A Health Reform Update

September 30, 2011
49 Views

This week has been notable in the world of health reform implementation. First, on Monday, the Obama administration made a decision with big implications for the future of reform when it decided against asking the federal appeals court in Atlanta to revisit its decision on the constitutionality of the individual mandate. At issue was whether the Justice Department should request an “en banc” review. For those of us non-lawyers, court of appeals cases are often heard and ruled upon by a three-judge panel, even though the full court consists of 11 judges.

This week has been notable in the world of health reform implementation. First, on Monday, the Obama administration made a decision with big implications for the future of reform when it decided against asking the federal appeals court in Atlanta to revisit its decision on the constitutionality of the individual mandate. At issue was whether the Justice Department should request an “en banc” review. For those of us non-lawyers, court of appeals cases are often heard and ruled upon by a three-judge panel, even though the full court consists of 11 judges. An “en banc” review involves hearing the case anew in front of all 11 judges. Think of it as a way of getting a second opinion.

The decision was a strategic one on the part of the Obama administration, because it had the potential to speed up or slow down the judicial process as the Affordable Care Act weaves its way through the courts. Most agree that this case is going to the Supreme Court, but asking for another review along the way is a way to draw things out until 2013 or beyond, while forgoing said review paves the way for the Supreme Court to hear the case next summer.

According to Washington Post reporter, Sarah Kliff, the move was likely motivated by three things. First, it guarantees that the case will be handled by the Obama administration. The idea of a Republican administration arguing in support of “ObamaCare” is absurd on its face. Second, it avoided the embarrassment of the appeals court denying the en banc request or, worse, ruling the individual mandate unconstitutional twice in a row, both of which would weaken the Obama administration’s position. Finally, it makes the Obama administration look confident in its defense of health reform. With everyone fully expecting a Supreme Court case over the individual mandate, buying time looks a lot like uncertainty, while welcoming the case suggests that they think they can and will win.

Legal issues aside, the other major development this week was the announcement that health insurance costs rose dramatically over the last year. According to a Kaiser Family Foundation study, costs went up by 9%, with the average family plan costing more than $15,000 in annual premiums. The question is why, especially during this economic downturn, we are seeing such a big jump. Critics of the Affordable Care Act will assert that this is proof that “ObamaCare” isn’t working, but is, in fact, making things worse. There’s really no way to prove that right now, but for all intents and purposes it doesn’t matter, because whether he wants to or not, President Obama has no choice but to claim the health care system right now. Its successes or failures are his successes or failures. It doesn’t make much sense for insurers to artificially inflate prices, because once reform is fully implemented, they will have to spend at least 80 cents of every premium dollar on benefits, or refund the difference. I almost suspect that this is a price-gouging effort to generate additional revenue while they can, before reform makes them clean up their act. The bad economy and the floundering stock market in which insurance companies make their money may also have driven them to offset losses by increasing premiums. Again, there aren’t data that I know of to support this, but I think it’s compelling.

At any rate, these are the sorts of stories that will continue to unfold as time goes by. Numerous questions will emerge about the success or failure of reform, and a lot of interesting research should come out of this whole thing, both for legal scholars and social scientists. We are all, in some sense, subjects in the Nation’s grand experiment. Some of us are simultaneously fortunate enough to be investigators as well.


        

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