, what would be the point of regulating someone who was economically inactive? There would be no point, and that’s not what the individual mandate does. It regulates how people will pay for the medical care that they will eventually receive. Everyone, by virtue of their mortality, eventually will be active in the health care market. No one can predict when a disease will strike or how much it will cost. That’s why everyone needs insurance. Care isn’t free, everyone will need it, and if you aren’t paying for your own care, the rest of us are.  The individual mandate was put into place to say: either pay for your own care (buy insurance) or pay us a penalty to cover your care for you.

The opponents of health care reform have conceded that Congress could force people to buy insurance at the moment they enter the doctor’s office, hospital or ambulance with a severe disease. But of course, that’s not how insurance works. Can you buy life insurance on your death bed? Can you buy car insurance after you’ve already gotten in a wreck? Of course not. If Congress can require insurance when it would do no good, then they can require it when it would do some good. No one is immune from having an accident and being rushed to the hospital at any moment. No one is “economically inactive” in the health care market.

Limiting Principles for Some. Guaranteed health care for none!

So now that the Supreme Court has established that the mandate isn’t a tax (wink, wink) and that there are all these people in America who want nothing more than to be free from the burdens of life-saving medicine, we arrive at our last problem with health care reform: if the Court let’s Congress do this, they can get away with anything! Jonathan Chait tackles that problem here:

If Congress can force you to purchase health insurance, why can’t it make you buy broccoli, or anything at all? (And since this would be bad, then obviously Congress can’t be allowed to make you buy health insurance.)

There are many possible ways to solve this objection, if a Justice were so inclined to look for them. Health insurance is inherently different from almost any other product, with inherent problems of cost-shifting and adverse selection. (The economics of this seem to be utterly eluding the conservative justices.)

In other words, your decision to not eat broccoli doesn’t directly financially burden anyone else, but your decision not to buy health insurance does. A broccoli mandate would not be necessary or proper to solving a major national problem, the individual mandate is. But as Chait goes on to point out, there aren’t “limiting principles” in a lot of Congress’ powers:

As Akil Amar notes, if Congress can tax income it could tax income at 100% percent. If you can conscript 18-year-olds into the army, you can conscript them for 25-year terms like the Czars did. You could put them into the Army Corps of Engineers and turn them into a vast pool of government slave labor. But such hypothetical possibilities don’t normally dominate jurisprudence the way they have at the Court this week.

There are not well-defined limits on a lot of  things Congress and the President are allowed to do, and for good reason. Sometimes problems or needs arise and people expect their government to be able to solve them in new ways. How about we worry about the validity of broccoli or gym membership mandates when Congress actually passes something that stupid. And besides that fact, defenders of the law, like President Reagan’s former Solicitor General, can offer limiting principles for this power.

Conclusion

So there you have it. There is an unusually weak case against Obamacare which the Supreme court is taking unusually seriously. The fact that this law could get thrown out shows us the utter ridiculousness in this case:

  • No one argues that it would be unconstitutional for Congress to impose a single-payer, government-run health care plan on America. But a moderate plan that preserves the free market while making badly needed reforms in a broken system? That’s a bridge too far.
  • This case would be over if instead of the word “penalty” in the law, it read “tax.”
  • The Supreme Court is actually considering striking down a 2,000 page law with hundreds of mostly unrelated, moving parts becauseone of those parts may be constitutionally defective.
  • The Supreme Court is putting the right of a few million people to burden the rest of society with their health care bills ahead of the right of Congress to make laws and the right of 40 million people to the medical care Congress has given them.

If the most conservative Court in decades strikes down this law it will be for of political, not legal reasons.

Will the Supreme Court strike down health care reform?

Now that oral arguments are done, everyone who is not a Supreme Court judge has to wait for three months to see if the Court will rule the individual mandate Constitutional or Unconstitutional. As if that weren’t enough, the justices can also strike down some or all of the rest of the law, if they decide they want to. I have no idea what the outcome will be, btu I can see the arguments from both sides. So, here are the best arguments that “they will uphold the individual mandate” and “they will rule it unconstitutional.” The con first:

The Justices will rule the individual mandate Unconstitutional.

The Supreme Court is divided between five conservative justices and four liberal justices. The conservative justices have shown themselves more than willing to ignore prior case law and hand down decisions which confirm to their own political beliefs. They tossed out decades of campaign finance law in Citizens United v FEC and revealed themselves as a political branch in Bush v Gore. What’s more, this is the most conservative Supreme Court in decades, so if  any Court is going to strike down a major accomplishment of a Democratic President, this will be the one. The conservatives are also very worried about the possibility that if they uphold this law, then Congress will have no limit on its power to regulate commerce.

During oral arguments, the Court revealed themselves as pretty hostile to health care reform. Before oral arguments, most commentators assumed the Court would uphold the entire law. Now, court-watchers think there’s only a 50-50 chance (maybe worse). Kennedy and Roberts, the conservatives most likely to side with the Obama administration, were very skeptical about the Constitutionality of the law. Worryingly, they also parroted some of the opposition’s lines when they questioned the Solicitor-General, showing they probably are thinking about the case in the same way as the law’s opponents. Scalia seemed willing to disregard his previous ruling in Gonzales v Raich in order to strike down this law. In short, the future does not look good for health reform.

