The ACA, we argued yesterday, has become a “political orphan.” It is the biggest loser in the spending bill agreed to in the House, as Democrats seemed to have turned against one of its key provisions, the so-called “Cadillac Tax” on expensive plans that employers offer to their employees. Yuval Levin has a smart column at National Review breaking down the health care politics and policy surrounding the spending bill (h/t Ross Douthat):
Republicans have majorities in both houses, so this bill reflects their priorities on the whole. But on health care, I think it’s actually most interesting for what it suggests about the Democrats—some meaningful number of whose votes are after all necessary for passage. I read the omnibus bill as reflecting a meaningful change of attitude among the Democrats about Obamacare. They’re no longer offering themselves up as a sacrifice to protect every last bit of the law, as they have done at enormous political cost for the last five years. Now, they’re spending their capital to protect key constituencies (and therefore themselves), even at the cost of allowing the structure of Obamacare to become even more incoherent and unsustainable.
Levin also argues that the specific concessions agreed to in the bill—especially the two-year delay of the Cadillac tax—set up the country for a big debate over health care during the next Administration. The delay means the tax is set to take effect in 2020, unless Congress takes future action to once again delay (or repeal) it. Levin thinks Congress will act again—the tax is too unpopular for it to go into effect—and that the future move against it will touch off a wider debate on health care policy.
It’s remarkable that the debate over the ACA’s full implementation has now been kicked back another two years—and that Democrats themselves seem to oppose the law’s ever going into full effect. This is not the “settled policy” that President Obama would like it to be. Rather, as time goes on, the law may be facing more serious challenges. Peter Orszag has argued that the Cadillac tax not only brings in revenue to fund the ACA, but also is crucial to the goal of bringing down health care spending. If he’s right, Democratic opposition to the tax could wind up being a far more serious threat to the law than, for example, the dispute at play in the King v. Burwell.
What comes next? It seems likely that the next health care debate will focus on the question of cost, as opposed to focusing on the question of coverage. The ACA is largely, though not exclusively, a coverage expansion program (albeit one that has underperformed relative to expectations). The law does contain some cost-control measures—the Cadillac tax among them—but the central drive has been to reduce the uninsured population by extending subsidies and forbidding discrimination based on pre-existing conditions.
This turned out to be an expensive project for insurers, because many of the newly insured have used a lot of health care—so much so that many insurance co-ops designed by the ACA have gone under, premiums are increasing by 7.5 percent next year, and at least one large insurer has floated the possibility of withdrawing from the exchanges. In addition, the law has contributed to higher prices by helping to incentive hospital consolidation.
Whatever good the ACA may have done, and it has done some good, the choice to focus on expanding coverage as the primary objective (rather than reducing costs) always meant the ACA was never going to be anything like the final word on health care policy. It’s never been clear what will come next, but all parties now seem to agree that something must. A recent piece at The Upshot on some new research about medical prices cross-country shows some of the new rhetoric that may be at work here:
“Price has been ignored in public policy,” said Dr. Robert Berenson, a fellow at the Urban Institute, who was unconnected with the research. Dr. Berenson is a former vice chairman of the Medicare Payment Advisory Commision, which recommends policies to Congress. “That has been counterproductive.” […]
Several prominent researchers who read the paper said they had become convinced that policy makers needed to do more to address the high prices charged by some health care providers.
Many of the changes pioneered by the Affordable Care Act have been devised to reduce wasteful medical care, but few have been directly concerned about price.
If you’re on the Left, there is an obvious solution to the price problem plaguing U.S. health care: some sort of national system, whether a single-payer-type system or all-payer rate setting. The national discourse tends to lump all European health care systems together as “single-payer,” but there’s a variety of different national health care systems that exist in Europe and other industrialized countries, only some of which are actually single-payer. However, a key instinct behind the different systems, at least for Americans who advocate for them, is the same: If prices are too high, the government needs to help bring them down through one of these national system mechanisms.
Levin argues, however, that any system of this kind is unlikely to become law in America, at least in the foreseeable future. The ACA was much more modest in scope than a national system would be, and, he argues, even it only passed because of a combination of favorable political conditions that won’t exist for the next Administration, should it be a Democratic one.
So if those options are of the table, both the Left and the Right will have to present other plans for tackling the cost problem. The ACA is looking more and more like a placeholder policy that’s done little more than postpone this more fundamental discussion for a few years. It’s not clear what that debate is going to look like, but it’s an urgent and crucial one. As WRM has noted, “If we get health care policy right so that over the next generation we develop a truly effective and innovative health care system that works better and costs less than what we now have, the federal government’s fiscal problems will be manageable without huge sacrifices on anybody’s part. If we fail at that task, we are in a world of ugly.”