In Defense of Obamacare … No, Really

From the pages of In Business magazine.

By the time people finish reading this column, conservatives will be convinced I’ve lost my mind and liberals will think I’m finally wising up. But of all the things President Obama has done since taking office, I’ve tried to cut him the most slack on the controversial Affordable Care Act, aka Obamacare.

Yes, the ACA was enacted in controversial fashion. Yes, the implementation phase has been bumpy, especially as insurance premiums spike in the short run. Yes, the employer mandate has been delayed and, yes, the law is temporarily suppressing job creation as employers try to figure out its impact on their health plan costs. And yes, recently issued rules raise concerns about eligibility fraud.

While concerning, most of these are short-term worries that fail to look over the horizon. With the ACA, it’s important to take the long view because something has become lost amid the controversy — the health care business model that it’s replacing would have bankrupted us. Let’s not forget that the old volume-based system, in which health care providers were paid based on the number of tests and procedures they performed, was marked by perverse incentives that led to costly waste and duplication.

As providers prepare themselves for the lower reimbursement environment the law will create, they know they will be paid based on the quality of the care they provide, not on how many MRIs they order. And it’s not just the government payers (for Medicare and Medicaid) that will be making those judgments; private insurers are expected to follow suit. Providers that expect to run profitably had better reduce preventable events such as hospital readmissions because they will have to eat those costs, and new care models are emerging to emphasize less expensive outpatient care and prevention.



Thanks to the growing number of high-deductible insurance plans, consumers are also getting into the cost-control act. When consumers have enough skin in the game, they will be more judicious about the health care dollars they spend. The early cost-sharing experience proves that.

I’m not convinced the ACA will save Medicare, which according to the Medicare Trustees has $38.6 trillion in unfunded liabilities. But if new care models result in significant savings, that will have a moderating influence on insurance costs. For employers that want to provide this benefit to their workforce, that will be a very healthy outcome.

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