The U.S. Supreme Court unlikely to strike down the health care law

Posted by Shyam Moondra

On March 23, 2010, President Barack Obama signed into the law the Affordable Care Act passed by then Democrat controlled Senate and House, which would gradually roll out comprehensive health care reforms by 2014. The most contentious element of the reforms is the individual mandate that requires all citizens, old or young and healthy or sick, to buy health insurance; the failure to do so would automatically trigger a penalty of around $1,000 a year unless exempted because of religious beliefs and financial hardship. Many conservative Americans consider this mandate to be unconstitutional and a power grab by the federal government. The government argues that the penalty is a "tax" which is within the constitutional mandate of the Congress.

The Obama administration's position is that without the individual mandate, the people with pre-existing conditions would either be denied insurance coverage by the insurance companies or the insurance premiums for such people would be prohibitively high. Also, the people would tend to buy health care insurance only when they get sick, thereby increasing the insurance premiums for everybody else. Many without insurance would just go to the hospital emergency room and get treated knowing that the law requires hospitals to treat sick people even if they are not insured and the cost of treating such people would then be borne by the taxpayers.

The individual mandate is not scheduled to go into effect until 2014, but many states controlled by the Republicans chose to seek pre-emptive legal remedy to freeze the so called Obamacare in tracks. Last week, the U.S. Supreme Court (USSC) heard the arguments on two key issues: (i) can the government force the citizens to buy a product or service they don't want to buy and (ii) can the federal government force the burden of the expanded Medicaid entitlement program on to the states without providing full funding.

Since the individual mandate has not been yet implemented, no harm has been caused to the citizens. Therefore, rather than instigate a train wreck, the USSC may choose to not take any action at this time and let the health care reform proceed. After the mandate has been implemented and there is enough data available on the actual experiences of the citizens on the cost-reduction objectives of the health care act, the USSC may then re-visit this issue at a later date after the November presidential elections. Tossing out the health care law now would make it look like a political decision and be perceived as extreme judicial activism which would be harmful to the court's credibility. The government's job is to solve problems and the USSC is part of the government. The USSC's politicized approach to an ideological problem would make them look like an extension of the radicalized Congressional Republicans which can't be good for the country. In any case, if the young people don't buy health care insurance, they will have to pay a lot more when they get old than they would pay if the individual mandate were implemented. There is nothing unconstitutional about the government's attempt to address the problem of high health care cost in the U.S.

The USSC has the following four options:

· Trust the Congress' judgment on fixing a major problem that has enormous implications for our economy and declare that the law is constitutional. Clearly, without the individual mandate, the escalating health care cost cannot be controlled.

· Do nothing. Since the most objectionable element of the health care act, the individual mandate, has not been yet implemented, it's premature to make a decision without knowing how this will turn out. So, in essence, the court could rule to not rule at this time and revisit the issue at some point in the future, after we have had some data on the results from the implementation of the law.

· Let the most of the law stay but declare that the individual mandate is unconstitutional. The Congress would then have to find a fix.

· Strike down the entire health care act including the things that are constitutional. This would seem an overreach by the conservatives on the bench and will do the most harm to the reputation of the USSC.

Given that rapidly increasing health care cost is a major problem, the Congress has the authority to pass laws related to taxes and commerce, and the fact that dismantling the Affordable Care Act would lead to massive disruptions and confusion making the health care problem even more acute than it is now, the USSC would likely opt for one of the first two options as described above.

Health care reforms must reduce costs by at least 30%

Posted by Shyam Moondra

President Obama has made health care reform as his number one domestic policy goal. Obama and others talk about two major problems related to health care: the swelling ranks of uninsureds and rapid increase in the health care cost. In fact the sharply escalating health care cost is the primary reason why millions of people can't afford to buy health care insurance. Therefore, if the Obama plan is able to bring down the costs by at least 30%, the problem of uninsureds will dissipate. Those who are too poor to pay for health care could be dealt with as a separate issue as part of the reforms concerning the Medicaid program.

The main reasons why health care costs are increasing at a much faster rate than the overall inflation and what could be done about them are as follows:
· Unchecked greed of service providers such as insurance companies, drug manufacturers, hospitals, and doctors. The industry environment permits the service providers to increase the rates as they please to earn a hefty profit. They are treating health care as a cow they could milk to the hilt. This issue could be addressed by introducing a non-profit government administered plan or by regulating the profit margins of the service providers in the same manner as many of the utilities are regulated today.
· Insufficient competition in the industry. There appears to be a conspiracy among the service providers when it comes to pricing their products and services. If a government sponsored plan is introduced, it will force the competing carriers to moderate their pricing policies. We could also have new anti-trust regulations specifically designed for the health care industry. In addition, we need to reform the patent related laws to permit the introduction of generic drugs sooner.
· Unnecessary tests and treatments. Doctors often prescribe tests not because they are really needed but just to protect themselves from potential malpractice lawsuits. The fear of lawsuits drives them to be 100% sure on all aspects of health care. This "care-to-perfection" is often unnecessary and it adds to the costs enormously. Doctors and hospitals collude to push for expensive surgical procedures that yield more income for them even though there may be cheaper alternatives available that would be just as effective. This issue could be addressed by reforming the malpractice laws and by developing standards for medical treatment.
· Patients' attitude of indifference. The patients often ignore the costs so long as a treatment is covered by insurance (even though this eventually ends up costing them more in terms of higher insurance premium and co-pay/deductibles). We need to come up with a plan which will induce the patients to weigh in the costs involved when choosing service providers or making decisions on treatment alternatives, just as they would when they buy other non-health care products and services.
· Health care system inefficiencies. The paperwork and record-keeping procedures tend to be cumbersome that add to the health care costs. The government could help develop a comprehensive solution that takes advantage of the modern information technologies.
· Lack of medical knowledge on the part of population. People often end up seeing a doctor or not being able to make wise treatment choices because they are not knowledgeable enough about medical care. We should make education about medical care and prescription drugs for common ailments mandatory for most people. If people achieve the required level of understanding about medical care, they should be awarded a certificate which would allow them to get certain medicines (e.g., antibiotics) without a doctor's prescription. If people are able to treat common ailments such as cold, diarrhea, heartburn, constipation, high blood pressure, etc. they will have fewer visits to doctors and thus reduce the cost of health care. If people can learn how to repair automobiles, I am sure they can also learn how to treat common health problems themselves.

The escalating health care costs are negatively impacting families and businesses alike. Up to this point, in the face of government inaction on this issue, many employers are washing their hands off this problem by cutting back employee/retiree's health benefits and increasing co-pay and deductibles. The escalating health care costs are also making American companies less competitive in the global market place. The Obama administration is thus correct in making health care reform as the number one priority. Republicans must work together with Democrats in an objective manner, free from any pre-conceived ideologies, to reign in the health care costs. Any proposal that doesn't reduce the health care costs by at least 30% should be viewed as a sham. In the next round of elections, the American people would not hesitate to punish those who are creating obstacles in achieving meaningful reforms.