Health Care Reform in Full-Blown Damage Control

COMMENTARY | Key aspects of the Affordable Care Act seem to be crumbling. Overall public approval has been consistently sinking since its passage, and now the details are being put under the microscope. From afar, the entire legislation now looks like a wind turbine with brake failure caught in a nasty storm. The result: total disintegration. As every tiny variable for calamity emerges at precisely the right moment, the recently passed health care reform may just collapse in a like manner.

Many have chimed in offering fixes and tweaks to a law that has not even been fully implemented yet. All aspects of the legislation are not supposed to take effect until 2014, so what is causing the big scramble to fix everything? Bob Dole thinks the Veteran Affairs model needs to be replicated on a larger scale, The New England Medical Journal finds that the ACOs may in fact be worse for providers. Judge Vinson has voided the law, and the list of problematic variables goes on.

Breaking Medicare: The ACOs and Financial Losses

Bob Dole has a plan. Strengthening our health care model could be accomplished by copying the public-private structure of the Veterans Affairs. And while the VA might have served him well, he is one member of an extraordinary minority that holds that opinion.

The New England Medical Journal has recently published a study using the VHA’s data on a 3-year-old program set to curb Medicare’s exploding cost. The Accountable Care Organization (ACO) model has been on a 3-year test-drive. The main goal was obvious: curb costs. That model was added into the Affordable Care Act and needs to be implemented by Jan. 1, 2012. One small problem exists. According to performance over the past three years, “most organizations will lose money.”

Two major problems emerge here. One is that the required profit margin to break even seems unattainable. Second is that pols like Dole offer public commentary without as much as a glance at any peer-reviewed academic studies. This is the “public-private” partnership that supposedly needs to be strengthened; a model that shows a consistent net loss on initial investment.

Waivers Gone Wild

Another area supporters of health care reform are having trouble defending is the extraordinary amount of waivers issued. Now with over 1,000 issued, the list of grantees includes the strongest supporters of the plan. Even Rep. Anthony Weiner (D-NY), a proponent of the legislation and staunch supporter, is exploring the option of gaining a waiver for all of New York City.

While the issuing of waivers helped drive the increased numbers of those favoring repeal of the law, the cowering away from the legislation by those who helped sell it to the public will drive those numbers higher. These waivers might seem like small tweaks, but for the recipients it is their key to continue with the status-quo unmanipulated.

Individual Mandate-The Impossible Tweak

Florida federal Judge Roger Vinson voided the Affordable Care Act on Jan. 31. The individual mandate, as written in Judge Vinson’s ruling, “goes beyond the Commerce Clause and is unconstitutional.” The legal eagles at the White House and Health and Human services initially ignored the ruling and continued to implement measures from the law. The Obama administration has filed a formal appeal in response to Vinson’s ruling. Next stop, the Supreme Court.

The individual mandate is the least popular and best known problem with the legislation. From the start, support for the mandate was weak and the opposition is steadily growing. According to Harris Interactive, just 22 percent now support the provision. Since it is so central to the legislation, Vinson’s ruling may hold in the Supreme Court.

The 1099 Problem and Small Business

Another unpopular regulation that has received attention is the new 1099 reporting provision. This regulation infuriated small business owners. Any transaction with other businesses over $600 would require the businesses to file individual 1099 forms. A bill to repeal this provision passed the House 314-112 and is set for a vote tomorrow in the Senate.

House Democrats have said that the repeal would result in $25 billion in lost tax revenue and would hurt the middle class. However, no “loss” will take place. The operating budget for the IRS will not suffer a deficit due to less paperwork. The figures cited are compared with the proposed expansion in their budget; not doing it doesn’t cost anyone anything. But the repeal will face more of a challenge in the Senate, where Democrats still control the majority. So the 1099 repeal may float in legislative purgatory for some time before any bi-partisan agreement in both Houses is reached.