Why the (un)Affordable Care Act should be repealed and replaced

Article Highlights

  • Co-authors of 'Why ObamaCare Is Wrong for America' strongly recommend the Affordable Care Act be repealed and replaced asap

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  • The real key to affordability is health care that is delivered quicker, simpler, cheaper, more consistently, and more effectively

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  • Replace PPACA: Extend insurance portability rights and protection against new medical underwriting due to changes in health status

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  • Replace PPACA: Redistribute and prioritize current insurance coverage subsidies.

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  • Replace PPACA: Maintain a back-up system of safety-net protections for those who fall through the cracks

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As co-authors of Why ObamaCare Is Wrong for America,1 we strongly recommend that the Affordable Care Act of 2010 should be repealed and replaced as soon as possible. The Affordable Care Act (ACA) has become deservedly more unpopular since its enactment.2,3  It is too costly to finance,4 too difficult to administer,5 too burdensome on health care professionals,6 and too disruptive of existing health care arrangements that many Americans prefer.7  It will limit future economic growth,8 distort health care delivery,9 exacerbate already-unsustainable entitlement spending,10 and erase any meaningful constitutional limits on the enumerated powers of the federal government.11  By relying on illusory formulaic reductions in future payments to physicians, on burdensome new reporting requirements, and on top-down restrictions on medical innovation, it will further jeopardize access to quality care.12  

For example, proposed lower levels of reimbursement for physicians and other health care providers - as set out either in the ACA payment formulas, the even less accountable future operations of the Independent Payment Advisory Board, or the continued operation of the statutory Sustainable Growth Rate - along with forthcoming comparative effectiveness guidelines and Medicare pay-for-performance reporting rules will force medical practitioners to be much more responsive to the preferences of budget-sensitive federal officials than to the best application of their professional judgment to their patients' preferences and needs. The imperative to comply only with the edicts of a much smaller number of highly politicized regulators, administrators, and payers under the ACA might reduce some of the annoyance of coping with the more varied payment regimens currently used by larger numbers of private insurers and other third-party payers. But it will substitute the greater burdens of political risk, permanent monopsony bargaining power, and unfunded mandates on many medical practitioners. 

The new health law was built on faulty premises, a number of which are reflected in Dr. Dalen's commentary in this Journal.  Researchers certainly may differ over whether the United States has the "best health care delivery system in the world." Our own work suggests that there are many ways to improve our system's longstanding problems with excessive costs, inconsistent value, and access to care by reforming the flawed public policies that drive them, including overregulation, mistargeted subsidies, lack of price transparency, overreliance on third-party payment, and barriers to competition.14-20 Unfortunately, the ACA will only worsen these problems rather than help to solve them.  

Citing the widely-criticized21 World Health Organization rankings in 2000 will not help to guide us.22  The WHO measures often relied on "imputed" rather than real data, in instances where it actually had none of the latter (as noted by United Kingdom health scholar Allen Williams).23 Those measures also were biased to overemphasize "expert" political views about inequality in health-care rather than to compare overall health outcomes across different nations and assess how patients actually view their own health care.24  Other problems remain in flawed measures25 of life expectancy and infant mortality in the WHO rankings and similar comparative studies26-29 that do not account for factors operating outside the health system (such as levels of education, socioeconomic status, and health-limiting habits within particular nations). For example, June O'Neill and David O'Neill suggest the limits of simplistic comparisons between the health of Americans and the health of Canadians along these dimensions.30

Higher levels of uninsured citizens in the US do impact overall population health to some degree, but the magnitude of such effects remains in doubt because of the above factors and other ones.31-32 Moreover, most of the ACA's projected insurance coverage expansion will occur through the already-overstretched Medicaid program, which produces higher levels of emergency department use per person than does lack of any insurance and, in some cases, produces even worse health outcomes.33-36

In short, simply increasing the number of insured Americans by itself will not ensure improved delivery of health care, let alone better health outcomes - particularly without other reforms that will realign incentives facing all parties in the health system, improve health decisions, hold all parties more accountable for their choices and actions, and ensure a more sustainable balance between health care supply and demand. We believe that the ACA fails to achieve these vital reforms and there are better ways37-39 to do so. They include:

  • Transitioning to "defined contribution" methods of financing taxpayer subsidies for health care,
  • Targeting coverage subsidies to be based more on income and health status, and linking them to income-related, stop-loss "major risk" protection against medical bankruptcy,40
  • Providing a sustainable safety net through more robust taxpayer funding of coverage for individuals with high health risks,
  • Tying expanded protections for pre-existing health risk and enhanced portability of insurance to incentives for maintenance of "continuous insurance coverage,"
  • Encouraging more vigorous competition in health insurance and health care delivery,41
  • Mainstreaming more Medicare and Medicaid beneficiaries into affordable, competitive private health plan options, building on the success of the Medicare Part D structure. (That program's costs are expected to be more than 40 percent lower over the first decade than original budgetary estimates, and the drop in the original projected growth rate for Medicare drug spending by 2013 will be greater than that for the below-65 private market),42
  • Aggregating and enhancing the best data available to expand access to useful information about health care cost, quality, and value to assist decentralized decisions about insurance and treatment options, and
  • Moving personal health care decisions out of politics and back into the hands of patients and physicians.


Some critics of this recommended policy shift toward more reliance on competitive and consumer-directed private health insurance coverage (bolstered by the above reforms) contend that this would fail to provide enough Americans with comprehensive protection against high health care costs and serious health risks. However, they begin by asking the wrong questions -- how to cover everyone through mandates, price controls, comprehensive benefits, minimal cost sharing, and vastly expanded taxpayer subsidies -- and end up with answers like the ACA that do not work.

