Ann Marie Marciarille Reads Zeke Emmanuel on the ACA: Thursday Focus: April 3, 2014

Over at Health Law Prof blog: Ann Marie Marciarille: *REINVENTING AMERICAN HEALTH CARE by Ezekiel Emanuel:

The best joke in Zeke Emanuel’s new book is told near the beginning, but referenced throughout–which makes the joke yet richer and more multi-layered by the book’s dense 349 page end. It goes like this: There are two people who actually understand the American health system, and both Victor Fuchs and Alain Enthoven are 90 and 83 years of age, respectively. I don’t care if Zeke Emanuel wrote the joke himself because what he did write is the book that should make all of us a little less fearful….

[It] is two shorter books, intertwined. Several chapters… could be a standalone book as a primer on the American health care system, or what the anthropologist Clifford Geertz described as “thick description.” More than an entry-level overview of the status quo, these chapters (particularly Chapter Two on “Financing Health Care”) represent something I might assign to my health law students.

The second book on the process of health care reform up to the present might be called “How the Sausage Got Made”, and essentially offers a standalone account of the history of health care reform–real and attempted–in the United States.

The weakest parts of the volume…. No one needs to read any more apologies for the failed rollout of http://healthcare.gov, particularly short sighted ones declaring (in December, 2013 when the manuscript was ostensibly put to bed) that all is well. Really? This rings a little less true in the very week when Oregon is reported to be considering abandoning its state operated exchange and directing all Oregonians to the http://healthcare.gov. This book, though showing some evidence of the great haste with which it must have been written, does offer a valuable overview for a health care reform bookshelf remarkably short on overview and synthesis. I am… less concerned that Zeke Emanuel thinks physicians are “convicted” (a criminal law term) of medical malpractice liability than that he… takes the time to talk about the legal challenges to the ACA in terms a literate layperson could understand.

More concerning, however, is his assertion that the far more important and interesting provisions of the ACA do not concern Medicaid expansion but concern the exchanges/marketplaces…. As I have argued elsewhere, and as Zeke Emanuel himself has argued within this very book, [it is] the development of the health care exchanges and the so-called individual mandate [that] were the incremental reforms…. The now-optional Medicaid expansion… was to have been revolutionary and may yet still be revolutionary but in a far more incremental way….

Still, so much is right about this book, I commend it to you for the overview it is and the primer it could be.

In general, a market system adds two important layers of administrative complication to an economy. First, a market system adds additional administrative complexity: lots of administrative mechanisms need to be duplicated firm-by-firm and the wheel needs to be reinvented and reinvented over and over again. Second, the transactional infrastructure needs to be constructed: bean counters need to count beans, and their count of beans needs to be checked, and economic rewards and punishments need to be administered depending on what the bean counters count as the proper number of beans. Post of the time these two extra layers of administrative complexity are worthwhile. The bean counters serve to keep everyone else focused on a firm-level bottom-line that is close to the societal-level bottom-line you want people focusing on, and is cheap at its price. The administration and management secrets of effective bureaucracy are easy to copy and very hard to keep any one firm’s private intellectual property–thus the necessary amount of wheel-reinvention is not all that large.

But attempts to establish health insurance markets are riddled with adverse selection and moral hazard. The net societal institutional calculus is much less weighted in favor of the market, And may not be weighted in favor of the market at all. Already, no health insurance company appears eager to compete with fee-for-service Medicare without a large public subsidy thumb on the scale. And the private for-profit insurance industry was never interested in serving the Medicaid, the expanded Medicaid, and the near-Medicaid population: they, after all, are where the money is not.

Back when I was listening to people talk about the legislative strategy behind Obamacare, it seems very simple to me, with four truly-important moving pieces:

1. The stepping-away from the failed “Medicare Advantage” let’s-see-if-insurance-companies-can-serve-the-Medicare-population-better-and-cheaper experiment.
2. The huge expansion of Medicaid.
3. The setting-into-place of the future eventual-but-inevitable end of tax-subsidized employer-sponsored insurance.
4. An attempt to take the Republican exchange+community rating+mandate idea and see if it could work–if it could provide effectively universal insurance to that part of the population with less risk than Medicare and Medicaid-for-the-disabled but more money than Medicaid.

So far (1), (2) (where state governments have not blocked it), and (3) appear to be working well. (4) hangs in the balance, still, and will for another five years at least.

And the curious thing is that up until August 2009 (4) was a conservative priority, a Republican program. If you had asked me back then what the politics of an overfulfillment of an exchange-enrollment target would be, I would have said that it would be Republicans taking a victory lap: saying “see, you really don’t need single payer after all…”