Healthcare Costs Money?

Aug 03 2010 Published by under Uncategorized

The current issue of New England Journal of Medicine includes a perspective on the legal challenges to the Affordable Care Act (ACA). Rosenbaum and Gruber convincingly argue that the ACA should survive these pending cases.

Will Justice Prevail?

the fight is over whether the individual mandate to purchase health insurance (or pay a tax) is about regulating individuals’ economic conduct or regulating their noneconomic status. Depending on which characterization of the facts prevails, the individual mandate either falls within or lies outside Congress’s power to act.

The constitution and judicial precedent grant congress wide authority to regulate economic behavior via the Commerce Clause, but limited power to regulate other behaviors. They discuss a 2005 decision in Gonzalez v. Raich in which the US Supreme Court declared growing marijuana an economic activity, given the "established and lucrative interstate market." They contrast this case with two involving gun possession on school grounds and domestic violence. Both conditions had secondary economic consequences, but were deemed to primarily involve other behaviors. Gun possession and domestic violence were thus outside the realm of Congress.

So how can the ACA be seen through these lenses? The plaintiffs frame the ACA as "a law about status (being uninsured) rather than about economic activity." The US government argues that the law is economic in nature:

the U.S. Department of Justice argues that the ACA is a quintessential economic regulatory effort because it addresses the when and how of paying for health care (a market commodity that almost all Americans will purchase at some point, either because they plan to or because of an unforeseen event). In its argument, the Justice Department lays out the congressional findings that undergird the ACA, which highlight the economic imperative of health care reform in order to save a health care system that is fundamentally failing the tens of millions of Americans who are either uninsured or faced with purchasing insurance in a dysfunctional insurance market.

They then review some facts about US healthcare:

  1. Accounts for 17.5% of US GDP
  2. Uninsured consume $50 billion in uncompensated care which must be passed on to insured people
  3. Medical debt is a leading cause of bankruptcy in the US
  4. Lack of health insurance can reduce worker productivity
  5. Fear of loss of insurance keeps many workers tied to jobs they dislike

The authors conclude, correctly, that the ACA, at its heart, is an economic law:

In the end, the ACA is all about altering individual economic conduct, and its importance lies in the way it changes the when and how of health care purchasing. By ensuring access to affordable coverage for most Americans, the law seeks to rationalize our economic behavior while providing the regulatory and subsidization tools to make this rationalization possible. To characterize the ACA as a law aimed at anything other than individual economic conduct is to fundamentally miss the point of the legislation.

This article presents an understandable and succinct summary of one of the major judicial issues facing the ACA. I recommend you click a link (here it is again) and read the entire piece.

Image courtesy of PhotoXpress.

5 responses so far

  • Alan Kellogg says:

    There is one big problem with the requirement that everybody get health insurance, you can't force people to be sensible. Maybe if we refused to treat those without insurance, or the money to pay for treatment, things would be different. But I just don't see doctors flat out refusing to treat people in emergency or even urgent circumstances.

    So expect people to pay fines, if caught, instead of getting insurance; just to show the man how independent they are. Also expect the government to start demanding further resources in order to pursue and prosecute the scofflaws.

    And don't call it an unintended consequence, for anyone who understands people can tell you what the likely result of this one provision is.

    Just remember, you can't persuade a man determined to prove you wrong.

    • Dorothea Salo says:

      Only ONE big problem?

      Clearly you've never run afoul of pre-existing condition insurance refusals, or rate jacks.

  • Christina Pikas says:

    Useful to have that background on the legal issues - the details of which get lost in the yelling. The mainstream media probably won't provide such an insightful treatment of what does happen, sigh.

  • Paul Murray says:

    "There is one big problem with the requirement that everybody get health insurance, you can’t force people to be sensible."

    Sure you can! Seatbelts and all that. Except maybe in the USA. The problem isn't that people won't be *sensible*, it's that they are *poor*.

    "Maybe if we refused to treat those without insurance, or the money to pay for treatment, things would be different. But I just don’t see doctors flat out refusing to treat people in emergency or even urgent circumstances."

    I though that this happened routinely.

    • whizbang says:

      People without insurance routinely wait until things get really bad, and then they go to the ER where they will get treated. Unfortunately, the ER is significantly more expensive for care. The other problem is this "game" US health care providers play with the insurers who offer us 80% (or less) of usual and customary charges. This means, of course, that the discounted rate must cover the actual costs of care, so the "usual" rate is higher than actual costs. Patients with insurance, be it private or government, have negotiated rates. The only people who pay the "usual" costs are the uninsured who must pay out of pocket. Can physicians and hospitals waive costs for the working poor (who are the bulk of uninsured patients in the US)? No, in many cases- if we are willing to take a discounted rate, then we are charging 3rd party payors fraudulently.
      No, people generally get treated in emergency situations, but they often end up with long-term debt or bankruptcy. And they now have a documented pre-existing condition that precludes purchasing most non-group insurance in the US.
      It's a major mess.

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