The Price If Health Care Is Overturned

WASHINGTON — In arguments before the Supreme Court this week, the Obama administration might have done just enough to keep the Affordable Care Act from being ruled unconstitutional. Those who believe in limited government had better hope so, at least.

If Obamacare is struck down, the short-term implications are uncertain. Conservatives may be buoyed by an election-year victory; progressives may be energized by a ruling that looks more political than substantive. The long-term consequences, however, are obvious: Sooner or later, a much more far-reaching overhaul of the health care system will be inevitable.

To say the least, the three days of oral argument before the high court did not unfold the way many experts had expected. Confident predictions that the administration would prevail by a lopsided margin became inoperative as soon as the justices began pummeling Solicitor General Donald Verrilli with pointed questions.

At one point on Wednesday, as the barrage was winding down, Chief Justice John Roberts told Verrilli he could have an extra 15 minutes to argue a point. Verrilli replied, “Lucky me.”

In the end, however, Verrilli gave the skeptical justices what they were looking for: a limiting principle that allows them, should they choose, to defer to Congress and uphold the law.

At the heart of the legislation is the requirement that individuals purchase health insurance or pay a fine. It became clear by their questioning that the court’s five conservatives — including Justice Anthony Kennedy, the swing vote who sometimes crosses the ideological divide and votes with the liberals — see this mandate as a significant expansion of the federal government’s reach and authority.

Verrilli argued that the mandate is permissible under the clause of the Constitution giving the government the power to regulate interstate commerce. Justices demanded a limiting principle: Where does this authority end? If the government can compel a citizen to buy health insurance, why can’t it compel the purchase of other things?

Justice Antonin Scalia raised the specter of an all-powerful government that could even “make people buy broccoli” if it wished. Scalia’s mind seemed to be made up, but Kennedy seemed to be genuinely looking for a principle that permitted a health insurance mandate but not a broccoli mandate.

And Verrilli gave him one. The market for health insurance is inseparable from the market for health care, he argued, and every citizen is a consumer of health care. Those who choose not to buy health insurance require health care anyway — often expensive care at hospital emergency rooms — and these costs are borne by the rest of us in the form of higher premiums.

I think Verrilli made his case. The court is supposed to begin with the assumption that laws passed by Congress are constitutional. Justices don’t have to like the Affordable Care Act in order to decide it should remain in effect. If some members of the court think they could do better, maybe they should quit and run for legislative office.

But it’s going to be a close call. What if they strike down the law?

The immediate impact will be the human toll. More than 30 million uninsured Americans who would have obtained coverage under Obamacare will be bereft. Other provisions of the law, such as forbidding insurance companies to deny coverage based on pre-existing conditions and allowing young adults to remain on their parents’ policies, presumably would also be invalidated; if not, they would have to be modified to keep insurance rates from climbing sharply. The United States would remain the only wealthy industrialized country where getting sick can mean going bankrupt.

Eventually, however, our health care system will be restructured. It has to be. The current fee-for-service paradigm, with doctors and hospitals being paid through for-profit insurance companies, is needlessly inefficient and ruinously expensive.

When people talk about out-of-control government spending, they’re really talking about rising medical costs that far outpace any conceivable rate of economic growth. The conservative solution — shift those costs to the consumer — is no solution at all.

Our only choice is to try to hold the costs down. President Obama tried to make a start with a modest approach that works through the current system. If this doesn’t pass constitutional muster, the obvious alternative is to emulate other industrialized nations that deliver equal or better health care outcomes for half the cost.

I’m talking about a single-payer health care system. If the Supreme Court strikes down Obamacare, a single-payer system will go from being politically impossible to being, in the long run, fiscally inevitable.

Eugene Robinson’s email address is eugenerobinson(at)washpost.com. (c) 2012, Washington Post Writers Group

39 Comments

  1. Probably even if the ACA is found to be constitutional there will still be a day of reckoning to come. The weakness of the ACA is that it relies on for profit insurance companies to provide health care and there are no foreseeable conditions under which hundreds of for profit insurance companies can provide lower cost, high quality health care than the government or a single non-profit community rate based provider can. We have spent the last fifteen years proving this beyond a doubt after the conversion of Blue Cross-Blue Shield into for profits and all of the wasted extra money that has gone into the Medicare Advantage program. Both were touted as a chance for the market to prove its ability to provide low cost medical care and both failed, miserably.

