The Bi-Partisan Rhetoric of Health Care Apocalypse is Wrong

By Edward Zelinsky

Much discussion of the Patient Protection and Affordable Care Act emphasizes the partisan division from which this health care legislation emerged. At one level, this emphasis on partisan rancor is accurate and understandable: The Act was bitterly contested, narrowly passing both chambers of Congress without a single Republican vote.

At another level, this emphasis on partisan conflict obscures an important truth: There is a strong, albeit unspoken, consensus among the leaders of the Democratic and Republican parties on the rhetoric of health care apocalypse, rhetoric which is quite misleading.

Democrats advance this narrative of crisis to convince the public that they have accomplished something of overwhelming magnitude by adopting the Act. In their triumphalist version of the story, the Act is a culmination which finally resolves the nation’s health care problems; an important crossroad has successfully been traversed.

In contrast, Republicans advance the narrative of health care apocalypse to summon support in the upcoming congressional elections to “repeal and replace” the Act. In this telling of the story, it is now-or-never to preserve the strengths of the American health care system. Beyond Obamacare lies the abyss.

Everybody needs to calm down. For three reasons, the bi-partisan rhetoric of apocalypse is overstated and obfuscates the sobering reality that Americans must, into the indefinite future, confront difficult issues of health care and health care costs.

First, the Patient Protection and Affordable Care Act, while significant, is more incremental in nature than either side cares to acknowledge. Second, many provisions of the Act have delayed effective dates. It is questionable whether future Presidents and Congresses will permit these provisions to go into effect as written. Third, the Act merely postpones many tough decisions which must be made about health care and about health care cost control in particular. At its core, the Act’s efforts to control health care costs are tepid and deferred. Indeed, for the long run, the Act is likely to exacerbate the nation’s problem of health care costs and will thus require further confrontation with this intractable problem.

Given the overheated rhetoric of both the Act’s proponents and its critics, it is easy to overlook the incremental nature of much of this new law. The Act continues – indeed reinforces – the existing system of employer-provided health care including the income tax incentives for such care. The Act imposes penalties for certain firms failing to offer satisfactory coverage to their employees and provides tax credits to subsidize smaller businesses offering medical coverage to their workers. In the end, most working Americans will see relatively little change in their employer-provided medical care.

Much of the expanded coverage projected under the Act stems from the extension of Medicaid to people currently not participating in that state-run program for low-income persons. This expansion will be an important development if it occurs, but one which builds quite firmly on the status quo by enlarging the existing Medicaid program.

Private insurance remains central to the American health care system. The Act subjects the insurance industry to new federal regulation on such matters as pre-existing conditions. However, this industry has always been heavily regulated. The insurance industry and its role in the financing of medical care will both grow as the industry acquires millions of new customers as a result of the Act.

Moreover, many of the Act’s provisions take effect on a delayed basis. For example, the planned increase in the Medicare tax and the extension of that tax to unearned income are scheduled to occur only in 2013. The “Cadillac tax” on expensive health care plans materializes five years later, in 2018.

Will future Congresses actually allow these taxes to take effect as scheduled? Perhaps. But perhaps not.

While the Act’s supporters claim to have significantly reduced Medicare’s costs, the Act specifies no actual reductions. Rather, the Act mandates an independent commission to identify and implement these cost reductions. If this commission makes the hard decisions necessary to decrease medical care outlays, Medicare recipients will undoubtedly complain about the resulting service denials to their Senators and Representatives. In the face of such complaints, it is likely that future Congresses will modify or override the Commission’s attempted cost savings.

The Act’s other major cost control measure – the Cadillac tax – does not activate until 2018 – and then in attenuated form.

Much will depend on the outcome of the 2010 elections. Today, it seems likely that the Republicans will increase their memberships in the House and Senate. If so, we can expect them to force reconsideration of major provisions of the Act.

One possible scenario for the Act is similar to the story of the 1981 tax cuts favored by President Reagan. After signing those cuts, President Reagan was forced to approve significant retrenchments in 1982 and 1984.

In another possible scenario, Democrats will be required to reduce the Act’s reach as the costs of the Act prove to have been underestimated. A political donnybrook is likely in the future as governors and legislators resist the Act’s imposition of higher Medicaid costs onto state budgets.

In short, the Patient Protection and Affordable Care Act is undoubtedly significant, but both parties, for their own reasons, exaggerate that significance. The Act is neither the panacea its supporters claim nor the radical break from the past its detractors assert. The Act modifies the existing system of employer-provided care and private insurance but essentially leaves that system intact. The Act postpones the toughest decisions to the future, particularly politically difficult decisions about medical care cost control. Indeed, the Act will likely exacerbate our health care cost problem.

Despite the rhetoric of apocalypse adopted by Republicans and Democrats alike, the Act is one more chapter in our ongoing national debate about health care. To be sure, it is an important chapter but it is by no means the end of the story.