The Patient Protection and Affordable Care Act is about as unwieldy as its name. This gargantuan law, passed before even the legions of Congressional staffers could read it, is now poised to transform the rapidly expanding American healthcare sector into…
…basically the same thing it is now. The mandates imposed by the ACA are coupled to fines whose structure ensures they will be merely punitive rather than coercive. Young people, especially those young people who are grossly underemployed, will broadly refuse to buy into a system designed to subsidize the poor, sick, and elderly. Young men, from whom the state-run exchanges aim to bleed the most money, are already eschewing healthcare they perceive to be unnecessary; raise the price point, and even legitimately effective prophylactic care may fall victim to a rational cost-benefit analysis.
The widely-touted employer mandate is such a shambles that its implementation will be delayed until after the 2014 midterm elections. Even less agile firms will have the lead time to minimize healthcare benefits by reducing hours and creating fewer full time, salaried positions; benefits, like pensions, are on the way out, and the ACA will only accelerate the existing trend.
Concurrent with the end of denial for pre-existing conditions (perhaps the most equitable part of the law, though that is a low hurdle to clear), insurers will be forced to spend eighty percent or more of their revenue on policyholders’ medical expenses. This compares rather unfavorably with the (roughly) five percent overhead of both Medicare and Medicaid, and, in fact, the floor is less than the current average: approximately eighty-five percent of revenue.
The assertion has been made that the ACA aims to gradually supplant the private insurance sector with a single-payer, government-run system, similar to the UK’s National Health System. Given the gross ineptitude Kathleen Sibelius and her underlings have displayed attempting to set Obamacare in motion, this seems a remote prospect.
Realistically, healthcare reform will continue to be the proverbial idiot’s tale as long as it is political suicide to dismantle Medicaid, Medicare, and EMTALA. All the sound and fury surrounding cost containment will accomplish nothing while the main drivers of rising medical expenses are unaddressed. The destruction of the pricing mechanism inherent in shifting the sickest patients’ financial burden to the taxpayer has blown a bubble of gargantuan proportions, every bit as ludicrous and economically dangerous as the rapid ballooning of student debt.
In the end, the insurers and hospitals will succeed in extracting their pound of flesh, and the last independent physician will take down his shingle as the cost of malpractice insurance and regulatory compliance drives him inexorably out of business. Cost containment is incompatible with rent-seeking, which, incidentally, is the primary modus operandi of hospitals and insurers.