The Affordable Care Act provided a big increase in Medicaid payments for primary care in 2013 and 2014. But the increase expires on Thursday — just weeks after the Obama administration told the Supreme Court that doctors and other providers had no legal right to challenge the adequacy of payments they received from Medicaid.
The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.
Stephen Zuckerman, a health economist at the Urban Institute and co-author of the report, said Medicaid payments for primary care services could drop by 50 percent or more in California, Florida, New York and Pennsylvania, among other states.
Our spending is indeed high compared with the rest of the world, but that’s because it started high. And while restraining government spending is easy, it is a walk in the proverbial (government-funded) park compared to actually cutting spending. Cutting spending means that a number of people are going to lose income and employment. They will have trouble paying their mortgages, car loans and little Johnny’s bill for travel soccer. Then they are going to get organized and march on Washington and vote against the politicians who cut their jobs.
Oh, Vermont has some special problems — a small state loses some of the ability to rationalize the system that the federal government would have because it has to deal with border issues, such as commuters and what to do about a Vermont citizen who has to get treatment in a New Hampshire hospital. But that doesn’t seem to have been the biggest problem Vermont faced. Mostly, it faced the impossible choice between cutting provider incomes by a lot or raising taxes to nosebleed levels.
This holds a lesson for all the folks who hoped or feared that Obamacare was a stalking horse for single payer. It’s not. First, because if you try to take away the current system from the vast majority of folks who had health insurance they liked before the Affordable Care Act was passed, your voter base will get hopping mad enough to enter low-earth orbit. And second of all, even if you’re willing to brook their rage over the loss of their health insurance, combining that with a whopping great tax hike on the middle class is a recipe for political suicide.
The U.S. health-care system may be all kinds of screwed up. But at least at this late date, single payer is not the cure for what ails it.
The co-ops were supposed to compete with normal private insurance, but as it happens the amateurs who run them can’t attract private financing. Perhaps the lack of accountability to shareholders and capital markets explains why they are starting to fail, though their complete dependence on government subsidies introduced other distortions.
In particular, the co-ops have tended to deliberately underprice their policies. A McKinsey report in October observed that the co-ops “emerged as price leaders” and offer about a third of the lowest-cost plans on the exchanges. Normal insurers have been complaining about “irrational” co-op rates and even withdrawing from markets where such artificially cheap plans are sold.
The ACA is the critical event that will define the apex of the American Progressive experiment. I am undecided if the incredible incompetence was a significant factor or if the entire project was undo-able from day one. It is hard for any amount of competence to make such a flawed bill work well.