Posts Tagged ‘ health care law ’

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?

Advertisements

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.

Explaining the individual mandate

What is the individual mandate?  

Protesters in front of the Supreme Court this week

In 2014, it will be a tax penalty that will be assessed against anyone who can afford health insurance but who chooses not to purchase it. It will be a penalty of 2.5% of income or $695, whichever is greater. People on Medicare, Medicaid, on their employer’s health plan, or who have bought an individual policy will not have to pay this penalty. (Also starting in 2014, the government will begin giving out subsidies to individuals so that they can afford to purchase health care individually.)

Why did Congress enact the individual mandate?

The individual mandate is in the law as a companion to the law’s prohibition on discriminating against people with pre-existing conditions. As it stands now, insurance companies will refuse to cover people who have ever been struck by a serious disease or who are at risk for one in the future. Yes, another side-effect of childhood leukemia is that you will never be able to qualify for private individual health insurance for the rest of your life! So Congress, reasonably enough, put a stop to this practice in the Affordable Care Act.

However, this does present a legitimate problem for health insurance companies. If they can’t refuse coverage to people with existing medical conditions, what’s to stop someone from calling to buy medical coverage from the ambulance on the way to the hospital? (to take the most extreme example) In order to keep people from waiting until they get sick to buy insurance (and thereby overloading the insurance system), Congress said that anyone who does not buy insurance will be docked a tax penalty.

Why is the individual mandate being challenged before the Supreme Court?

Detractors say that Congress does not have the power to enact an individual mandate. They say this would amount to forcing people to buy a private good which they may not want. They say that the Constitution only gives Congress the power to regulate “economic activity” and not a person’s choice to remain “inactive” in the health insurance market.

Supporters say that everyone is involved in the health care market because disease or illness can impact anyone at any time. Therefore, to protect society at large from having to pay for an individual’s medical bills, Congress can require people to have some form of insurance to cover them when they fall ill. They say that the Constitution’s “commerce clause” gives Congress the power to regulate health care and the “necessary and proper clause” gives Congress the power to enact a mandate as part of an broad regulatory scheme.

Who originally thought up and popularized the “individual mandate”?

Actually, the same people who now say that this is an unprecedented and unconstitutional infringement on civil liberties are in many cases the individual mandate’s old supporters. Republicans across the board used to think the mandate was a great idea. However, once Democrats decided to include it in their health care bill, every Republican politician in the country suddenly had a collective change of heart. As Ezra Klein shows: “If you’re talking about Republicans who were in any way active during the 1990s, there’s a very good chance you’re talking about Republicans who either supported or said nice things about bills that included an individual mandate.”

How does the mandate relate to the rest of health care reform?

The mandate is very intertwined with the law’s ban on discrimination against people with pre-existing conditions  and some other reforms to the individual health insurance market. But the law does much more than just reform the individual insurance market. It expands Medicaid, reforms Medicare, regulates insurance companies’ profits, allows young adults to stay on their parents’ health insurance plans, etc. However, the Supreme Court has the power to strike down much of the rest of the law if they determine it is inextricably linked to the individual mandate. More on this in my next post.

How Republicans have already won on Health Care Reform

The US Supreme Court is hearing arguments this week (principally) over whether the “individual mandate” in President Obama’s signature health care reform bill is constitutional. This issue is dominating political news coverage this week, just as the issue of the individual mandate has dominated coverage of the Affordable Care Act since Obama signed it into law. This is why Republicans have already won the messaging war on health care reform.

Unfortunately, when most people hear the words “health care reform,” “Obamacare” or “Affordable Care Act” they immediately think of the individual mandate, which (starting in 2014) will put a tax penalty on people who have not signed up for health insurance. It is a tragedy (though not an unpredictable one) that this one small part of the bill has become its best-known feature. The bill does so many good things for people in America, but the continuous media coverage of the court challenges have made sure that the individual mandate is the one thing people associate first with Obamacare. In politics, name association and messaging are everything and the strong popular connection between “health care reform” and “individual mandate” is probably the main reason why health reform remains unpopular.

