Category: Uncategorized

Scrapping Obamacare Would Be an Rx for Chaos

Mar 29, 2012• 49

By Henry J. Aaron

Sharp questioning in oral arguments before the Supreme Court raised serious questions about whether the “individual mandate” — the requirement that people carry health insurance — will survive.

At issue is Obamacare’s central requirement that every American buy health insurance or pay a penalty. Critics say this is an unprecedented expansion of federal power — that if the government can force people to buy insurance, it can force them to buy anything.

Supporters, including me, say the mandate is just a logical extension of federal authority to regulate this market — a market that everyone eventually participates in at one time or another. We also know that if the mandate is struck down chaos is inescapable.

Under one scenario, the court would invalidate the requirement while leaving the law’s many other rules and regulations in place.

In that event, insurance companies would have to insure anyone who asked for coverage — but they would be barred from charging premiums equal to a best guess of what the new customers will cost.

Limiting how much insurers charge can work, but only if the mandate is in place — if everyone, the healthy as well as the sick, has to have insurance. It can’t work if people can go without insurance until they get sick and only then call up their friendly insurance broker and say “Cover me.”

So, Congress would have to do something. But what? One option would be to repeal the parts of the law that the Supreme Court left standing. Finding the votes to repeal the health reform is unlikely, as the next Congress is almost certain to be closely divided.

The Long Road From March to November

Mar 29, 2012• 1

By Richard Reece, MD

In politics, a month is a lifetime, and 7 months is an eternity. It’s four months from now to late June when the Supreme Court issues its ruling on the health law, and it’s several months until the election.

No one knows what will happen between now and the election. But whatever occurs, it will be a psychological and political time.

Democrats will put on a brave face. They will say it’s not over until it’s over, that the individual mandate was originally a Republican and Romney idea, that the justices will come to their senses, that this is a moral not a constitutional issue.

Republicans will say that the health law is a train wreck, that it was rooted in ego and arrogance of an overly ambitious president, that Democrats poisoned the whole politics process by completely ignoring the other party and the American public, and that the whole idea of individual and Medicaid mandates is toast.

If they are smart, and there is no guarantee of that, the GOP will issue a detailed alternative plan resting on incremental market reforms with proper government oversight.

“Inaction “ on Massive Scale

Over the next seven months, we are likely to have “inaction,” if I may borrow a term from the hearings, on a massive scale.

How Did the Challenge to the Affordable Care Act Ever Make it to the U.S. Supreme Court?

Mar 29, 2012• 77

By Maggie Mahar

In 2009, when someone asked Nancy Pelosi a question implying that health reform legislation might be unconstitutional, she replied: “Are you serious?”

Pelosi wasn’t alone. At the outset, many legal scholars considered the challenge to the Affordable Care Act (ACA) both “implausible” and “frivolous.”

But over the next two years, the notion that state courts might strike down the ACA took on a life of its own. Most people had only a hazy idea of what was actually in the legislation; nevertheless the idea of “health reform” inspired heated rhetoric. Soon, state attorneys general and governors responded to the political opportunities, banding together to make what Slate Senior Editor Dahlia Lithwick calls, “novel arguments in the form of what was always a constitutional Hail Mary pass … It’s no accident that until the lower district courts started striking down the act, none of the challengers really believed that they could succeed.”

Yet somehow, this week, the highest court in the land is hearing oral arguments in a case that even supporters viewed as a long shot. How did this happen?

The media played a major role, fanning political passions by quoting every challenge – including the absurd claim that the bill called for “death panels.” As Rachel Maddow observed Monday night: this case was “built up as the Super Bowl of American partisan politics.” Thus, the Supreme Court was left with little choice: it had to hear “The Case of the Century.”

Better Health Care at Half the Cost

Mar 28, 2012• 6

By Joe Flower

Why “half the cost?” How? Most important, what does it mean for hospitals and health systems? Here’s the argument, and some of the implications.

