The ACP Advocate Blog

by Bob Doherty

Monday, June 21, 2010

Coverage the U.S. can't afford? Think again.

A staple of the anti-health reform chorus is that the United States can't afford the promise made to extend coverage to tens of millions more people. Even though the Congressional Budget Office has said that the legislation will reduce the deficit by about $141 billion over the 2010-2015 period, and by about a trillion dollars over twenty years, the critics don't buy it. They argue that the CBO has been wrong before, or that the savings and revenue increases underlying its analysis will never happen, or that the CBO didn't take into account the costs of things that pre-dated and aren't related to the costs generated by the legislation itself, like the SGR physician payment fix. Usually, it is all of the above.

My own view - as I stated in my recent perspectives article in the Annals of Internal Medicine - is that there is a great deal of uncertainty in long-term budget forecasting, and it is certainly possible that the CBO under-estimated the costs and over-estimated the revenue and savings offsets to pay for it. It is also possible that the legislation might save more than the CBO estimated, because it generally did not assign any savings to innovations (like accountable care organizations and patient-centered medical homes) designed to align payment incentives with the value of care provided.

Now, though, a brand new study by the prestigious, non-partisan Rand Corporation reaches a stunning conclusion:

"The recently enacted federal health care reform law provides health insurance coverage to the largest number of Americans while keeping federal costs as low as reasonably possible" according to Rand's news release.

Rand goes on to report that, "The only alternatives that would have covered more Americans at a lower cost to the federal government were all politically untenable - substantially higher penalties for those who don't comply with mandates, lower government subsidies and less-generous Medicaid expansion."

Now, I know this won't put an end to an argument, because Rand's analysis attempts to answer only the question of whether it was possible to cover more people at less cost to the government. On that score, the Patient Protection and Affordable Care Act is a highly efficient use of taxpayer dollars. Many of the critics of the current legislation do not believe, though, that covering everyone (or most everyone) should be an essential goal of health reform, especially if it adds more costs to the federal treasury.

Certainly, one can conceive of alternatives that would have covered a lot fewer people, at less cost to the taxpayers - but those would have left us with the human, societal, and economic costs of leaving tens of millions of Americans without health insurance coverage. One can also conceive of ways to cover more people at less cost, but according to Rand, those generally involved more punitive mandates for people who choose not to buy coverage or much lower premium subsidies (meaning much greater out of pocket costs to them).

In my mind, the argument about whether the country can afford to provide health insurance coverage is an important one but one that probably can't be resolved, because it comes down more to a value judgment than an economic argument: How important is it to you to ensure that all Americans have access to health insurance they can afford? If you believe that society has an obligation (I am not going to get in the argument over whether it is a right) to provide all Americans with access to affordable coverage - as ACP believes it does - then the Patient Protection and Affordable Care Act was a highly prudent and efficient use of federal dollars, covering the most people at the least possible cost. But if you believe that it is not the role of government to ensure that its residents have affordable health insurance, then you probably aren't going to view any substantial increase in federal spending on the uninsured as a good use of taxpayer dollars, even though the legislation covered the most people at the least possible cost to taxpayers.

Today's question: Do you think Rand's analysis will make much of a difference in the endless argument over the costs and benefits of health reform?

1 Comments :

Blogger ryanjo said...

Mr. Doherty, still struggling to explain the ACP leadership's support for the Patient Protection and Affordable Care Act, this time as cost effective? Apart from the fact that most of the public and many of ACP's membership object to the PPACA, cost projections from the Centers for Medicare and Medicaid Services (CMS) are contrary to the Rand's analysis.

CMS estimates that this legislation will increase national healthcare spending by 311 billion dollars over the next 10 years. It will also cause 14 million Americans to lose their employer-sponsored health insurance (because of business-unfriendly rules and loopholes left in employer mandates). Moreover, 23 million persons are estimated to remain insured, including 18 million citizens who will pay the $750 penalty for not buying insurance, and 6 million undocumented immigrants. Where are the costs of free care for these millions reflected in the Rand figures?

Let's face it, the PPACA is headed for a giant deficit, and in the next several years, we will have to face the frightening prospects of underfunded programs (like Medicaid today), reduced provider payments ("the SGR on steroids"), and higher insurance premiums and taxes. Rand's conclusion that the Congress couldn't have done any better is no comfort to me. I don't think that this bad bill could have succeeded without cheerleading by AMA & ACP.

All of which makes the ACP's continued support for PPACA -- without demanding SGR repeal, tort reform and primary care enhancement --- inexplicable.

July 3, 2010 at 10:19 AM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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