Court’s decision will not solve the need for further health care reform

Issue: May 2012

ByDouglas W. Jackson, MD

Next month, the Supreme Court will rule on the constitutionality of the associated mandates of the Patient Protection and Affordable Care Act. It will be a historic Supreme Court decision and may limit the reach of President Obama’s health care overhaul.

Whatever the decision, it will have significant political ramifications and controversy as a central part of funding the Patient Protection and Affordable Care Act (PPACA) is the requirement that every American purchase health insurance or pay a penalty. There is nothing in the PPACA that will reduce health care costs as proponents had promised nor will it do anything to reduce the U.S. deficit. Regardless of the Supreme Court’s decision, we will still have to deal with escalating health care costs in the United States.

It appears from many projections that health care premiums will increase by 19% to 30% as a result of the legislation. According to The Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey, annual premiums for employer-sponsored family health coverage increased to $15,073 in 2011 – an increase of 9% from 2010. On average, workers pay $4,129 and employers pay $10,944 toward annual premiums.

Douglas W. Jackson

Many additional new costs are buried in this legislation and are to be funded by the proposed mandate with increased taxes on working, healthy and younger people as well as those who have chosen healthy lifestyles. This new government program will most likely be similar to those in the past in which any projected savings of the legislation are exceeded by the actual costs of the program. For example, when Medicare was passed in 1965, the program was estimated to cost $12 billion in 1990. However, the actual Medicare costs in 1990 were $110 billion – an amount that exceeded the projected costs by almost ten-fold.

Budget projections

The Congressional Budget Office (CBO) recently released revised budget projections for the PPACA for the next 10 years. In March 2010, the CBO estimated the gross cost to be $940 billion for 10 years. The newly revised CBO forecasts have the cost to be around $1.76 trillion — nearly double the initial estimate. I am certain the costs will be even higher if the reform is implemented as currently written. The higher costs will add to the national debt and even current and scheduled tax increases will not fund the eventual costs.

A major unknown that makes it difficult for the CBO or anyone to make accurate projections relates to the estimation of how many Americans will lose their employer-sponsored health coverage under the new reform. Some experts have projected that more than 30% of employers will stop offering health insurance to their employees once this portion of the health law is implemented in 2014. The unknown question is how many employers will furnish $20,000 per year for family coverage for their employees vs. paying the $2,000 penalty to the government. No one knows how these future decisions will impact the need for projected government subsidies of actual costs.

Many of the employees who may lose their employer-sponsored health coverage would qualify for subsidies through the health care exchanges, especially if their household incomes are less than $64,000 per year. It appears that if large numbers of employees move to government-subsidized exchanges, then it will bring us one step closer to a single-payer health care system and increase the taxpayer burden.

Besides the individual mandate, another area of constitutional interpretation involves the portion of the legislation that almost obligates states to expand their Medicaid programs. Prof. Richard Epstein has argued in the Wall Street Journal that this expenditure of federal funds is unconstitutional when it coerces states, rather than encouraging them, to participate in a federal policy. The PPACA further expands existing state-run Medicaid beyond a health care program for impoverished and special needs groups. The funding necessary to cover the new requirements will require states to obtain the available federal funds, as the additional implementation costs can not be underwritten by most states making it mandatory to accept the offered federal funds.

Prospects for physicians

Physicians have been practicing under Medicare-imposed price controls for more than 30 years and their payments have steadily decreased. This will most likely continue in the future. In addition, physicians will also have greater burdens due in part to the new regulatory requirements as well as the mandatory adoption of electronic health records.

The Federal Commission for the Coordination of Comparative Effectiveness Research (FCCCER) will collect data culled from these electronic health records. The FCCCER will make decisions about the effectiveness of drugs, procedures and therapies from this data. The physician will have to document providing cost-effective care and this will require more documentation, including outcomes data. Federally derived protocols and guidelines are scheduled and most likely will become a much broader basis for medical practice and decision making. Medical students and residents will be taught and tested on the protocols. The irony for physicians is that the American Medical Association (AMA) gave early support and endorsement for the PPACA. Unfortunately, this controversial decision made by the AMA has also seen a delay and possible future failure to achieve the implied permanent “doc fix” of physician payments.

Modifications possible

Strategically, the initial implementation of health care reform for the less controversial portions has been well-received by the people who are affected. A Kaiser Family Foundation survey estimated that employers added 2.3 million young adults to their parents’ family health insurance policies as a result of the provision that allowed young adults to obtain coverage on their parents’ plans until they turn 26 years old. Additionally, some Medicare beneficiaries have additional help with prescription drug costs and companies find it more difficult to deny coverage for pre-existing conditions. However, these all could have been done without the other more extensive changes.

The full impact of the new law and all its regulations and mandates will not be seen until complete implementation in 2014. What is hopeful is that modifications and changes are also still possible and may be added to the legislation in the future. The upcoming Supreme Court decision will help determine the extent and limits for the federal government to control and dictate the future of health care in the United States. If the mandate is found to be unconstitutional under the commerce clause, then many young and healthy individuals and some families will wait to buy health insurance. This will result in increased premiums for all the others, as the costs of the new regulations and mandates will be passed on to those who can afford and elect to buy health insurance.

Next month will bring some clarification to the methods for the implementation and funding of health care reform. As we near the 2012 Presidential election, the Supreme Court’s decision should make the candidates focus their rhetoric on the realistic financing of the health care entitlements and the future of health care reform.

A note from the editors

For more on this topic, read the Orthopedic Medical Legal Advisor.

Reference:

The Kaiser Family Foundation/Health Research & Educational Trust. Employer Health Benefits: 2011 Annual Survey. http://ehbs.kff.org/pdf/ 2011/8225.pdf. Accessed April 23, 2012.

For more information:

Douglas W. Jackson, MD, is the Chief Medical Editor of Orthopedics Today. He can be reached at Orthopedics Today, 6900 Grove Rd., Thorofare, NJ 08086; email: orthopedics@healio.com