March 19, 2012

After SCOTUS: The Status Quo is Not an Option

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Udow Phillips2014

Marianne Udow-Phillips

Center for Healthcare Research & Transformation

Everybody and their brother will be blogging about the Supreme Court arguments on health care reform over the next several weeks. I do not want to add to the noise by focusing on the arguments and/or who has the winning position: many others will offer that kind of analysis.

Instead, I want to focus on what will happen if the Supreme Court rules that the Affordable Care Act, in part or in its entirety, is unconstitutional.

Think about what happened in the 90s, when the Clinton administration proposed health care reform. At that time, the great political debate was around a proposal that would have implemented health care “purchasing alliances” and moved the country toward a model known as “managed competition,” where health plans would compete for members on a more level playing field than existed at the time—or today.

Opponents of the Clinton proposal were very effective at sowing fear in the minds of the public (remember Harry and Louise?) and creating a political climate that led to the overwhelming defeat of health reform. With the defeat of health reform at the federal level, most Americans assumed that the status quo would stay in place—but that is not what happened.

Instead, employers—concluding that they could not count on the federal government to help them rein in rising health insurance costs—tackled the issue themselves by making fundamental changes to the benefits they offered to employees: shifting most open-access, indemnity-type coverage plans into tight, managed-care approaches. Health maintenance organizations (HMOs) became predominant.

Consumers hated that shift, and thus was born the managed-care backlash. The failure to convince most Americans that managed care was a desirable way to deliver health benefits has, over time, resulted in more costs being shifted to consumers a decade or so later.

Fast forward to 2012 and the ACA. In this very political year, with all the rhetoric around “repeal and replace,” the real question is: if we are going to replace the ACA, what are we going to replace it with? What will really happen if the ACA is determined to be unconstitutional? Does anyone really believe the status quo will stay in place this time around, any more than it did after the failure of the last major attempt at health care reform?

Already we are seeing employers—beyond shifting costs to employees—dropping coverage at stunning rates. And, even with an economic recovery coming to life to some degree, small businesses and others who dropped coverage do not seem to be adding it back.

So, what is likely to happen if the Supreme Court strikes down the core coverage components of the ACA (or, if it gets repealed through the political process)? Well, despite what the rhetoric might lead one to believe, on this we have some pretty good clarity: Without the ACA, insurance costs will go up, coverage will decline, people will be paying more out-of-pocket for medical care, and providers will be paid less.

In other words, if the ACA does not stand (constitutionally or politically), the trends we've seen over the past few years will not only continue but get much worse, with no prospect for improvement in sight. And the chances that Congress will go out on a limb and pass a comprehensive approach to expanding coverage or dealing with the tough political issues around health care are slim and none in the near term.

In the longer term, the prospects for some form of a single-payer solution will actually increase, because every other compromise approach will have failed either politically (managed competition, ACA incrementalism) or practically (market-based solutions).

So, opponents and proponents of the ACA alike, you should all be hoping that the Supreme Court upholds the core provisions of the ACA. Because for both sides, the alternatives are worse.


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