Mandated Rationing

How the Affordable Care Act will keep Americans from paying 'too much'

June 29, 2012

Burke J. Balch, Director of the Robert Powell Center for Medical Ethics at National Right to Life, highlighted the aspects of the health care law upheld by the Supreme Court on Thursday that create the possibility of limiting the availability of healthcare for those who wish to pay for it—a process referred to as "rationing."

While the court struck down penalties on states if they refuse to participate in extending Medicaid coverage, Balch explained in an interview with the Free Beacon that the court’s decision did not effect "the provisions in the law that risk rationing."

"The fundamental provisions in the law that give federal bureaucrats the authority to limit what Americans are allowed to choose to spend to save the lives of their family members remain intact," Balch said. He outlined three specific provisions with these results.

The law gives the U.S. Department of Health and Human Services (HHS) the authority to issue "quality standards" that "control all providers of healthcare: doctors, hospitals, nurses, and so forth." If a doctor does not comply with these standards, he "will be unable to get reimbursement from any of the insurance plans that all Americans will be required to have" under the individual mandate, which was ruled constitutional under the Congress’ power to tax.

Congress set up the Independent Payment Advisory Board (IPAB). This group of regulators "is directed, starting in 2015 and every two years thereafter, to make recommendations … to limit the ability of Americans to put resources into healthcare so that they stay below certain goals set forth in the legislation." IPAB sets a price cap, a dollar amount beyond which Americans cannot pay for care. All of those limits are required to be below the rate of medical inflation.

To illustrate this principle, Balch used an analogy with food prices. "Imagine a situation where Congress said, ‘Whenever you go out to buy food, if the price of food has risen by ten percent next year, you’re not allowed to pay that extra ten percent to get the same food that you got this year. You’re only allowed to pay five percent more.’" Such a policy would force citizens to buy less food, or lower quality food, each year.

IPAB aims to "reduce the treatment that doctors are allowed to give to their patients."

"That," Balch said, "is the most massive example of rationing." But there are two more.

Obama’s health care plan also "specifically targets senior citizens." As citizens reach retirement age, they become eligible for Medicare. This program, which has grown tremendously in the last 50 years, is funded "by payroll taxes, which people who are currently employed pay."

"So, in effect, it’s a transfer," Balch explained, "from currently employed people to retired people." As more people retire, "we’re going to have less money available."

Balch explained under the current Medicare plan there are two ways to receive coverage under Medicare: direct government reimbursement for care and voucher payment. If citizens use the voucher payment method, they can spend their own money to receive more care, just as retired people can add their own money through 401Ks to Social Security when saving for retirement.

"Medicare advantage" plans, which senior citizens can purchase during the "open season" period, allow them to use their Medicare vouchers for private health care plans.

"Under the Obama health care law," Balch explained, "the Department of Health and Human Services is given the authority to exclude or limit your ability to add your own money." HHS does this indirectly, by restricting access to Medicare advantage.

Insurance plans cannot participate in the voucher side of Medicare "if they allow people to spend what" the department considers "too much money."

While the Medicare restriction will apply only to senior citizens, new regulations on state-based exchanges will compel most Americans to spend less on health care. As Balch explains, the Affordable Care Act requires states to set up insurance exchanges, where citizens can purchase health care plans.

Employers will provide vouchers, and the citizens can pay more if necessary (like the Medicare voucher plan). "The limitation on this," Balch explained, "is that, under the law, insurers will be excluded from these exchanges if their insurance plans allow people to spend what is deemed by the bureaucrats to be 'an excessive or unjustified amount' on health care."

As a result, if a regulator thinks an insurance company has a "pattern or practice" of allowing people to spend an "excessive or unjustified" amount on health care, he can exclude that company from the market. Any insurer judged "too expensive" will not be able to sell health insurance to Americans.

"So they get you coming and going," Balch said. "It’s done from the supply side, by limiting what doctors and hospitals are allowed to give you in terms of treatment, and it’s done from the insurance side, by limiting the insurance plans that companies can offer."

While the Supreme Court upheld the Affordable Care Act on Thursday morning, Balch argued that Congress can still repeal it. Since "the worst aspects don’t go into effect" until after the election, November gives Americans one last chance to repeal this rationing.

"It’s now in the hands of the electorate," Balch said.