In 1980, health care in the United States took no more of a bite out of the economy than it did in any other developed country. Then we instituted cost controls. By 2000, U.S. health care cost twice as much as everyone else’s. By 2020 or 2025, we may be back to costing the same as any other country — half the current cost in GDP.

Historical charts of the comparative cost of health care in different countries show a startling and obvious pattern. The trend lines of the leading economies form a fairly tight pack, drifting slowly upward from around 5 percent of GDP in 1960 to 8 percent to 10 percent in recent years — except for one. Around 1980, the U.S. trend line sharply breaks from the pack, and quickly establishes itself at half again as much as most other leading economies, then twice as much.

This happened over the very period that Medicare, followed by private health plans, instituted increasingly stringent and widespread unit cost controls.

I draw two conclusions from this: The notion that U.S. health care must cost twice as much as everyone else’s is not exactly the law of gravity. And there is no evidence that unit cost controls actually control system costs. In fact, through a series of complex feedback mechanisms, it may well be that controlling unit costs pushes up system costs, as members of the system find ways to increase their prices and the numbers and acuity of their utilization patterns despite the caps on reimbursements for individual items.

If the Supreme Court Overturns the Individual Mandate

Mar 28, 2012• 37

By Robert Laszweski

First, trying to predict how the Court will rule is at best just speculation. I know what Justice Kennedy said both today and yesterday and it certainly doesn’t look good for the Obama administration and upholding at least the mandate.

But I will remind everyone, based upon oral arguments, most Court watchers expected a ruling in favor of the biotech industry on a recent case involving health care patents. “Surprisingly,” the Court ruled against the industry.

Whatever the justices are now thinking, there isn’t a lot anyone could do differently until we actually get a ruling and know exactly what gets thrown out, if anything, in the 2,800-page law.

But if the mandate is overthrown, then what?

First, exactly how the Court rules on severability will be critical. What could go out with the mandate?

The Obama administration has smartly tried to build a firewall around the rest of the Affordable Care Act (ACA) by arguing before the Court that only the insurance reform elements of the bill should fall if the mandate goes down—that the mandate is only the quid pro quo for the insurance industry in exchange for taking all comers. That looks to me like the most logical outcome of overturning the mandate—but my perspective is one of an insurance veteran not a Court expert.

Health Insurance Exchanges: What to Do During the Waiting Game?

Mar 28, 2012• 1

By Kevin Walsh

Being in limbo is never a good feeling – it’s in our nature to make decisions, feel comfortable, and find solid ground. So many state leaders may be feeling uncertainty and hesitancy now, as they weigh the pressure to move forward with building a health insurance exchange with the knowledge that the Supreme Court will soon weigh in on the future of the regulations. As my peers have pointed out recently, states are taking different approaches to handling being in limbo. Some are moving forward with confidence, some are testing the waters, and others are doing nothing – determined to wait and see.

One thing is certain, however – there is an opportunity for states to examine how to best use technology and solutions to serve people, regardless of how the regulations play out. As the researchers at Urban Institute point out in this New York Times article by Robert Pear, the states currently making the least progress toward an exchange are actually the ones that could benefit the most from an Exchange, because they have large numbers of uninsured residents.

States can move forward now with the following considerations, which will be helpful in either the event that the health insurance exchange mandate is upheld and they are asked to move forward, or in the event that they have more flexibility, but still need to use technology to best serve their citizens.

That’s Not a Limiting Principle, Noah Feldman Edition

Mar 28, 2012• 2

By Michael F. Cannon

Harvard law professor Noah Feldman opines that U.S. Solicitor General Don Verrilli ”faltered” yesterday when Supreme Court justices asked whether the Obama administration’s claim that the Constitution empowers Congress to force people to purchase health insurance contains any limiting principle. Put differently, if the power “To regulate commerce…among the several States” allows the government to force you to buy health insurance, can the government also force you to buy broccoli?

