Editorial Board

All Americans Lose If Health-Care Law Is Overturned

As much as we’d like to see the U.S. Supreme Court allow the entire federal health-care law to stand, it’s perfectly possible that, when it rules in a few months, the court will toss the whole thing.

If it finds that the individual mandate, the requirement that Americans either have insurance or pay a penalty, is unconstitutional, the court may also decide the rest of the law is so inextricably tied to it, everything must go. That would bring the nation back to square one on health-care reform.

Opponents of the law say it would be fine to turn back the clock and start from scratch. In fact, in our polarized political climate, a do-over is unimaginable. What’s more, the Patient Protection and Affordable Care Act contains many specific provisions that would be painful to lose.

The big elements are obvious: Without the law, insurance companies could keep turning away people with pre-existing conditions or charging them higher premiums. They could maintain annual caps and restore lifetime caps on how much they spend on care for an individual policyholder. They could stop paying the full cost of preventive services such as mammograms, flu shots and well-child visits. And young adults would no longer be guaranteed coverage on their parents’ plan until age 26.

We couldn’t look forward to state insurance exchanges, those competitive online marketplaces where, starting in 2014, people without coverage from employers should be able to buy health insurance using federal subsidies. And, with no subsidies and no expansion of Medicaid, we’d give up on the promise of insuring 32 million more Americans.

Many less-often-discussed pieces of the 2,000-page law are valuable as well. Consider the “medical loss ratio” -- the requirement that for every dollar insurance companies collect in premiums, they spend no more than 15 cents to 20 cents on administration and profits. The rest has to go toward medical claims. Before the law, insurance companies often spent 25 percent to 30 percent of the money on administrative costs and profits.

Think, too, of the law’s charge to the Food and Drug Administration to arrange for speedy approval of “biosimilars” -- cheaper versions of expensive, complex drugs derived from living organisms, including vaccines and gene therapies, that are used to treat conditions from arthritis to cancer. Biosimilars are needed to bring down the exorbitant cost of using biologic drugs. A three-month course of the melanoma treatment Yervoy, for example, a biologic made by Bristol-Myers Squibb Co., costs $120,000. Last month, the FDA released its draft guidance, suggesting that makers of biosimilars could in some cases save the time and expense of human trials.

Without the law, other opportunities to improve care while saving money would be lost as well. Under the Affordable Care Act, Medicare payments to hospitals are to be reduced if too many of their patients contract infections while they’re in the hospital or if too many of them, after their release from care, are quickly readmitted.

Another chunk of Medicare savings written into the law is a gradual elimination of the extra payments to private insurance companies for Medicare Advantage policies. The Medicare Payment Advisory Commission estimates that, in 2011, payments to Medicare Advantage per beneficiary were 10 percent higher than those for traditional Medicare. According to the Congressional Budget Office, ending these overpayments stands to save Medicare about $136 billion over 10 years.

The law also provides for curtailing increases in other Medicare spending over 10 years, so that, all things considered, it saves the program almost $500 billion.

Finally, we would hate to give up the law’s push to improve basic medical treatment. Over 10 years, $3 billion is set to be spent on an independent, nonprofit organization called the Patient-Centered Outcomes Research Institute, which will support studies assessing the benefits and drawbacks of medical treatments and diagnostic tests. The idea is to give doctors, hospitals and insurers the information they need to make more informed and less wasteful decisions about the care they give.

This is only a sampling of ways in which the law is already making progress toward mending and strengthening the health-care system.

It’s not perfect, of course; nothing with so many facets could be. We don’t yet know, for example, whether the law’s incentives to move doctors and hospitals away from a fee-for-service system to one more focused on efficiency will work. Just helping Americans to understand what’s changing in the health-care system is a challenge that remains unmet.

But the law takes a great many small steps in the right direction -- toward a health-care system that provides good-quality care at a reasonable price for the largest possible number of people.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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