A Positive Aspect of The Affordable Care Act

The Supreme Court begins three days of hearings today on the Patient Protection and Affordable Care Act.  26 states have challenged the constitutionality of numerous aspects of the law, but by far the most controversial piece is the coverage mandate—the requirement that by 2014 every U.S. citizen would have to had purchased (or have had purchased for their benefit) health insurance coverage, or pay a fine.  

I gather that the argument is essentially the Commerce Clause ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.") v. The Tenth Amendment (“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”)  I have no sense of what cases will be cited by either side as precedent.    

One noble pursuit of the Act which doesn't get much attention is the change to the way Medicare reimburses physicians.  Here's Sarah Kliff's recent post on Ezra Klein's blog.  It's not that long, and it seems to me to frame the issues pretty well.  

Pause.  I’d much rather see Medicare become a defined benefit public assistance plan (e.g., “premium support”) than a totally open-ended benefit (i.e., the current “pay for service” model).  Among other things, as currently structured, the open-ended benefit model is bankrupting the U.S.  But, given what we currently have, this provision of the Act seems totally reasonable.

Currently Medicare compensates physicians for volume.  In the Affordable Care Act the federal government says that, at least with respect to Medicare benefits, taxpayers want to compensate doctors for good results, not just attempts.  As a taxpayer, I have to say that I don’t want my Medicare dollars going toward quick turn-arounds.  If I’m required to pay for some guy’s hip replacement in Pocatello, I want the problem fixed correctly and to be done with the expense.

And, yes, I want the guy to enjoy his new hip.

In this provision, Medicare—as a market participant—is acting to exert its preferences (good care, lower taxpayer costs) on the vendors (doctors).  This particular market is warped in many ways, not the least of which is Medicare’s disproportionately large lever.  But, this is a market-based reform.  Doctors have the option to decline Medicare patients.  It may not be as profitable for them to do so, and Medicare administrators may be basing their paternalistic one-size fits all decisions about what constitutes 'good care' on ignorance, but doctors have the choice not to participate in the market if they don't want to.  

That’s important.