The Supreme Court has already decided the fate of the health reform law, and in a few short weeks the rest of us will know whether it is upheld, struck down entirely, or badly damaged. Of the possible decisions, four are the most likely and each would have significant ramifications.
1) The Court could uphold the law. Prior to oral arguments, this was the conventional wisdom. Justice Anthony Kennedy’s stinging questions led many to change this view, but he has surprised Court watchers before.
If he springs another surprise and supports the individual mandate, the law’s implementation would continue unabated. States that have waited for the Court’s decision would start moving on exchanges and essential benefits.
HHS would issue more regulations: on subsidies, employer penalties, insurance requirements, and others. However, it is common knowledge that many of the more controversial rules are being slow walked until after November 6th so as to not complicate President Obama’s reelection chances.
Upholding the law would certainly raise the stakes of the November elections. Should Democrats hold the Senate and/or President Obama win reelection, it’s likely the law would be permanently ensconced. On the other hand, should Republicans control the House and Senate and Governor Romney win the presidency, they will try to repeal the law or gut it through budget reconciliation before major provisions take effect in 2014.
But based on the “train wreck” of oral arguments, it seems unlikely that the law will escape the Court unscathed. It is more likely that the law will be damaged. The question is, to what extent?
It’s no secret that our nation’s economy is struggling, and the president’s health care law, enacted in 2010, is making things worse — raising health costs and making it harder for small businesses to hire workers. The only way to change this is by repealing ObamaCare in its entirety.
There has been much renewed media focus on the president’s health care law in recent months because the U.S. Supreme Court is expected to rule in June on the question of whether the law is constitutional. But the American people have never lost their focus on it. They didn’t like the law when it was rammed through Congress by President Obama and a Democratic majority in 2010, and according to most public opinion surveys, they like it even less now.
It’s not difficult to understand why most Americans remain opposed to ObamaCare. Many question its constitutionality; I’m certainly one of them. But the law’s negative impact on Americans’ daily lives is what I hear about the most.
Americans are dealing every day with the tough realities of life in the Obama economy. They’re facing rising prices for food, gas, college tuition and health care. Many are out of work. And among those fortunate enough to have jobs, many are struggling to keep them. Couple this with the ever-present specter of higher taxes — which are constantly being threatened by the president and his advisors — and the possibility of another downgrade in our nation’s credit rating as a consequence of the national debt that has exploded under the president’s spending policies, and it’s a pretty grim picture. If you’re reading this, you know exactly what I mean.
“How can the government make us buy health insurance? What gives them that right?”
Sitting on my left while our airplane raced above the clouds, Elizabeth was clearly upset about Obamacare. She wondered why the bill had to be so long, and why Obama would endorse a plan that doubled her health insurance costs. But nothing vexed her more than the individual mandate.
At least that’s what I though until I spoke with her at greater length, and she revealed a profound truth to me about people’s attitudes towards the mandate and towards Obamacare more generally: she showed me that deep down she liked the idea of the mandate, once she realized its important role in accomplishing goals people on all sides of the political spectrum care about deeply.
We were flying towards North Carolina the day before the Supreme Court held its oral arguments on Obama’s healthcare plan. Elizabeth had heard a great deal about the mandate. She read The Wall Street Journal regularly, in part because it was so relevant to her work in banking. And she enjoyed watching Bill O’Reilly on Fox News, but not Hannity, who she thought was “too extreme”. She was by no means a conservative extremist. She had major concerns about the banking industry for example, and as a Christian felt strongly that income inequality is a moral problem that neither party was addressing in an effective manner. But she was solidly Republican, no doubt about that, and she agreed with most people in that political party that Obamacare was hurting the economy. And above all she believed the health insurance mandate was “un-American.”
Before long the Supreme Court is expected to rule on the health care reform law, a decision that will have tremendous policy ramifications and could reshape the presidential election.
But even if the court overturns the Affordable Care Act, as some observers predict, that won’t change the reality that our country’s health care system is seriously broken. In short, regardless of what the court says, people will still be getting sick, costs will keep rising and too many people will be uninsured. And our federal budget will never be sustainable if we can’t bring health care costs under control.
