Potential Chaos In Healthcare Funding In America

With the implementation of the Affordable Care Act we continue to see the governors of several states resist establishing the program in their states. If this resistance continues those states will, in effect, replace the program with one of their own. This is not alarming, but it will mean that there will be some differences in the level of universality and level of coverage of healthcare state by state. We know that some states always do things less well than other states. This happens when there are national programs in which all states share in funding from the national government.

The Affordable Care Act the program may well evolve into one in which the percentage of funding the states themselves must endure turns out to be higher that is currently anticipated. This will put more pressure on the economies of each of the states whether they elect to go with the program or not. Further, if those states which do not subscribe to the Affordable Care Act are not able to offer their citizens the same level of coverage, the federal government may well have to withhold some level of funding for healthcare that it does provide to those states. Otherwise, the federal government may be seen as playing favoritism with those states which do not subscribe to the program laid out by the Affordable Care Act. Such an outcome would make little sense in that it would encourage states that elected to follow the program to resign from it in order to receive the same favorable treatment. Thus, it may turn out that staying out of the program will be far less economical than going into it.

Another option that the states not electing to implement the Affordable Care Act may take is the one in which they neither choose to establish the “insurance exchanges” nor a program of the own which would bring essentially all of their citizens fairly into their version of healthcare. In that case, those citizens without an ability to establish a healthcare program through the state where they reside may find it advantageous to move to other states where they can get at least basic healthcare as they needed. These citizens would be quite easy to track and funds could flow from the federal government to those states where those citizens go. The offending state could be assessed those expenses by the federal government in order to compensate those states taking on the extra expenses.  Certainly the individual states will have some freedom in how they will implement the Affordable Care Act and some states will likely spend more than will others, but these differences should be quite minimal compared with what those states that are trying not to enroll in the Affordable Care Act may achieve. Thus, electing not to sign up for the program will make any real difference in the end.

The more difficult problem moving forward will be the inability of the medical community and the government including the insurance exchanges to bend the cost curve for medicine downward while still providing the same or even improved levels of care. As I have noted earlier, medicine must first improve service at lower cost. This may be partly accomplished in time by increased automation of services and by reducing the overall cost of the practice of medicine. In short, productivity in medicine must increase even while it has never increased its productivity in its entire history.

The additional option is to change the way medicine is practiced with an increasing emphasis on early diagnosis and prevention. If this can be coupled with programs that lead or even push people to guard their own health better than they presently do, then costs may in fact begin to go down. Changing medicine and changing people to guard their own health better than they presently do will not be that easy. Yet that is the path we must try to follow.

In the short term, especially given the current chaotic state of the world economy, success at any level may be hard to achieve. However, with time we may be able to achieve a better result if people are able to improve their health profile and medicine can continue to move more and more toward early diagnosis and prevention when treatments may generally be more less complicated and heroic and, indeed, less expensive. Further, as medical procedures are more advanced and automated, productivity may actually increase. This is a future that will likely be chaotic for a while, but at the same time it has the potential to be both fascinating and rewarding.


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