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ObamaCare is the Law of the Land. What now?
Four prominent policy experts discuss the implications of health care reform

Paul Howard
Medical Progress Today
April 15, 2010

From the Editor:

In this special edition of Medical Progress Today's Innovative Ideas podcast series, we've highlighted four recent interviews with leading health care experts discussing the impact that ObamaCare will have on the U.S. economy, health care inflation, and health insurance—and how policymakers should consider reforming the worst aspects of the legislation.

Leading off, former CBO director and president of the American Action Forum Douglas Holtz-Eakin talks with us about how the legislation worsens the U.S.'s fiscal position by employing a slew of fiscal gimmicks to make trillions in new government spending look like a net spending cut. Along with existing liabilities for Social Security and Medicare, the legislation may force a downgrading of the U.S.'s sovereign debt rating sooner than anyone expects—unleashing a financial crisis that may make the 2008 mortgage crisis look like a tempest in a teacup. [PODCAST]

Next, Steven Parente, a health care financing expert at the University of Minnesota, discusses how the generous subsidies under ObamaCare are likely to drive up the price tag of the legislation by hundreds of billions of dollars by encouraging people to purchase more expensive insurance coverage than they would if their own money was at stake. But he also points to two silver linings in the legislation: first, health savings accounts will be available in the exchanges—offering millions of consumers an affordable health care option. Next, the subsidies will grow more slowly over time than health care inflation. This trend should encourage even more people to gravitate towards catastrophic coverage and HSAs as costs rise, empowering consumers and helping to hold down costs. [PODCAST]

Tevi Troy, senior fellow at the Hudson Institute and former Deputy Secretary of United States Department of Health and Human Services, talks with us about how implementation issues will effect how health care reforms play out in practice. Many of the critical issues in the legislation—such as what counts as qualified coverage in the exchanges, federal review of insurance rate increases, and the amount of discretion states have to manage insurance offerings in the exchanges—will all be determined by the Secretary of the Department of Health and Human Services in the next few years, before the exchanges become operative in 2014. By keeping pressure on the administration and advocating for more consumer friendly options, supporters of patient-driven health care reforms can help push the legislation in a more market friendly direction and stave off the worst outcomes. [PODCAST]

Finally, Scott Harrington, a health insurance expert and professor at the Wharton School at the University of Pennsylvania, explains how one of the central provisions in the legislation—a mandate for all U.S. citizens to have health insurance or pay a fine—is likely to play out once the mandate takes affect in 2014.

Professor Harrington argues that the mandate is "weak"—meaning the financial penalty for being uninsured is likely to cost much less than purchasing and maintaining a policy for many middle-class uninsured. Since the legislation also requires insurance companies to cover all applicants regardless of health status at the same price, it may lead to "adverse selection", i.e. where people wait to get sick before buying insurance and then drop it after they've been treated. [PODCAST]

This will drive up costs for everyone in the market, leading either to a spike in government spending on subsidies, or causing ever larger numbers of people to drop coverage. Harrington suggests several reforms that could obviate this problem—including limited annual enrollment periods, waiting periods, and penalties for buying health insurance outside of annual enrollment. These reforms would also reduce the need for an insurance mandate, which many conservatives find objectionable. Professor Harrington concludes the series by emphasizing how we can influence health reform implementation and reform the legislation to encourage the purchase of consumer directed health plans.

Each of the experts we spoke to emphasize the pitfalls of ObamaCare—but also that it is still possible to influence it through regulatory and policy changes that would make it far more fiscally responsible and patient-friendly. Over the coming months we'll continue to focus on this point, because the only certainty about health care reform is that the future is still very uncertain.

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