The Affordable Care Act Lives, For Now. So, What Do We Do Next?

So, now that the insurance purchase mandate and most of the PPACA's Medicaid provisions have survived a Supreme Court review, where does that leave us? Most critics have shifted course and are arguing that the next major front in the health care wars will be waged in November with the coming Presidential and Congressional elections.

Oh, there remain a few other skirmishes to consider. The House of Representatives voted earlier this month to repeal the ACA's tax on medical device manufacturers. And there is a movement afoot to repeal the provisions creating Medicare's Independent Payment Advisory Board. But with the Senate controlled by a Democratic majority, any significant movement on the legislative front is unlikely until after the 113th Congress convenes in January.

One major problem, as AEI scholar (and my former CEI colleague) Tom Miller points out in today's Los Angeles Times, is that "Conservatives should have used the time that the court was deliberating to formulate attractive legislative proposals to both repeal and replace this unpopular law. But they didn't. So where does this leave us?"

Our challenge now is to map out a course forward, even though:

"most of the healthcare industry is resigned to shrugging its shoulders and falling back into line with the political deals it cut with the Obama administration several years ago. The political case for repeal will become much stronger among grass-roots voters -- particularly independent ones -- outside the Beltway this fall if it is combined with a credible, attractive alternative that offers better solutions to chronic health policy problems. ...

The country needs a more competitive healthcare marketplace that encourages more entry and less command-and-control regulation. New insurance purchasing vehicles such as the exchanges called for under Obama's law should remain optional, not exclusive, and should welcome all willing buyers and sellers. By providing better and more usable information about the "value" of healthcare options -- including how different healthcare providers perform -- but without dictating decisions, the federal and state government could empower consumers to make more responsible choices on their own."

As I wrote two years ago, in an article published days after President Obama signed the ACA into law:

"Most of the problems in America's health care system - high and rising prices, lack of consistent and reliable access for millions, rampant cost shifting and an inability to distinguish between effective and ineffective services or between high and low quality, to name just a few - stem not from some supposed market failure but primarily from existing government interventions in the market for health care and health insurance.

The runaway entitlement spending of Medicare and Medicaid is bad enough. Worse still are the many government regulations on private-sector health programs that distort incentives and hide most of the costs within the system - what my former colleague Tom Miller, now at the American Enterprise Institute, once described as trying to have socialism's benefits without socialism's (overt) costs.

Entitlement programs and a tax system that forces Americans into employer-provided health insurance shield consumers from the true cost of their care. To promote affordable coverage, governments implemented benefit mandates, guaranteed coverage, and community rating laws that force healthy individuals to subsidize those with higher health care costs. But each of these have led, predictably, to spiraling health inflation and still more uninsured Americans."

It will be difficult, to say the least, to upend all of ObamaCare, even if Republicans are lucky enough to win the White House and both houses of Congress. It will be more difficult still to implement the kinds of major, structural reforms that could genuinely begin to address the cost, quality, and access problems that afflict American health care today.

Despite their tough talk, recall that even many Republican members of Congress support some of the most costly and distorting features of the ACA, such as "guaranteed issue" and community rating. On the other hand, even many Democrats and traditionally left-of-center constituencies have been critical of certain elements, such as IPAB.

"[The American Association of Retired Persons] said the board could "have a negative impact on [seniors'] access to care." Former House Minority Leader Dick Gephardt (D-Mo.) has written that IPAB actions "are likely to have devastating consequences for the seniors and disabled Americans who are Medicare's beneficiaries because, while technically forbidden from rationing care, the Board will be able to set payment rates for some treatments so low that no doctor or hospital or other healthcare professional would provide them."

Moving forward, then, our goal must be to think big AND small. That is, we must aim for a wholesale repeal of ObamaCare and do our best to substitute significant market-based reforms that would put greater purchasing power and decision-making responsibility into the hands of individuals. But we should not lose sight of the fact that reaching that goal will prove difficult. In the interim, there will still be many, arguably smaller but nevertheless significant targets of opportunity to reform the health care system we have today.

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Our Research

Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013

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