As a historian by training, I’ve tried to stand back from the Healthcare.gov disaster and ponder some of the broader lessons from the very wobbly rollout of the Affordable Care Act (ACA). I believe these 4 are among the most important.
Lesson 1: One statute tried to do far too much.
Let’s reflect on the fact that if the US health care system were a separate economy it would be the world’s sixth largest—bigger than the entire British economy. As I commented when the bill was before Congress, “Imagine five bickering congressional committees trying to redesign the British economy successfully in just a few weeks.” As the ACA’s provisions have been implemented, the complex interactions of many provisions, such as the essential benefits package, the employer mandate, and the limits on premium rating, have had large, unintended, and troubling consequences.
The cardinal mistake in trying to transform a huge and interactive system is to assume it must all be done in one bill. President Clinton’s health plan architect, Ira Magaziner, made that mistake, comparing health reform to building an airplane—requiring every element to be in place or it will not fly. But in reality, the more complex a system is, the more reforming it requires a series of steps, with each one adjusting to and learning from the results and surprises of earlier steps.
President Obama is now learning this the hard way almost by the week: employers alter hiring practices due to the mandate, the long-term care provisions (a voluntary long-term care insurance program called Community Living Assistance Services and Supports, or CLASS) proves unworkable, the Supreme court decision means states not expanding Medicaid face cuts in hospital subsidies. Each unpleasant surprise will requires major legislative surgery, assuming that is politically feasible, to avoid it triggering further disruptions.
Lesson 2: Bipartisanship is crucial in achieving and sustaining large-scale reform.
Putting aside whose actions precipitated it, President Obama’s decision to push through the ACA with only his own party’s votes was a mistake. It may have seemed bold, even heroic, but now it makes the first lesson even more painful and the ACA harder to fix. With the Republicans having been shut out during passage of the ACA, they are now angry and uncooperative—and see an enormous political opportunity.
So President Obama cannot ask Congress for major modifications without endangering the whole ACA. President Clinton’s decision to “go it alone” torpedoed his major health reform. Public support for “Clintoncare” plummeted and the bill ultimately collapsed in Congress. But Clinton wisely settled for a series of important and sustained steps, such as the State Children’s Health Insurance Program (SCHIP)and insurance reform, which won bipartisan support.
Lesson 3: The worst is likely yet to come.
The scale and complexity of the ACA will continue to haunt its implementation. The administration has been overwhelmed by the rule-making and organizational requirements of the ACA—as any administration would have been. The website debacle has provided a very public example of the daunting challenge for managers and shows how the operating culture of an administration can easily compound problems. But as the White House struggles with that and the other side effects of implementation, more problems are on the way that could derail the financing and other features of the ACA.
Imagine the political turmoil likely to accompany using the Independent Payment Advisory Board (which was created by the ACA to help control costs in Medicare) to enforce unpopular Medicare payment cuts. Or imagine trying to implement the “Cadillac tax” on high-cost employer-sponsored plans in the teeth of opposition from employers, unions, and insurers. Or the perfect storm that could occur if the Americans conclude next year that the exchange subsidy levels, the premium levels, and the availability of plans and physician networks are inadequate or unfair. Betting the ranch on solving these problems by slowing health costs would be a very unwise gamble.
Lesson 4: Large, complex legislative changes tend to be inherently unstable.
It is never wise to think of a major piece of legislation as creating a new system that will be set in stone with predictable consequences, even if the initial implementation is successful. There was nothing really permanent about the 1960s War on Poverty or unchanged about Medicare and Medicaid after they were created. Nor with the massive overhaul of the federal budget process in 1974—indeed, years of budget gridlock are now leading to calls by some of the leading players of the 1974 redesign for another massive overhaul. So even if the ACA manages to be fully implemented in a still-recognizable form, it is likely to be subjected to continuing pressures to evolve in one of 3 directions.
One possible direction would be increasingly stringent price controls and other regulations in response to higher-than-expected premiums for many groups, such as younger Americans. The aim would be to try to force the health system to comply with the basic design of the ACA without exploding federal costs. If the administration fails to convince insurers that the federal exchange can deal with the shopping requirements and billing details of Americans, writes Jon Kingsdale, who oversaw the Massachusetts exchange until 2010, “Premiums will jump, Democrats will blame ‘greedy’ insurers, regulators will review rates and push for price controls.” The messy result of that would be more unpleasant side effects and continuing frustration.
Another direction could be spurred by the successful revival of past efforts to expand Medicaid and Medicare, further displacing private coverage, such that the ACA evolves over time towards some form of single-payer system for most Americans.
Still another way the ACA might evolve would be that states slowly and steadily acquire the leadership role. This could happen as a beleaguered federal government, overwhelmed by the challenges of constructing an ocean-to-ocean system, concedes increasing flexibility to governors and statehouses to carry out the ACA’s general objectives but in a wide variety of ways. There’s a lot to be said for that direction, but it would require the Obama Administration to truly embrace federalism.
The website and cancelations of insurance are the center of attention right now. But history’s lessons of ACA-style reform suggest these are just the tip of the iceberg.
About the author: Stuart M. Butler, PhD, is Director of the Center for Policy Innovation at the Heritage Foundation in Washington, DC, where he focuses on developing new policy ideas. Previously he served as Vice President for Domestic and Economic Policy Studies. He is also an Adjunct Professor at Georgetown University’s Graduate School.
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