Obamacare on Trial

Today the US Supreme Court held oral arguments on the Patient Protection and Affordable Care Act with respect to the issue of whether a Federal mandate requiring citizens to purchase health insurance is Constitutional.

The Court could uphold the law, strike down the mandate but let the rest of the law stand, or strike down the entire law on the basis that the mandate is central to the functioning of the law.

The debate in some sense revolves around a technicality in that the law could have obtained the same result without raising this Constitutional issue (say by providing a tax credit for purchase of health insurance).  The technicality of course is extremely important. If the law is struck down Congress, as presently constituted, would not pass anything remotely similar to the Patient Protection and Affordable Care Act.

Obamacare suffers from some serious defects.  For example, it preserves the employer based system for providing health care.  In part this is accomplished by exempting from taxation health insurance premiums paid by employers but not exempting health insurance premiums paid by individuals.  It is ridiculous to have a system where one has to change one’s health care system every time one changes jobs. Creating an impediment for individuals to change jobs also has adverse consequences for the economy as a whole.

Furthermore, as we have recently witnessed, employers may decide that they wish to impose arbitrary conditions, based on their religious beliefs or conscience, on their employees’ health care.  Employers may decide that they do not wish to cover everything from contraception to blood transfusions.  Perhaps it may violate an employer’s conscience to cover expensive procedures.  What is more odious than an employer effectively entering his/her employees’ bedrooms and hospital rooms to decide what type of medical care the employer deems to be moral?

A second major defect of Obamacare is that it does not contain mechanisms to adequately control cost. Health insurance premiums have continued to escalate since passage of Obamacare.

To effectively reform the US health care system we need to recognize that our current system is badly broken.  The US spends approximately twice as much per capita as other countries on health care, obtains inferior results as measured by health care outcomes, and (at least prior to implementation of Obamacare) leaves a large fraction of the population uninsured.

Reform of the health care system, in my opinion, requires the adoption of two principles: 

One, everyone should have access to a basic level of health care. As an ethical society we should not allow someone to sicken or die because he/she cannot afford health care.  Such care needs to be comprehensive and longitudinal.  It is less costly and more effective to provide preventative care and not just provide care when someone lands in the emergency room in extremis.

Two, the cost of the basic health care system has to be subject to a capped budget.  There is no limit to the amount that one can spend on health care.  There will always be new drugs, devices, diagnostics and therapies that one can spend money on.  Hard-nosed decisions have to be made regarding what is the most cost-effective way to spend basic basic health care dollars.  Making sure that children are vaccinated is highly cost-effective; spending hundreds of thousands of dollars on a cancer therapy expected to extend a patient’s life by a few weeks is not cost-effective.  That said, individuals who wish to purchase supplementary health insurance beyond a universally provided basic health care benefit should be free to do so.  That supplementary insurance can cover treatments that are not covered within a basic health care package.

Once one accepts the above principles, there remain issues of how to implement the basic universal health care package.  We could adopt, for example, a single payer Medicare for All system.  As an alternative, I have suggested in a previous post a type of voucher system in which different health plans have to compete for patients in providing a basic health care package.  In this scenario, the basic health care package would include a defined set of minimum required benefits.  The voucher system has the potential for harnessing competition to improve quality and put pressure on providers to control costs.  

Any proposed system should optimally be tested in local pilot programs to detect unforeseen problems prior to broad implementation.

However imperfect Obamacare is, if the Supreme Court strikes it down many individuals will be left without access to healthcare.  This would be a tragedy. 

Whatever the Supreme Court decides, there remains much work to be done to provide US citizens with an affordable, effective and ethical health care system.