Unintended Consequences of Healthcare Legislation
Unintended consequences of healthcare legislation enacted over the past 45 years threaten the financial and social well-being of the U.S.
The "granddaddy" of unintended consequences comes from the Social Security Amendments Act of 1965, which created Medicare and Medicaid. Medicare cost the federal government less than $3 billion in its first full year of operation in 1967, or less than 2 percent of federal spending. It was projected that Medicare would cost the astonishing sum of $12 billion by 1990, a large number but still a small fraction of the total projected federal budget.
However, Congress, on both sides of the aisle, has expanded eligibility and the range of covered services. Today, 8 million people with disabilities are enrolled in Medicare. By 1990, Medicare cost not $12 billion but $98.1 billion and with Medicaid accounted for $145.7 billion, or almost 12 percent of total federal spending. In fiscal year 2011, the projected total for Medicare and Medicaid is a staggering $841.3 billion, equaling 23 percent of total federal spending.
Health reform initiatives under President Obama that led to the Patient Protection and Affordable Care Act (PPACA) were aimed in part at reining in health costs, and it is logical to ask whether this major healthcare legislation will result in unintended consequences. The answer is yes; the way the legislation was written makes unintended consequences inevitable.
Now time to ask how such unintended consequences happened.
The first overarching theme is the sheer complexity of the issues and how challenging it is for Congress to understand them. The second overarching theme is the open-ended nature of medical science and medical practice. When new lifesaving and life-extending treatments are available, doctors want to provide them to patients, and patients want to receive them.
The third overarching cause of unintended consequences is that legislation has the capacity to effect major changes in people's behavior. Perhaps the most stunning example in the health system is coverage by Medicaid for nursing home care. In the mid-1960s, the number of indigent elderly perceived to need financial help with accessing nursing home care was relatively small. Families took care of their own elderly. Today, Medicare and Medicaid cover 60 percent of nursing home care in the U.S.
The fourth overarching factor that is clearly in play is the moral hazard of people spending other people's money. The moral hazard arises from the fact that neither Medicare beneficiaries nor providers are at financial risk for the vast majority of expenditures and do not have much motivation to spend less or make the system more efficient.
When unintended consequences of healthcare legislation are analyzed, it is clear that legislative initiatives are typically a response to current perceived circumstances and exigencies. As a nation, the U.S. needs to change its outlook from thinking that it can draw a line in time and pass legislation on the basis of current conditions in the belief that the nation's problems have been solved for the future.
Rather, the assumption should be the opposite, that changes in social behavior and social norms on one hand and changes in science, technology and medical practice on the other will inevitably take the country and society in unenvisioned directions and that the country will inevitably need to challenge its original assumptions to effectively respond and adapt. Congress should consider building in timelines and milestone events that trigger automatic review or even sun-setting of legislation so that it is forced to address issues more definitively and in a more timely fashion in the future.
This article is excerpted from an article in the October edition of the Journal of the American College of Radiology.
The "granddaddy" of unintended consequences comes from the Social Security Amendments Act of 1965, which created Medicare and Medicaid. Medicare cost the federal government less than $3 billion in its first full year of operation in 1967, or less than 2 percent of federal spending. It was projected that Medicare would cost the astonishing sum of $12 billion by 1990, a large number but still a small fraction of the total projected federal budget.
However, Congress, on both sides of the aisle, has expanded eligibility and the range of covered services. Today, 8 million people with disabilities are enrolled in Medicare. By 1990, Medicare cost not $12 billion but $98.1 billion and with Medicaid accounted for $145.7 billion, or almost 12 percent of total federal spending. In fiscal year 2011, the projected total for Medicare and Medicaid is a staggering $841.3 billion, equaling 23 percent of total federal spending.
Health reform initiatives under President Obama that led to the Patient Protection and Affordable Care Act (PPACA) were aimed in part at reining in health costs, and it is logical to ask whether this major healthcare legislation will result in unintended consequences. The answer is yes; the way the legislation was written makes unintended consequences inevitable.
Now time to ask how such unintended consequences happened.
The first overarching theme is the sheer complexity of the issues and how challenging it is for Congress to understand them. The second overarching theme is the open-ended nature of medical science and medical practice. When new lifesaving and life-extending treatments are available, doctors want to provide them to patients, and patients want to receive them.
The third overarching cause of unintended consequences is that legislation has the capacity to effect major changes in people's behavior. Perhaps the most stunning example in the health system is coverage by Medicaid for nursing home care. In the mid-1960s, the number of indigent elderly perceived to need financial help with accessing nursing home care was relatively small. Families took care of their own elderly. Today, Medicare and Medicaid cover 60 percent of nursing home care in the U.S.
The fourth overarching factor that is clearly in play is the moral hazard of people spending other people's money. The moral hazard arises from the fact that neither Medicare beneficiaries nor providers are at financial risk for the vast majority of expenditures and do not have much motivation to spend less or make the system more efficient.
When unintended consequences of healthcare legislation are analyzed, it is clear that legislative initiatives are typically a response to current perceived circumstances and exigencies. As a nation, the U.S. needs to change its outlook from thinking that it can draw a line in time and pass legislation on the basis of current conditions in the belief that the nation's problems have been solved for the future.
Rather, the assumption should be the opposite, that changes in social behavior and social norms on one hand and changes in science, technology and medical practice on the other will inevitably take the country and society in unenvisioned directions and that the country will inevitably need to challenge its original assumptions to effectively respond and adapt. Congress should consider building in timelines and milestone events that trigger automatic review or even sun-setting of legislation so that it is forced to address issues more definitively and in a more timely fashion in the future.
This article is excerpted from an article in the October edition of the Journal of the American College of Radiology.