Health economist: Health law still a work in progress
Jeff Horwich: For more analysis now on the health reform decision, we’ve got health care economist Uwe Reinhardt. He’s at the Woodrow Wilson School of Public and International Affairs at Princeton. Thank you very much being with us.
Uwe Reinhardt: My pleasure, sir.
Horwich: So the court made an important distinction here about whether this can be considered a tax, which they say is fine, or whether it’s justified under the Commerce Clause. Does it really matter to you as a health economist exactly how we split that hair as long as the mandate is in place?
Reinhardt: As a health economist, it really doesn’t because the mandate was, in effect, written not really to be a mandate, but rather a choice. You can either get insurance or if you don’t buy insurance, you’re going to pay an amount that is close to the actuarial cost of what you represent in case you get sick and don’t have money and burden hospitals with your costs. In oral arguments they suggested actually it’s in the nature of a tax cause it gets administered through the IRS. So in a way they wanted to have the cake and eat it too, and they got it.
Horwich: And the important thing, if I understand you correctly, is that the incentive is in place — whatever you call it. This incentive, this idea of a mandate, has been in place in Massachusetts for awhile now. Is the mandate working there?
Reinhardt: I think it is working from all I have read. Now there are always opponents who say it actually isn’t working, it’s driven up health insurance expenditures and so on. But I think by and large you measure it by how many people remain uninsured, and that’s plummeted in Massachusetts, so most people actually obeyed the mandate and took it up.
Horwich: Do you see this as a conclusion of sorts? We have the law and now we’ve got what we need for reform. Or is this just a piece of what ultimately needs to take place in your view?
Reinhardt: Oh no. This is a work in progress. I liken it a little bit — when we were young we bought unfinished furniture. And it was sometimes a little rough, some nails had to be tapped in and then you had to sand it and paint it. The Supreme Court could have just taken the axe to it and smashed it and say this thing is no good. They didn’t do that, but they say it survives. But since this bill never went to a reconciliation in what is called conference, this bill has a lot of ugly corners in it that need to be sanded down. But that can be done through legislation. We, after all, did the very same thing to Medicare. Medicare has been amended many, many times.
Horwich: Professor Uwe Reinhardt, an economist at Princeton, thank you very much.
Reinhardt: My pleasure. Thank you.
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