  2. It would be difficult to decide which cherished idea has cost this country more over the years, that financial markets can self-regulate or that the free market always does things better.

  3. “At the heart of the legislation is the requirement that individuals purchase health insurance or pay a fine.”

    Incompetence on the part of Liberals to stand up for their principles and make the coast of insurance a tax if one could not show proof of insurance is the reason this legislation is before the court. Had they called it a tax, that comes under the taxing authority of the government, but they were worried about thier careers and did not want to support a tax.

    “Verrilli argued that the mandate is permissible under the clause of the Constitution giving the government the power to regulate interstate commerce”

    How can the administration argue they can control insurance because it is interstate commerce, but then they argue they can not support interstate sales of insurance plans, allowing each state to regulate the companies plans within their states becasue insurance is a state respobnsibility and has not been truned over to the feds by the states. Are they not argueing out of both sides of their mouth?

  4. MERKIN..”and all of the wasted extra money that has gone into the Medicare Advantage program. Both were touted as a chance for the market to prove its ability to provide low cost medical care and both failed, miserably”

    Guess you have not been part of the Advantage plans. If you were you would find that they can be far superior to traditional Medicare with a much lower monthly cost than when adding the Part B premiums to Medicare and the AARP supplemental insurance premiums. In most cases, this is over $1500.00 per year minimum and can be up to $2,500 difference per year. And the co-pays are much loweer also!!!DON”T TOUCH MY MEDICARE ADVANTAGE!!!

  5. The court is supposed to begin with the assumption that laws passed by Congress are constitutional.

    Huh? I’m no expert but surely that’s not correct? Of their main function is judicial review, it would seem that they should be agnostic on whether or not Congress wrote the law in a way that’s consistent with the Constituion, and objectively review it- not assuming good faith and trying to make it fit.

  6. In fact what’s ironic is that Robinson’s complaint actually makes more sense in reverse- instead of the conservative justices trying to find Constitutional problems with the law because they don’t like it, it is much more obvious that the liberal justices are trying not to see any Constitutional problems because they do like it or at least feel it essential to preserve it at all costs.

  7. Guess you have not been part of the Advantage plans. If you were you would find that they can be far superior to traditional Medicare with a much lower monthly cost than when adding the Part B premiums to Medicare and the AARP supplemental insurance premiums.
    MA isn’t cheaper, it’s subsidized by the US government, yet it costs more than Medicare.
    http://www.washingtonpost.com/.....03953.html

    Many private plans require no additional monthly premiums, yet the government pays an average of $849.90 in monthly subsidies to insurance companies for a person on Medicare Advantage, according to the Kaiser Family Foundation. That is about 14 percent more than the government spends on people with standard Medicare, according to the nonpartisan Medicare Payment Advisory Commission.

    Were guaranteeing private insurance profits while giving them subsidies for a plan that costs 14% more.

  8. Our only choice is to try to hold the costs down.

    The operative word there is “try.” Not one of the single payer systems out there is succeeding.

  9. Mr. J is at home, and consistant, with the mis-information he peddles… He ought to be, he’s been doing it since HCR came to TMV.

    He is correct in his comment that “Not one of the single payer systems out there is succeeding.” in response to the statement, “Our only choice is to try to hold the costs down he omits the fact that even though NO system is succeeding in holding down costs:

    • Annual US Health Care Spending per person is $7,200 / year
    • US Health Care System has 40,000,000 citizens with NO coverage;
    • US Health Care System – 0 to 4 Doctor visits / year
    • US Health Care System – Live Expectancy 78 years
    • Average Annual Health Care Spending per person in Single Payer countries is $3,500 / year
    • Single Payer Countries have ZERO (0) citizens with NO coverage.
    • Single Payer Care Systems – 4 to 8 Doctor visits / year
    • Single Payer Care Systems – Live Expectancy 83 years

    Source: National Geographic – The Cost of Care

    The information and link above have been brought to Mr. J’s attention many, many times. unfortunately instead of trying to refute any of these FACTS he simply ignores them and keeps peddling US Health Industry propaganda and talking points.

  10. Re-write of Health Care Facts:

    Annual US Health Care Spending per person is $7,200 / year
    Average Annual Health Care Spending per person in Single Payer countries is $3,500 / year

    US Health Care System has 40,000,000 citizens with NO coverage;
    Single Payer Countries have ZERO (0) citizens with NO coverage.

