The only consistent characteristic of the Affordable Care Act (ACA) is its ability to generate litigation. The gift that keeps on giving for Obamacare opponents seems to defy common law doctrines curbing the practices of champerty and maintenance (frivolous lawsuits).
Last month 20 state attorneys general and two governors launched the latest lawsuit in federal district court in Texas, arguing that the upcoming repeal of tax penalties for the ACA’s individual mandate, as of January 2019, means that the entire law has become unconstitutional (or at least a number of its related insurance regulation provisions).
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The less-explored question involves why Obamacare’s overall combination of taxpayer subsidies, expanded insurance programs, health benefits requirements, AND coverage mandates had so much less of an effect than the law’s architects envisioned.
It turns out that many of the nominally uninsured still have other alternatives to health care than just through heavily-subsidized Medicaid and exchange-based insurance. You might call such uncompensated care either an option for “implicit insurance” or a hidden tax on acquiring more formal coverage.
Health policy researchers Amy Finkelstein, Neale Mahonem and Matthew Nolowidigdo unravel the puzzle in a recent National Bureau of Economic Research paper. They explain why there is less “demand” than expected for the increased “supply” of subsidized coverage for lower income individuals and more limited take up of subsidized coverage than once predicted.
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If we want to make headway on improving public policy discourse, a good place to start might be with how we’re debating Medicaid policy, in particular how it might be affected by pending legislation to repeal and replace the Affordable Care Act (ACA), including legislation presented on Thursday by Senate Republicans.
Medicaid has long been on an unsustainable cost growth trajectory. This was true long before the ACA was passed in 2010, though the ACA exacerbated the problem. Annual federal Medicaid spending is currently projected to grow from $389 billion in 2017 to $650 billion in 2027. The biggest problem with that growth rate is that it’s faster than what’s projected for our economy as a whole. As with Social Security and Medicare, Medicaid costs are growing faster than our ability to finance them.
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Despite its name and despite some of the more grandiose claims by its supporters, the Affordable Care Act (ACA) is failing to make healthcare costs more affordable. Indeed, it’s possible that the ACA has achieved less than nothing with respect to health cost affordability — meaning less even than a hypothetical scenario in which it had never been enacted.
It’s well documented that national healthcare cost growth has slowed in recent years relative to longer historical patterns.
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There’s no way around a simple truth: treating an expensive health condition costs (someone) lots of money. There are four basic approaches that can be taken to this problem: 1) Leave sick people to face the costs of their own treatment, whether out of pocket or through high-cost insurance, no matter how ruinous those costs become; 2) Mandate that other, healthier people overpay for the value of their own health insurance, so that sick people can underpay for the value of theirs; 3) Spread the costs of paying expensive health bills throughout society, for example by having taxpayers pick up the tab; and 4) Require a targeted group to shoulder the costs. [The AHCA opts for 3).]
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The CEA presentation is notable in reflecting the core components of ACA advocates’ case for the law. It is fourteen slides long, and I find that its points break down into five main themes (in my own words):
- The ACA represents a historic expansion of health insurance coverage.
- The ACA is achieving policy goals such as reducing patient harm and hospital readmissions.
- The ACA is helping to slow the growth of health care costs.
- The ACA has been good for job creation.
- The ACA is improving the federal fiscal outlook.
Today the Mercatus Center unveiled a study by Bradley Herring (Johns Hopkins University) and Erin Trish (University of Southern California) finding that the much-discussed health spending slowdown that continued in 2010-13 “can likely be explained by longstanding patterns” over more than two decades, rather than suggesting a recent policy correction. Projecting these factors forward and incorporating the effects of the Affordable Care Act’s health insurance coverage expansion provisions, Herring-Trish predict the expansion will produce a “likely increase in health care spending.”
Though not surprising in light of longstanding appreciation of insurance’s effects on health service utilization, the latter finding is nevertheless profoundly concerning given that pre-ACA health spending growth trends were already widely held to be untenable.