Feldman laments that Verrilli’s “failure to offer a sharp distinction could be disastrous for the government’s case,” but assures us, “There is a good, sharp answer to this wholly reasonable question.” Here is the preface to Feldman’s answer:

[W]hen it comes to the strange and unusual case of health insurance, inaction causes the whole market to break down. By not buying health insurance, the healthiest person is depriving everyone of a public good. By sitting on their hands — and acting rationally — people who do not purchase insurance are unintentionally causing the market to fail.

One problem here is that if Congress can compel you to buy something whenever not buying it would deprive someone else of a public good, then Congress can also force you to purchase — not just tax and provide to you, but force you to purchase — tanks, fighter jets, and military bases; lighthouses; software; fireworks displays; e-books; comparative-effectiveness research (or really any type of research); a subscription to Consumer Reports; landscaping services; parks; rare and endangered species; street lights; et cetera ad nauseam. That isn’t much of a limiting principle.

Another problem is that economists use the term ”market failure” to describe a situation where one or more features of a free market cause that market to fall short of the efficiency-maximizing outcome. Feldman misuses it to mean, “This market isn’t doing what I want.” That is not market failure. Nor is it much of a limiting principle. If the Commerce Clause empowered Congress to force people to buy things to correct every perceived shortcoming in every market, Congress’ powers would be without limit. Even worse, Feldman doesn’t even bother identify whether the outcome he deplores is caused by some feature of a free market or government intervention (see below).

Justice Kennedy Swings Again

Mar 28, 2012• 4

By Michael Ricciardelli

More than a few prognosticators have posited a 5-4 split (either way) after reading the tea leaves of oral argument before the Supreme Court on the Individual Mandate yesterday. I don’t disagree. I won’t venture a guess, up or down, but I will say that it is likely, as usual, that Justice Kennedy (surprise, surprise) will be the swing vote. As such, you can find below three Justice Kennedy quotes that may be indicative of which way he’ll swing. (page numbers refer to the page number of the transcript, linked here.) And for those of you swallowed by sorrow at the prospect of the Individual Mandate going down in flames, pay particular attention to the last quote and Justice Kennedy’s consideration of “degrees” of uniqueness as a cabining principle. It is, I believe, as I heard a particularly astute health law professor say today, indicative that “Justice Kennedy is in play.”

JUSTICE KENNEDY–Could you help — help me with this. Assume for the moment — you may disagree. Assume for the moment that this is unprecedented, this is a step beyond what our cases have allowed, the affirmative duty to act to go into commerce. If that is so, do you not have a heavy burden of justification?

I understand that we must presume laws are constitutional, but, even so, when you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution? (p.11-12)

Can’t We Do Better Than State-Sponsored Broccoli?

Mar 28, 2012

By Nathan Cortez

Legal arguments often rely on analogies. Indeed, during the first year of law school, students learn to analogize and distinguish cases. “This case is like this one, not that one.” Good lawyers can always conjure up and deploy a good analogy.

So why was it so hard yesterday for some of the most skilled lawyers and judges in the country to identify a good analogy for the individual mandate – the Affordable Care Act’s requirement that almost everyone buy minimum essential health insurance coverage or pay a penalty?

After listening to Tuesday’s historic two-hour oral argument and reading the transcripts, I counted roughly 17 different analogies to the insurance mandate – none of which seem particularly apt.

Here’s a brief rundown of the analogies invoked yesterday (by both the justices and the advocates), and then some thoughts on why they fall flat:

1. Is mandating health insurance like mandating that people buy cell phones to call 911? (Chief Justice Roberts).

2. Is the mandate like a requirement that we buy insurance to pay for our own burial services? (A macabre Justice Alito, who’s right: we’re all going to die).

3. Is the mandate like forcing us to buy broccoli? (Justice Scalia, invoking the dreaded broccoli analogy, which is apparently one of the parade of horribles that logically flows from the health insurance mandate, a canard that David Orentlicher has exposed).