    US Health Care System – 0 to 4 Doctor visits / year
    Single Payer Care Systems – 4 to 8 Doctor visits / year

    US Health Care System – Live Expectancy 78 years
    Single Payer Care Systems – Live Expectancy 83 years

    Source: National Geographic – The Cost of Care
    http://blogs.ngm.com/blog_cent.....-care.html

  11. unfortunately instead of trying to refute any of these FACTS he simply ignores them and keeps peddling US Health Industry propaganda and talking points.

    Steve, of course I’m not refuting them. They’re facts. Every time you bring them up I agree with you.

    And if you agree with me that, despite their better coverage rates and lower current costs, these other countries are seeing cost rises comparable to our own, then we’re in violent agreement in both directions.

    The truth, as you say, is that no one knows how to tame health care costs. I think our best hope is consumer empowerment and competition to drive cost efficiencies into the system, and I point to the many freer industries that have stable or falling costs as justification. Mr. Robinson thinks our best hope is single payer, and he points to hypothetical savings from recouping insurance industry profits as his justification.

    I think a quick look at the numbers debunks his argument, but mostly I’m objecting to his framing his theory as well-demonstrated. It isn’t, it’s sorely at odds with the cost growth statistics, and it’s more of a hope than a fact.

  12. Zakaria: How to save American health care – March 26th, 2012

    By Fareed Zakaria, CNN

    America’s health care system is really a mess. It is partly free enterprise, partly state-subsidized and overall highly inefficient in delivering quality care at a reasonable price.

    I am a big fan of the free market. I think it has an almost magical ability to allocate resources and generate growth. But precisely because it is so powerful, in places where it doesn’t work well, it can cause huge distortions.

    The Nobel Prize-winning economist, Kenneth Arrow, outlined in the 1960s why markets don’t work well when it comes to health care. He explained that people don’t know when they will need health care and that when they do need it, the cost is often prohibitive. This means you need some kind of insurance or a government-run system.

    Now, if we decided as a society that it is OK that when people suddenly discover they need health care, they can only get it if they can pay for it – that would work, but it would mean that the vast majority of Americans wouldn’t be able to pay for a triple bypass or a hip replacement when they would need it.

    The market would work, just as it works for BMW cars – people who can afford it can get it, people who can’t, won’t. But every rich country in the world – and many not so rich ones – have decided that every citizen should have access to basic health care and given that, a pure free market model simply cannot work (and remember, even if one were to have only a catastrophic insurance model, that’s where all the costs are.)

    [...]

  13. That’s a reasonable argument about coverage, Steve. You won’t be able to achieve 100% coverage if people are free not to buy insurance. So if that’s the definition of “works,” the free market won’t work. You need a mandate or automatic coverage supplied by the government.

    The article isn’t talking about cost control, though, and that was the point in Mr. Robinson’s post I was disputing. He’s right that soaring costs are the real problem, and shifting them to the consumer is no solution. But shifting them to the taxpayer isn’t either.

  14. Glad to see Robinson isn’t pulling any punches. He’s absolutely right in his assessment. And he’s right about this:

    “Sooner or later, a much more far-reaching overhaul of the health care system will be inevitable.”

    I suppose republicans (and their joke of a supreme court) might be happier without any HCR at all, but it would be unconscionable and shouldn’t be accepted as an option.

    Again:

    “The United States would remain the only wealthy industrialized country where getting sick can mean going bankrupt.”

  15. P.S. Thanks for the fact checking Steve.

  16. Its good to see someone actually touch on why things are screwy. The whole idea of a functional free market is that neither side of the buyer/seller equation controls too much of the buying/selling. Its why we don’t allow monopolies, because that upsets the “free market” if don’t make rules to prevent them.

    People really don’t have a choice about healthcare. As long as we are free to purchase something or not to purchase it, a natural balance and competition can be at work that has proven to be pretty effective, more so than any other type of economy in the past by far. The “Free” in free market means we can freely make choices, not that it is free of any rules. Making a financial system or market without rules or oversight is like playing football without rules or referees. Pretty soon the bigger scarier guys will just be beating the crap out of the QB and receivers and stealing the ball through violence.

    So the medical industry knows they have a basically infinite amount of demand, and their consumers have little choice about buying their stuff. So we get what we have, them jacking up the prices as high as they can, till the majority of bankruptcies in this nation are a result of medical issues, even when most of THOSE people have insurance. Both medical device makers and pharmecutical companies routinely show up in the top 5 most profitable industry ratings year after year. The demand has to be regulated or its going to implode. It would be the same in any industry with unlimited demand.

