Here’s some excerpts (actually a lot of excerpts from The Economist:
“What will it mean for America? The short answer is that the reforms will expand coverage dramatically, but at a heavy cost to the taxpayer. They will also do far too little to rein in the underlying drivers of America’s roaring health inflation. Analysis by RAND, an independent think-tank, suggests that the reforms will actually increase America’s overall health spending - public plus private - by about 2% by 2020, in comparison with a scenario of no reform. And that rate of spending was already unsustainable at a time when the baby-boomers are starting to retire in large numbers.”
“They [Republicans] point to recent studies done by Cato Institute, a libertarian think-tank, which, they claim, are early warnings of trouble to come. Cato recently examined the impact of introducing health reforms similar to Obamacare in Massachusetts a few years ago. It estimates that the law has not improved people’s health, but has let to a “substantial crowdout of private coverage” and to 60% fewer young (and presumably healthy) adults moving to the state. It claims that the “leading estimates understate the law’s cost by at least one third.” Premiums have also risen.”
“If coverage is the new lawâ??s strong point, cost control is its weakness. That is not to say that most ordinary people will pay more for coverage, as critics of reform noisily insist. True, some of those forced to buy insurance will earn too much to qualify for subsidies, and so will be spending more than they do todayâ??but, in return, they will get insurance plans that offer more generous coverage than current basic plans. What is more, many other Americans may end up with lower premiums.”
“The vast majority of workers enjoy health insurance today through employer-provided schemes. RAND estimates that by 2019 the employer-provided system will benefit from 6m new (mostly healthy) customers, and that premiums for everyone in that system will drop by 2% versus business-as-usual.”
“Fine, but what about costs to the federal government and the overall health system? The Congressional Budget Office (CBO), a non-partisan agency, estimates that the new health reforms will cost the federal government some $940 billion over the next decade. Of that, roughly $400 billion will be spent by 2020 on the subsidies and about $500 billion on increased spending on Medicaid.”
“But that underestimates the full cost of this new reform. Elizabeth McGlynn of RAND points out that the huge numbers of newly insuredâ??who now typically skip medical care or simply turn up, in a crisis, in emergency roomsâ??will soon consume a lot of routine medical services. She thinks this spending will expand the countryâ??s health outlays even more than the direct cost to the federal exchequer.”
“For example, insist critics, a big chunk of the savings is made up of politically implausible cuts in doctorsâ?? reimbursements (known as the â??doc fixâ??) and in Medicare, the government health scheme for the elderly. Also, some of the income provisions will kick in soon, but the main spending on subsidies will not begin until 2014â??skewing the ten-year analysis. The cost to the government of expanding coverage over the ten years from 2014 to 2023 will be $1.6 trillion, not $940 billion.”
“Such talk infuriates Peter Orszag, the head of the White Houseâ??s Office of Management and Budget and the administrationâ??s most important health expert. He insists all the fuss about ten-year windows obscures three big ways in which this reform will curb costs, by shifting the incentives in the delivery system to reward value and results rather than mere piecework (or â??fee for serviceâ??).”
“The first big idea that he stresses is the creation of a new agency to spearhead innovation and scale up any of the many pilot schemes contained in the bills that manage to reform delivery or payment systems. It is true that the reform effort began with earnest intent to â??bend the cost curveâ??. Alas, explains Mark McClellan of the Brookings Institution, the most meaningful proposals have since been watered down or delayed.”
“The second lever of change that Mr Orszag says is underappreciated is an excise tax introduced on the most expensive (or â??Cadillacâ??) insurance plans. Most economists like this idea, as it is likely to discourage excessive consumption of health care. Unfortunately, because of political pressure from labour unions and other groups, the Cadillac tax has been diluted, and delayed until 2018. Sceptics wonder if a future Congress will really implement this tax when the time comes. Mr Orszag is right that, if implemented, this provision will represent an important lever of cost control. But itâ??s a big â??ifâ??.”
“The third and strongest argument Mr Orszag makes is for the potential of an independent payment-advisory board on Medicare spending. Under the new law this group is to make recommendations to Congress on how to reduce the rate of growth in spending per head in Medicare if that expenditure exceeds a target figure.”
“Sceptics abound. Yes, the approach succeeded when used by the Pentagon to decide which military bases to shut down. But an earlier version of this idea, known as MedPAC, flopped because Congress simply ignored even worthy ideas that proved politically inconvenient. And the new law carves out a ten-year exemption for hospitalsâ??appalling, when one considers that runaway costs and misaligned incentives in hospitals lie at the very heart of the cost problem. But Mr Orszag believes this approach will help in two ways: it insulates tough decisions from politics, and it encourages ongoing reform rather than one-shot heroics. Critics say that is a lot of faith to put in a weakened body.”
“All this points to the only certain thing about Obamacare: that this is just another episode in the long saga of health reform. Indeed, by adding tens of millions of people to an unreformed and unsustainably expensive health system, this reform makes it all the more urgent to tackle the question of cost.”