This is extremely ironic because the individual mandate was originally a conservative idea, advocated by Republicans as an alternative for Pres. Clinton’s proposed health care reforms. Obama didn’t like it when he ran for President, and liberals have never liked it. Conservatives (predictably) turned against it when Democrats included it in their health reform package. And the only reason it made it into the Democrats’ bill was because of a desire to make the bill more appealing to Republicans and centrists. But alas, the mandate is now integral to giving people the good parts included in health reform. I could go on for 10 posts about this but here are some of the good parts:

  • Over 30 million people will be given access to health insurance. Anyone without money to buy insurance will be given a government voucher or will be added to expanded Medicaid rolls.
  • People can no longer be denied coverage because of “pre-existing conditions” or whatever other reasons insurance companies can come up with to deny health coverage.
  • The plan will save tens of thousands of lives every year.
  • The plan will reduce the deficit by over $100 billion in its first 10 years.
  • The plan also starts experiments in payment reforms which could hold the key to bringing down our skyrocketing medical costs.

Imagine if any of these major parts of the bill were what was dominating the news coverage around Obamacare. The individual mandate is a provision that will affect very few people in America but is given out-sized significance. Its too bad, because if people knew the Act contained all these beneficial and popular provisions, our health care debate would be very different. Instead of focusing on the most unpopular part of the Act, we could all be talking about how the US is joining the rest of the world in offering health care to all of its citizens. And that, my friends, is why Republicans have already won the messaging war over Obamacare.

IPAB- The most important part of health care reform (that you’ve never heard of)

Besides the insurance subsidies that will provide every American with access to health insurance, the Independent Payment Advisory Board (IPAB) is the most important part of the Affordable Care Act. Why is this obscure board, buried in the pages of the health care law, so important? It represents the best chance to save and sustain America’s Medicare system for the long term.

When fully implemented, IPAB will be a panel of 14 health care experts who will be nominated by the President and confirmed by the Senate. They will be charged with making changes to Medicare if costs in that program rise too rapidly. The board will have the authority to make changes to Medicare without the approval of Congress (though Congress can overrule it) if Medicare spending rises above the yearly bar that Congress has set. The changes can be something like lowering payments to hospitals that have high rates of readmission, incentivizing preventive treatments or bundling payments to save money and promote more efficient care. Its important to note that the board can’t raise fees or ration care, but has  significant power to tinker around the edges.

You’re probably thinking: well, that sounds good and all, but why is this board so important? Several reasons:

It can succeed in cutting costs where Congress has failed.

Medicare will be a large contributor to the nation’s debts in the future. Even though Medicare is much more efficient than private insurers at controlling costs, health care costs are still rising at an unsustainable rate in the economy as a whole. This affects Medicare as well. So, when health care costs rise in the private sector, Medicare can’t be too far behind.

Congress has tried and failed to control costs in Medicare. It tried to slap a sustainable growth rate (SGR) on Medicare but that has been permanently delayed by later Congresses. Congress caved to special interests when it made Medicare’s prescription drug benefit and the result is that drugs cost much more here than in other countries (which is why people go to Canada for cheap prescription drugs).

It should be no surprise to anyone that Congress is inept at saying “no” to special interests. The IPAB takes responsibility for saying “no” out of Congress’s hands. As a panel of healthcare experts not responsible for raising campaign contributions or dealing with lobbyists, the IPAB can succeed where Congress has failed. The CBO projects that the IPAB will save the country billions in Medicare spending.

IPAB can make all health care cheaper and more effective

Medicare does  not exist in a vacuum. When costs in the private sector go up (and they have been for years), Medicare’s costs must go up as well. IPAB can help by making both Medicare and our health system as a whole, more effective.

Our system is plagued by inefficiencies, and as a result we have the highest healthcare spending per capita in the world. Its important to note that all our extra spending hasn’t bought us any better healthcare than the rest of the world enjoys. Our life expectancy is 36th in the world (right below Cuba). Clearly there are ways to drastically improve healthcare in the US. How are they going to happen?

Because Medicare occupies such a huge part of the health care market, reforms to that program have the ability to spread throughout the healthcare system. Peter Orszag, Obama’s former budget director has said 

If the board realizes its potential to push Medicare toward paying for better quality care, as opposed to paying for more care, “it could well turn out to be perhaps the most important component of the new legislation,”

For example, if Medicare starts lowering payments to hospitals with high re-admission rates, hospitals will have to improve their treatment methods or else lose a lot of money. That will save all health insurers money, not just Medicare. If bundling payments does save money and improve care, private insurers might start copying Medicare, so that their costs go down as well. If Medicare stops paying for new and expensive procedures that have not been proven to work better than older, cheaper procedures, then private insurers will have the cover to do that as well.

Those are just a few ways that innovation in the large Medicare market can spark innovation through the private sector (where the costs really are located) as well.