  17. He’s right that soaring costs are the real problem, and shifting them to the consumer is no solution. But shifting them to the taxpayer isn’t either.

    Let me repeat one of the FACTS you agree with:

    Annual US Health Care Spending per person is $7,200 / year
    Average Annual Health Care Spending per person in Single Payer countries is $3,500 / year

    It the cost of health care next year is ONE HALF of what it was this year (and this reduced cost includes any increase in taxes required to establish ‘Single Payer’) how can you, with a straight face, imply that the taxpayer will be paying more?

    A payroll tax on employers (about 7%) and an income tax on individuals (about 2%) is one hell of a lot cheaper than Private Health Insurance costs workers and employers today AND that rate would provide sufficient revenue to cover grandma, grandpa, the kids, students, the unemployed… ALL Americans.

  18. It the cost of health care next year is ONE HALF of what it was this year…

    That sounds great, Steve. Unprecedented, in fact. No other country (among the ones I researched) saw their health care costs fall when they instituted national systems. If you know of one, please let me know.

    I don’t think I can agree the pnhp.org numbers are established fact. Isn’t a 7% payroll tax plus 2% income tax basically 9% of GDP? They sort of dismiss it as a small increment on what people are already paying, but I question that. I also question what sort of system it would actually buy us–what would happen to costs once the government took over, and to quality and availability. Without a mechanism to drive significant efficiencies into the system (and I mean 2x or 4x–way more than insurers’ 5% profit) or to ration acceptably (on end-of-life care, for example), costs aren’t going to move much.

  19. “Isn’t a 7% payroll tax plus 2% income tax basically 9% of GDP?”

    Huh? No. No it’s not.

  20. I can’t help but wonder how the great Republican president Teddy Roosevelt would approach HCR if he was president today? (probably in a way that would make the GOP froth and quake)

  21. @Dr J
    They didn’t fall, but increases were less than the US.
    http://www.kff.org/insurance/s.....042111.cfm
    Total Expenditure on Health as a Share of GDP, U.S. and Selected Countries, 1970, 1980, 1990, 2000, 2008

  22. Go down one more exhibit rudi in the same link and you’ll see the US rate of increase since 1990 and since 2000 is pretty much middle of the pack.

  23. Thanks roro80, zephyr, and rudi… Mr. J is up to his old habit of trying to change the subject and cloud the issue.

    Here’ the current breakdown of Employer / Employee Costs for Health Care from Kaiser Family Foundation.

    Employee Contribution
    Employer Health Benefits 2011 Annual Survey

    The average “Monthy Worker Premium Contribution Paid by Covered Worker” in 2011 was $77 / mo for single coverage$344 / mo. for Family Coverage.

    Minimum wage ($7.25 / hr) earns 1,305.00 / mo. or 15,660 / yr

    • $77 for single coverage = 5.9% of income
    • $344 for family coverage = 26% of income

    Under Single Payer (2%) their cost would be $26 / mo. and this would include their family.

    $20.00 / hr earns 3,600 / mo or 43,200 / yr

    • $77 for single coverage = 2.1% of income
    • $344 for family coverage = 9.4% of income

    Under Single Payer (2%) EMPLOYEE cost would be $72 / mo. and this would include their family.

    ———————————–

    Employer Contribution

    These costs would make offering coverage to minimum wage employees prohibitive.

    Employer cost for a 43,200 / year employee

    • Single Coverage would be 12%
    • Family Coverage would be 34.9%

    Under Single Payer EMPLOYER cost (7%) would be $3,024 / yr. and this would include their family.

  24. @SteveinCH
    Are you talking about Exhibit 5? While the growth may be middle pack, our costs are the greatest.

    Exhibit 4A is interesting. Switzerlands costs slowed after Swiss ObamaCare/RomneyCare started.
    Smiley face

  25. Glad that didn’t mess up the comment formatting!!

  26. SteveK: not sure I understand your point correctly, but if it’s that minimum wage workers (and their employers) would pay less under a 2%/7% system than they do today, I think we can agree yet again.

    How that would change our average spending on health care, and whether 2%/7% is a realistic funding plan, are still questionable.

    I don’t see any way around the macro numbers. We spend 18% of GDP on health care, employing millions of people. For that number to drop to 9%, we would need to pay them all half as much as we do today, or figure out how to make half of them twice as productive and fire the other half. These are big, sweeping changes that won’t happen just from restructuring insurance payment ratios.