The Justices will rule the individual mandate Constitutional.

Everyone who is very worried about the Government’s poor job in oral arguments is missing the fact that those arguments rarely determine the case. The written briefs and the environment of the case are much roe deterministic. The environment of the case should swing in the health care law’s favor. Chief Justice Roberts and Anthony Kennedy want to preserve the aura of independence and impartiality surrounding the Court. They do not want it to be labeled as the third political wing of the government. They care about the Court’s reputation far too much to strike down a President’s greatest accomplishment on shaky technical grounds. Also, upholding the law may give them much more latitude to strike down parts of the Civil Rights Act or the acceptability of affirmative action, which are things they care about far more than the Commerce clause.

As a friend pointed out to me, the legal case for the law is pretty simple:

The main argument that opponents of the health-care law have come up with is that the mandate regulates economic inactivity—i.e., not buying insurance—and the Commerce Clause allows only the regulation of economic activity… The [Sixth Circuit] court pointed out that there are two unique characteristics of the market for health care: “(1) virtually everyone requires health care services at some unpredictable point; and (2) individuals receive health care services regardless of ability to pay.” Thus, there was no such thing as “inactivity” in the health-care market; everyone participates, even if he or she chooses not to buy insurance.

The legal contortions the conservatives would have to go through to strike this down would be enormous and the precedent set by such a ruling would probably make Social Security and Medicare privatization (other important conservative goals) impossible. Therefore, the Court will probably grudgingly rule in the law’s favor.

So which argument do you believe?

Can Health Reform survive without the individual mandate?

Wednesday, the Supreme Court heard arguments over whether the individual mandate is “severable” from the rest of the health reform law. That is, if they choose to strike down the individual mandate, do they also have to take down other parts of the law that may or may not depend on the mandate to function? The Court should rule that all of the rest of the law should stand, even if the mandate falls.

The individual mandate is in the law as a companion to the law’s prohibition on discriminating against people with pre-existing conditions. If we want universal coverage, the insurance companies have to be required to cover everybody. If  they have to cover everybody then everybody has to sign up. If not, then only the sick would sign up for health insurance and rates would go through the roof.

Of course, most of the Affordable Care Act (ACA) isn’t related to the individual mandate and would not be affected if the mandate is struck down by the Supreme Court. For example:

  • The Affordable Care Act will expand Medicaid so that it covers everyone who makes under 133% of the poverty line. Currently in many states, you cannot qualify for Medicaid even if you make nothing in income. The only way for adults in many states to get on Medicaid is if they (1)have children and (2) make less than a third of the poverty line! (How’s that for a social safety net?) The ACA patches up this hole and of course, the individual mandate does not affect Medicaid at all.
  • The law also starts several experiments in payment reform through Medicare. Currently Medicare, like almost all insurance plans, pays doctors for every service they perform. This is a problem because it means insurance pays for more care rather than better care, driving up the cost of health care in America. The ACA aims to change that. It is already starting several small scale experiments in cost-control. Its payment reforms include giving a hospital a set amount to treat one disease or a lump sum to treat one group of people for a year. It also starts lowering payments to hospitals that have high rates of re-admission and has given out grants to medical providers so that they can better share information about patients and study which treatments are the most cost-effective for a given disease. All this is to say that the ACA is trying lots of different ways to bring down the cost of medical care in the US. These methods have nothing to do with the individual mandate.
  • Finally the ACA reforms the individual buyer’s insurance market. Even these provisions, though they are related to the mandate, should be able to stand if it is declared unconstitutional. For example, the ACA makes insurance companies display information about their plans in an easy to read format. Its sort of a “nutrition facts” label for insurance plans. As it stands currently, you would need a lawyer to wade through countless pages of insurance jargon to tell you what you are buying  from an insurance company.  This is as big of a no-brainer as I can think of in the bill. The law also creates online exchanges where you can compare and buy these newly-understandable insurance packages. It also says that insurance plans must cover preventive care and cannot retroactively cancel coverage when you get sick.

So, can you  think of a way that the expanded Medicaid program would be affected by striking down the individual mandate? I can’t.  Besides the fact that they are both tools to increase insurance coverage, I don’t see them overlapping at all. Likewise with the reforms to Medicare. Those reforms are done in order to reduce costs in the Medicare program. The Medicare program and the population it serves are completely unaffected by the individual mandate.

Finally, the ACA’s improvements to the individual insurance market do not rely on the mandate to function. Some, like the exchanges and the insurance plan fact sheet won’t be terribly affected by the loss of the mandate. Even the guarantee of insurance coverage–the part of the ACA most related to the individual mandate–can still stand (though it wont work nearly as effectively).

For instance, New York, New Jersey, Maine and Vermont all force insurers to cover everyone in the state and do not have an individual mandate. This is less than ideal, and insurance premiums are much higher in those states because of that decision, but it is obviously possible to have a health insurance system with guaranteed issue  and without an individual mandate. Congress is also more than capable of coming up with a substitute for the mandate.

At any rate, it is not the Supreme Court’s job to make political decisions about a statute. If part of a law is unconstitutional, then they should strike only that portion. The Courts should not and cannot wade into the political and policy issues involved in deciding which *Constitutional* parts of the law need to be thrown out alongside a (supposedly) unconstitutional provision.