For example, even though some modelers of the coverage take-up effects of an individual mandate appear to assume reflexively that its commands will be obeyed faithfully and executed flawlessly, the actual proposals for enforcement of an individual mandate often provide more bark than bite. Not even the strongest version of an individual mandate to purchase health insurance would guarantee what should be its ultimate objective: improvements in people's health. Requiring people to have health insurance in itself is not the same as ensuring that they actually receive all of the effective health care services they may need in a timely manner. To do that, one would need to mandate not just the purchase of health insurance but delivery of the actual "treatment" itself.

The continuing debate over the individual mandate and its underpinning of the ACA's other provisions for health insurance regulation, health care financing, and delivery system restructuring requires a more realistic understanding of the limits of government coercion within our political system, the balance of power between government and citizens in our Constitution, and the longstanding societal values that sustain both of them. There are other effective ways to ensure necessary health insurance coverage for more Americans that are less onerous, less unpopular, and less constitutionally questionable.43 A better mix of policy reform ingredients would begin by relying first on persuasive incentives rather than coercive commands.

First, we should extend insurance portability rights and protection against new medical underwriting due to changes in health status (already provided since 1996 by the Health Insurance Portability and Accountability Act requirements for employer group health plans) to those entering, exiting, or remaining in the individual health insurance market-as long as they maintain continuous qualified insurance coverage. In short, the incentives to get insurance and maintain it would be strengthened. Switching between group and individual markets would become less complicated and stressful. However, those who delay obtaining coverage when healthy, or drop it and stay uninsured for too long, would run the risk of paying higher premiums in the future or facing restrictions on coverage of pre-existing conditions they develop in the interim. 

Second, we need to redistribute and prioritize current insurance coverage subsidies. There just is not a sustainable line of credit ahead or enough tax revenue to keep financing the levels of tax expenditures and public program benefits that foster the illusion we can pay most, or at least a substantial share, of everyone's health insurance premiums with other people's money. We should not, and actually do not, need to bribe upper-middle class and wealthier Americans to purchase and maintain insurance coverage. They already have assets to protect themselves, and they generally live healthier lifestyles. We could instead lower their other taxes to offset the net effects of making the full unsubsidized costs, and real value, of their current coverage and care more transparent to them. However, that does not mean that additional subsidies (offset by other spending reductions in the health care portion of the federal budget) will not be needed to help other populations targeted on the basis of lower-income and higher health-risk needs. Those dollars can help pay for some, and sometimes all, of the actuarially-equivalent costs of their basic care, but almost everyone needs to start seeing more of the real price tags in health care markets again, instead of the fake ones at the government discount store.

Third, because no system of coverage incentives and need-based subsidies is fool proof, we have to maintain a back-up system of safety-net protections for those who fall through the cracks or must be protected from the unbearable consequences of their irresponsible behavior. Beyond a narrowed base of Medicaid assistance for the temporarily low-income and more permanently disabled, the next layer of support should involve more sustainably financed, high-risk pools that are operated by states within basic federal parameters. Such subsidized coverage would still cost more than the conventional insurance for standard-risk customers, but its premiums would be capped in proportion to an enrollee's income and likely risk-related health costs.  

Fourth, no matter how much money taxpayers decide they can afford to throw at the wall of insurance coverage problems, the real key to affordability is health care that is delivered quicker, simpler, cheaper, more consistently, and more effectively.  An individual mandate (let along more rigid single-payer financing of health insurance as a politically-controlled public good) tries to ignore that problem, because it cannot solve it. To fix it, better incentives are needed for more efficient health care. Less affordable health insurance is a secondary symptom, not the primary cause, of high-cost health care. We should insist as private purchasers and taxpayers that insurers and health care providers find ways to offer different mixes and methods of care and coverage that cost less and are worth more.

Instead of trying to prop up a controversial and ineffective individual mandate, we should focus on the most important unmet tasks of true health reform: improving the value of health care (and its related insurance financing) that is delivered to patients so that more people can and will purchase it voluntarily, and investing in other more effective ways to boost their lifetime health. Insurance coverage still can be increased through less intrusive means, such as higher premiums for those who delay, or fail to maintain, coverage; more targeted and equitable subsidies; and better products that customers will purchase voluntarily.

The editors of this Journal also insist that the problem of medical bankruptcy is a pre-eminent issue that overrides many of the above issues. We agree that the medical debt issue certainly is worthy of further reform efforts within a broader policy context than health policy alone. Further adjustments to the nation's bankruptcy laws, better macroeconomic and labor market policies, more productive investment in human capital, and more vigorous market incentives to lower future health care costs are necessary elements of a more comprehensive approach than simple insurance coverage "solutions" provide. We also caution strongly that the medical debt "crisis" needs to be placed in a more empirically-based context 44 than several of its strongest proponents have asserted in these pages.45

In conclusion, a clear plurality of Americans opposes the ACA and particularly its unprecedented individual mandate to purchase health insurance.  Whether or not the Supreme Court later this year agrees with several lower court rulings that have determined that such a mandate is unconstitutional, the overall structure of over-regulated, over-subsidized, and centrally-planned health care that the new health law aims to implement remains unaffordable, unworkable, and unsustainable. Its early results are designed to be inconclusive because the ACA's essential features will not be fully implemented for several more years.  But they promise to be both disappointing and destabilizing across the entire health care system and our overall economy.  We cannot afford to waste additional years heading in the wrong direction.  The sooner that the ACA is repealed and replaced, the earlier we can get back to the urgent need to reform the US health care system more effectively and sustainably.

This article was originally published in the May 2012 issue of The American Journal of Medicine. The final version is available here.


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