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Affordable Care Act not what the doctor ordered

Dr. Roger StarkBy the time this issue of the Kitsap Peninsula Business Journal is published, the U.S. Supreme Court will have announced its ruling on the Affordable Care Act.

If that ruling upholds the health care reform law that Congress passed in 2010, then Dr. Roger Stark will be even more worried than he was a couple weeks ago when he dissected the Affordable Care Act in a presentation to a local business group.

His criticism of the ACA is not based on partisanship or ideology. Stark, a retired heart surgeon who is a health care policy analyst for the Washington Policy Center, did not once use the pejorative “Obamacare” to refer to the law when he spoke at the Port Orchard Chamber of Commerce lunch on June 14.

But he recited a litany of critical flaws he sees in the Affordable Care Act: the mandates it imposes on employers; substantial cuts in reimbursement to Medicare providers; a huge expansion of the financially strained Medicaid program; the resultant decreased access to care for low-income and elderly people; failure to achieve universal coverage in the U.S.; and the fact that rather than “bend the cost curve down in health care” as promised, the ACA would hugely increase spiraling U.S. health care costs over the next decade.

That last one is most critical.

“It’s the cost,” Stark said during an interview after his speech to the chamber group. “It doesn’t matter whether you’re liberal or conservative, everyone agrees the problem with health care is the cost.”

The initial estimate from the Congressional Budget Office when the ACA was passed in 2010, Stark noted, was a 10-year cost of $940 billion to implement all the reforms; and that was projected to yield a $100 billion reduction in the U.S. deficit.

In the two years since then, however, “the CBO had a chance to really evaluate the whole law,” he said, and its revised cost estimate is $1.76 trillion over 10 years, upending the original estimate of deficit reduction. Now the effect on the deficit is pegged at a $300 billion increase over 10 years.

“By 2020, we’ll be spending 21 percent of our gross domestic product on health care,” he said.

Employer mandates

The employer mandates in the ACA that take effect in 2014 will likely produce the unintended consequence of fewer businesses offering health coverage for their employees, Stark said. In that case, many of those workers would need to obtain coverage through state exchanges, which would function as insurance brokerages.

“A business that has more than 50 employees must purchase health benefits for employees, or else pay a fine or a tax,” he said. That amount, starting in 2014, would be $3,000 a year for each worker who opts out of employer-provided coverage, or $2,000 for each employee if the business doesn’t offer or discontinues offering health insurance.

But considering that the average annual cost of health coverage is about $12,000 (typically shared between employer and employee), Stark said a lot of employers might choose the less expensive option of not providing health care benefits.

“If you’re an employer who’s trying to be competitive, and worrying about the bottom line, … you might ask yourself ‘why am I in the health insurance business at all?’” he said.

As for insurance companies being required to issue policies with no restrictions for applicants’ pre-existing medical conditions, Stark said that won’t be viable if the Supreme Court rules the ACA’s “individual mandate” requiring everyone to buy health insurance is unconstitutional.

“It would make it virtually impossible for insurance companies to mitigate their risk,” he said.

Medicare, Medicaid impacts

If the ACA goes into effect unchanged, Medicare funding would be slashed by more than $500 billion to cover the cost of implementing reforms over the next 10 years, with most of that amount cut from reimbursements to medical care providers. That will have a huge impact, Stark said, because it will be harder to find doctors willing to take Medicare patients.

“There are physicians today having a hard time keeping their doors open with what Medicare pays,” he said.

The outlook for Medicaid may be even more dire, even though the Affordable Care Act provides $450 billion more in federal funding over the next 10 years to greatly expand the state-administered program.

“The ACA adds at least 20 million people into the existing, already broke Medicaid program,” Stark said.

Patient-centered approach

As he and the Washington Policy Center see it, a more effective and affordable path to reform would be shifting to a health care system that empowers individuals — rather than government — to make more and better-informed decisions about their medical care.

“What we advocate is consumer-driven health care,” Stark said.

As he explains in his book “The Patient-Centered Solution” that was published in January, that approach would promote more use of personal Health Savings Accounts, along with high-deductible insurance plans, to give people more control of their own health care dollars.

He also proposes changes in the tax code to give individuals and families who buy health insurance the same tax benefits employers get for providing coverage. Another piece would be allowing consumers to buy insurance across state lines to make the market more competitive. And Stark maintains that sensible reforms, not just further reductions in reimbursement rates, are needed in Medicare and Medicaid.

He contrasted the way the 2010 health care reform law pushed by President Barack Obama was passed with support only from Democratic members of Congress, with the passage of Medicare and Medicaid in the 1960s with majority support from Democrats and Republicans.

And while noting that Democrats prevented any Republican proposals from inclusion in the ACA, Stark also pointed out that there was no attempt to address health care reform during the Bush administration when Republicans held a congressional majority.

So if the Supreme Court effectively derails the Affordable Care Act — and Stark said he was expecting a 5-4 decision finding the individual mandate unconstitutional — it won’t represent a victory but rather an important chance to start over on doing health reform right. Just restoring the status quo is no solution, he stressed.

“What’s driving the cost in health care,” he said, “is a model that’s unsustainable.”

And should the court ruling allow the ACA to stand, then another crucial decision looms.

“There’s one other step, and that’s the November election,” Stark said. “I think the November election becomes that much more important to the future of our country, and the future of health care.”

 
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