There is no good alternative to IPAB

The alternative to controlling costs through the IPAB are, as I understand them, thoroughly underwhelming. Adopting a complete single-payer system in the US would work, but it is unlikely to happen. The other options are to

  1. raise taxes until health spending starts slowing, or
  2. shift costs.

I’m no fan of simply raising taxes every time health care spending increases and option 2 seems equally terrible. This is the plan proposed by Republicans. They have proposed giving everyone who would traditionally be covered by Medicare a small voucher that they could use to buy insurance on the private market. Since private insurance is much more expensive than Medicare, seniors would be responsible for almost all of their own costs.

Another alternative would be to raise the Medicare age from 65 to 67. This option, as the graph below shows, would save the federal government money, but would actually increase system-wide costs as a whole. 

Neither of the alternatives would not slow the growth in medical costs. They would just be the equivalent of the federal government saying “somebody else should pay for it!” That “somebody else” would be you, me, employers and state governments.Shifting costs is just a budgetary sleight-of-hand that saves the federal government a nickel but charges everyone else a dime.

If implemented correctly, the IPAB can get our growing federal health care budget under control. It also has the potential to reduce costs and improve quality in the private market. Growing health care costs are the greatest future budgetary threat to the US. The IPAB is the only serious, recent effort that has the potential to both improve care and lower costs in our health care system. We sorely need it.

The Wall Street Journal and “Obamacare”

It  always really disappoints me when I see ideologically biased, dishonest journalism on display. Today, Stephen Moore wrote a post in the Wall Street Journal . It reads in part:

ObamaCare Doesn’t Add Up

A new CBO report finds that the costs of Medicare and Medicaid will drive federal spending to all-time highs in coming decades. (1)

What is conspicuously missing from this report is the magical windfall from the new health law. CBO reports that it is “using the same growth rates that would have been applied in the absence of the legislation.” Now they tell us. Hence, Medicare alone is projected to nearly double over the next 25 years, from 3.7% of GDP to almost 7% by 2035. (2)

CBO warns that ObamaCare’s purported payment cuts to doctors and hospitals and the hoped-for reductions in the growth of the insurance subsidies would be “difficult to sustain over a long period.” Let us translate all this mumbo jumbo: The ObamaCare cost savings are mostly bunk. (3)

None of these scary trends is inevitable, and there is still time to get health-care costs contained. But now even CBO seems to agree that ObamaCare bends our health-care bills up, not down, in the long run. (4)

Stephen Moore seems to either completely miss (or just selectively misrepresent) the point of the CBO report. (For clarification, the CBO is the Congressional Budget Office, the non-partisan scorekeeper for all Congressional laws and bills) Let’s go point-by-point:

(1) To start, if there seems to be some tension between the headline and the sub-head its because the sub-head is mostly true while the headline is all sensational. The bills for Medicare and Medicaid will increase in the coming years because health care costs as a whole will increase. If healthcare for everyone else is increasing at a breakneck pace, its only natural that healthcare for the elderly, disabled, young and poor will also increase considerably. Of course, that has nothing to do with “Obamacare,”  which is what the headline leads you to believe.

(2) When the CBO says it is “using the same growth rates that would have been applied in the absence of the legislation,” its saying that it is using those growth rates as a baseline  and then it will “incorporate the projected effects of the legislation on the level of federal spending for health care”  as they affect the baseline they established. Somehow, surely by accident, Moore quoted the CBO out off context so he could make an ideological point not represented by the evidence. Either that, or he was commenting on a report he could not understand.

(3) In one of the two scenarios the CBO presents, it assumes that all the cost savings contained in the Affordable Care Act (ACA) will keep costs down for the coming decade, but then after that, they will prove “difficult to sustain.” Moore thinks this means “the ObamaCare cost savings are mostly bunk,” but the CBO doesn’t. It still projects that the ACA will save money for a decade but thinks that after that a future Congress will vote to spend more money to override some of the savings.

(4) Finally, Moore says that “even CBO seems to agree that ObamaCare bends our health-care bills up.” That is NOT what the CBO says. In the more pessimistic scenario the CBO says that “excess cost growth” in Medicare will drop 88 percent in the first decade of the ACA compared to what it was from 1985-2007. Thereafter, Medicare’s excess growth will still be 25 percent lower than it was before. (pgs 43, 45) Even if everything goes wrong with the law that the CBO thinks may go wrong with it, it will still save money (bend the cost curve down), according to the CBO.

In conclusion, the CBO’s conservative scenario projects that the ACA will save money and everything in this article is a distortion or misrepresentations of what the CBO says.