BLOG POST

An Overlooked Element of the Affordable Care Act

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In today’s LA Times, columnist David Lazarus writes about what patients and health care consumers would lose if the U.S. Supreme Court rules that the Patient Protection and Affordable Care Act is unconstitutional. Unfortunately, he overlooks one big category: how the law will help control the cost of health care.

If the court declares that a central component of the law—the individual insurance mandate—is impermissible, the law would be unworkable, and many of its important reforms would be gone. Lazarus laments that insurers would no longer be required to include young people up to the age of 26 on their parents’ insurance plans, insurers would once again be able to exclude people with pre-existing conditions, and funding to help the working poor buy basic insurance plans would be gone.

Lazarus overlooks another big loss that would occur with the demise of the Affordable Care Act: the law’s provisions that help to address the high and rising cost of health care.

The rapidly rising cost of health care is a growing burden on households, employers and government budgets, and is unsustainable.

  • The cost of health care rose 4 percent from 2008 to 2009, even as the average cost of other consumer goods fell. In 2009, health care spending per American was $8,086, with nearly $1,000 of that coming straight out of the pocket of patients.
  • Families spent an average of 6 percent of their budgets on health care in 2009, while businesses spent 8 percent of their budgets. Growing health care costs have added to the financial troubles of governments: spending on health care consumed more than half of the federal government’s revenues in 2009, and 27 percent of state and local governments' revenues.

The Affordable Care Act seeks to address the rising cost of care through a number of policies. For example, according to information compiled by George Washington University and the Robert Wood Johnson Foundation:

  • Reducing avoidable re-admissions to the hospital through better oversight and transition for patients leaving the hospital will reduce costs for Medicare recipients and for all patients as hospitals improve their practices.
  • Imposing financial penalties on hospitals where patients suffer from unusually high rates of hospital-acquired infections will help to reduce patient suffering and costs.
  • Ending overpayment to Medicare Advantage plans could save the federal government $145 billion over 10 years.

If health care is to remain affordable for anybody except the wealthiest Americans, the price of care cannot continue to increase at historic rates. Though the strategies included in the Affordable Care Act don’t go far enough to address the major cost drivers of health care, the policies are a strong first step toward demonstrating the potential for controlling the cost of health care. Giving up this progress would be the greatest loss if the Supreme Court invalidates the Affordable Care Act.