The Democratic Party and progressives invested a huge amount of political capital in getting Congress to pass the ACA in 2010. The act was not perfect, but it did provide a start to the many years of work needed to create a sustainable health care system. In speeches, Republicans and conservatives acknowledge that our health care system is unsustainable and have spoken of a need to “replace”; however, in the two years since the ACA passed, they have failed to be clear about what they actually favor.
As we look to what we’re actually going to do about the problem, what’s clear is that progressives and conservatives both need to move beyond their familiar positions to find a new kind of deal. This seems politically impossible before November, but politicians on both sides would do themselves – and the country – a big favor if they quietly started devising a solution that everyone can live with, even if neither side gets everything it wants.
For progressives, universal coverage has always been the Holy Grail and dream deferred, not just of health policy, but of all social policy. I don’t think conservatives have a health policy interest that is so clear and heartfelt as universal coverage is for progressives, but if I had to take a stab, I think it is their belief that people don’t have enough “skin in the game” and are therefore wasteful of other people’s money.
While it’s comforting to just blame the GOP for the unhappiness with health reform threatening the president’s re-election, the truth is that Barack Obama repeatedly botched, bungled and bobbled the health reform message. There were three big mistakes:
The Passionless Play
While Candidate Obama proclaimed a passionate moral commitment to fix American health care, President Obama delved into legislative details.
When a Baptist minister at a nationally televised town hall asked in mid-2009 whether reform would cause his benefits to be taxed due to “government taking over health care,” Candidate Obama might have replied that 22,000 of the minister’s neighbors die each year because they lack any benefits at all. Instead, President Obama’s three-part reply recapped his plans for tax code fairness.
While Republicans railed about mythical “death panels,” and angry Tea Party demonstrators held signs showing Obama with a Hitler moustache, the president opted to leave emotion to his opponents. The former grassroots organizer who inspired a million people of all ages and ethnicities to flock to Washington for his inauguration never once tried to mobilize ordinary Americans to demand a basic right available in all other industrialized nations. In fact, he hasn’t even mobilized the nearly 50 million uninsured, who have no more favorable opinion about the new law than those with health insurance!
In its wisdom, the Supreme Court of the United States may decide to overturn the Obama administration’s health reform legislation.
The Supreme Court of the United States may decide not to.
Mitt Romney may unseat Barrack Obama and wrest the Presidency away from the Democrats. Or he may not.
In a way, these things may not actually matter.
There may be uncertainty on Wall Street and in the media about the fate of the Affordable Care Act (ACA) and the upcoming presidential election, but the mood in the crowd gathered at the 9th session of the World Health Care Congress last week in Washington was curiously upbeat.
There was a sense that health care is making progress.
And that is a good thing.
Innovations like accountable care organizations (ACOs), scientific management principles like cost containment and quality improvement and the movement for better health information technology will make their presence felt, regardless of what happens in the courts and on Election Day.
Unlike TEDMED, which brought together official Washington, the tech industry, entertainment and medicine — at the Kennedy Center last week, the World Health Care Congress is a meeting pretty much limited to health care industry insiders at larger firms.
As is generally the case, the speakers list read like a who’s who of very important healthcare names. Kaiser Permanente CEO George Halvorson, Intermountain CEO Charles Sorensen, Aetna CEO Mark Bertolini, Economists Ezekiel Emanuel and Jonathan Gruber, former OMB Director Peter Orzag, TEDMED curator (Priceline.com) Jay Walker talked about the power of the Internet to fundamentally rewire the way people think. Verizon CEO and NantWorks Founder Patrick Soon-Shiong were on hand to talk up a new collaboration. Xerox CEO Ursula Barnes introed the tech giant’s push into healthcare. Journos like Health Affairs Editor Susan Dentzer and NBC correspondent Nancy Snyderman provided media star power.
