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The Pros and Cons behind the Supreme Court's Decision
Since the 1970s, when Richard Nixon became the first U.S. president to call for "national health insurance," the debate surrounding health reform has ebbed and flowed, but never gone away. Today, questions around reforming our health care system are no longer about whether or not we need it, but only how best to do it.
The Affordable Care Act (aka Obamacare) was passed by Congress and enacted into law in March 2010. Certain provisions of Obamacare are popular, such as an end to exclusions for pre-existing conditions and allowing for coverage of children on their parent's policy until age 26. Other provisions have promise, such as state health exchanges, and still other provisions were either unpopular or unworkable and have already been repealed (e.g., 1099 reporting requirements, long-term care insurance).
Perhaps the law's most controversial provision, an individual mandate that requires all U.S. citizens to purchase an approved level of health insurance, became the primary basis for challenging the law's constitutionality.
The Supreme Court's ruling last week judged Obamacare to be constitutional in a way that was quite unexpected: by deeming the financial penalties imposed for not purchasing health insurance (i.e., the individual mandate) to be a tax. However, the law was not written as a tax nor sold to the American people as a tax, but the taxing authority of the federal government is clear. Was this an effort to do what is best for the country and shift away from the right-left acrimony? It appears that it was in order to make the law constitutional, but is it good public policy?
Short answer: No. Obamacare is not good policy, principally because of a weak economy with annual deficits in excess of $1 trillion for the foreseeable future. This figure comes before Obamacare insures 30 million to 40 million more people into the current broken system. Small business is not hiring, and our economy is not growing, and Obamacare is a significant factor.
Other concerns with the law include:
· The imposition of major new taxes on employers, health insurers and medical device companies;
· The creation of an Independent Payment Advisory Board empowered to make decisions about the cost and appropriateness of health care services beginning in 2014 (most likely, government-directed rationing); and
· The infringement on the doctor-patient relationship through loss of current coverage, actions of the aforementioned advisory board and a shortage of primary doctors.
The federal government has failed to effectively manage Medicare, so why give it the keys to the entire system?
Going forward, there are two options: Totally repeal Obamacare and replace it with a new, incremental set of health reform regulations; or continue to repeal major portions of the law, focusing on IPAB, new taxes and onerous regulations. Constructive provisions, such as state-run health exchanges (with less federal regulation), can proceed.
Interestingly, the Israeli healthcare system may hold clues that could steer us in the right direction.
Israel operates a public/private health care system where each citizen chooses annually from among four national health plans. The system is financed by a tax, which though now deemed legal here would be unpopular.
The comparison is not perfect because this country is significantly larger and more diverse than Israel. But according to data presented by Israel's Economic Trade Ministry, the discrepancies are revealing. Per capita costs, for instance are $2,048 in Israel; $7,290 here. There, life expectancy is age 79 for males, 82 for females, in contrast to 76 for males and 81 for females in the United States.
Since Israel is the size of New Jersey, why not encourage states so inclined to adopt the Israeli exchange model, given its potential for significant improvements in the cost and quality of care? With the requisite political will, our health insurance system can be fixed first, allowing all U.S. citizens to then participate in an effective and efficient health care system of which Americans can be proud.
David E. Edman is the managing partner of Risk Management Partners LLCwww.RMPLLC.biz! based in Wayne, and is a member of the Pennsylvania Leadership Council of the National Federation of Independent Business.