  27. rudi,

    I never argued the costs. The point however is that single payor does not slow the growth rate in costs or at least there’s no evidence of it doing so.

    So the mechanism by which our costs would shrink would come down to 1 of 2 things, either less usage or lower prices. But since most of health care is labor, lower prices really means lower wages or fewer people.

    And further since usage would increase under single payor because care would essentially be free at the moment of care, the only way that costs could come down is a combination of rationing (explicitly or through queueing) and price controls (which is also another way of rationing).

    If you’d like to argue that you support price controls at 50% of today’s levels as a way to get to 9% of GDP on health care, feel free. If you’d further like to argue that you think the US Congress would sustain such an approach when it can’t even sustain the current SGR formula, we’ll just agree to disagree.

    In my view, the most likely outcome of single payor in the US would be increased costs rather than decreased costs because I do not believe the US government is willing to make the tradeoffs necessary for costs to come down and moving to single payor does nothing to cause this to happen.

  28. Dr J i think the reason the numbers are looking so much lower is that the 2+7 formula is only replacing the private spending, and maintaining the status quo for public spending in addition to that.

  29. It strikes me that folks who want the supreme court to overturn the HCR legislation might want to be careful what they wish for. The next round of legislation (barring increased power by the GOP in 2012) might make them wish for a re-do. As for all the number crunching? Even if the numbers are relatively close, so what? We’re talking about the difference between decent healthcare for millions vs. either no healthcare or substandard healthcare. Does that mean anything at all to republicans???

  30. SteveinCh said: In my view, the most likely outcome of single payor in the US would be increased costs rather than decreased costs because I do not believe the US government is willing to make the tradeoffs necessary for costs to come down and moving to single payor does nothing to cause this to happen.
    I agree, but Obamacare could cost more and is a mess.
    I have thrown in the towel and would welcome a well run (possible?) single payor plan, warts and all.

    Without a “real” mandate/fine/tax/financial incentive, the law of all in the pool in insurance does not work,. the present mandate is a joke; maybe better to start all over, sorry.

    BTW: ongress can create a new law that would continue the age 26 and MAYBE some other provisions, if they can all get along (ha!), should Obamacare in its entirety go away.

  31. Dduck,

    I don’t think the ACA could cost more because much of the cost is shifted to consumers through the mandate. That said, I don’t think a well run (if that has anything to do with cost containment) system is possible without a major attitude adjustment around end of life care.

    Moving to an unbounded liability system before that happens seems a pretty lousy idea.

  32. Is it just me or is everybody else tired of the BS these two HCI shills are trying to peddle?

  33. As usual there seems to be a pretty casual dismissal of the big picture. On second though it’s more likely a studied dismissal than a casual one. Ah well..

  34. “It would be difficult to decide which cherished idea has cost this country more over the years, that financial markets can self-regulate or that the free market always does things better.”

    I don’t know merkin, but put together they have done inestimable damage… damage that one party seems determined to learn virtually nothing from.

  35. You’ve got that right zephyr…

  36. “Is it just me or is everybody else tired of the BS these two HCI shills are trying to peddle?”

    Your low class is showing, SK.

  37. As usual there seems to be a pretty casual dismissal of the big picture.

    And as usual there seems to be a pretty casual shooting of the messengers.

    Guys, I agree with you that it’s terrible so many people lack access to decent health care. We need to do something about it–probably a good bit more than ACA does.

    That doesn’t mean it’s okay to fool ourselves about the cost numbers. Indeed it would be literally fatal to do so. Single payer is not the cost panacea liberals imagine, and there is no easy path to halve our health care costs.

    Please don’t mistake pointing that out with not caring about the uninsured, being an AETNA booster, wanting the supreme court to invalidate ACA, or even wanting them to throw out the individual mandate. AFAIK no one on this thread has taken any of those positions. I haven mixed feelings about ACA, and I’ve been calling to dethrone insurers from power until I’m blue in the fingers.

  38. Dr., J., Single payer will cost a lot, there is no question, but it could work and cover a lot more people than the stupid puny mandate.
    So if we are looking to cover more people, as most liberals say they are, let’s dump ACA and do a universal plan.

    (Hope I am not too much of a shill for the HCI proposing what might decimate the vampire insurance companies.)

  39. “(Hope I am not too much of a shill for the HCI proposing what might decimate the vampire insurance companies.)”

    Nice shilling there dd. ;-) Bring it on!

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