There is no doubt that the campaign to “repeal and replace” ObamaCare will have its weakest standard bearer if Mitt Romney becomes the Republican candidate for President. His embrace of an “individual mandate” to buy health insurance or pay a penalty, as legislated in his 2006 Massachusetts health reform, is anathema to those faithful to the ideal of limited government. When Mr. Romney declares that he will issue a universal waiver from ObamaCare’s regulations as his first executive order, the people who should be voting for him fear that such action would be a substitute for repeal, instead of a preparation for it. (Do these folks really think a clean repeal bill, like the one passed by the House of Representatives in January 2010, will be on the president’s desk on inauguration day?)
But maybe we should look at it another way: If Mitt Romney had never signed his 2006 law (which was motivated, as the president’s men are so fond of telling us, but an idea generated at The Heritage Foundation), those of us committed to defeating ObamaCare would never be in the fortunate position we are today – the whole, ungodly mess hanging by a thin thread after a brutal hazing in the Supreme Court last week.
Without Massachusetts’ 2006 law, there is almost no likelihood that the Democrats would have written an individual mandate into the bill. Instead, they would have just hiked taxes. The only reason they painted a thin varnish of so-called “individual responsibility” onto the bill was so that they could pin some of the blame on Mitt Romney and certain conservatives who had embraced it. As noted by Avik Roy, the individual mandate was traditionally anathema to liberals, who prefer straight-forward tax hikes.
Americans believe in second chances. The oral arguments before the Supreme Court last week were a rare opportunity to dispassionately re-examine the divisive healthcare debate of two years ago. What happens if, after the smoke clears, we get a second chance at healthcare reform?
We’ve long known that healthcare will be a central theme in the 2012 presidential contest. The High Court’s deliberations and June decision only reinforce that reality for President Obama and Governor Romney.
Unlike with the Patient Protection and Affordable Care Act (PPACA), the constitutionality of Governor Romney’s Massachusetts law has never been seriously questioned. States, not the federal government, have police powers, allowing them to require purchases (car insurance, taxes and licensure) and to pass wide-ranging public health laws and public safety laws. The Bay State law enjoys broad popular support.
In contrast, the case before the Supreme Court was brought by the majority of states. Regardless of what the Court decides, the PPACA will continue to polarize the country.
President Obama may cite Romney’s Massachusetts reform as inspiring his efforts, but there are profound differences in the size, reach and financing of the two laws. Elected just six months after the law’s passage, Romney’s successor, Democratic Governor Deval Patrick, has obscured some of those differences by taking a big government approach to implementation.
Where Romney sought an open marketplace for individuals to purchase benefit plans ranging from catastrophic to generous, Patrick has drastically limited choices and mandated minimum coverage levels beyond private-market norms.
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.
Many opponents of Obamacare claim that large employers will drop employee health coverage in droves. The Wall Street Journal has made this argument a centerpiece of its opposition to the health exchanges. The argument has some face validity – employers that drop coverage can save about $10,000 per employee in insurance costs but only have to pay fines of $2000 per employee. What employer would not want to save $8000 per employee?
Supporters of Obamacare argue that if employers do not pay for insurance, they will have to increase wages. This will temper the incentives of employers to drop coverage. This follows from a classic model in labor economics that says that employers have to give workers a competitive wage/benefits bundle, and that the mix of wages and benefits is largely fungible. Thus, if benefits fall by $10,000, wages will increase by about the same amount. The theory is well accepted.
While it has been difficult to construct empirical tests of this theory, the available evidence is largely supportive (though the evidence of 1:1 fungibility is less compelling than the evidence of some degree of fungibility.) This may explain why the Congressional Budget Office predicts that only a few million workers will lose their employer sponsored coverage and get pushed onto the exchange. Even so, the Wall Street Journal and others have dismissed this theory and evidence, arguing that employers who drop coverage will pocket the full savings and therefore than tens of millions of workers will be affected.
I want to propose a simple test of the naysayers’ position. The test relies on evidence that the Wall Street Journal and others should find unimpeachable –stock market valuations. This is a quick and dirty test but the results are so compelling that I think it is sufficient.