The Healthcare Reforms We Still Desperately Need

The Supreme Court's decision to uphold Obamacare still leaves one huge problem unsolved.

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Hooray for Obamacare. It stands. The Supreme Court has ruled it constitutional.

So our healthcare problems will be solved in a few years, when the law is fully in effect, right?

Not by a long shot.

[LIVE BLOG: What the Healthcare Decision Means for Americans]

The fight over Obama's Patient Protection and Affordable Care Act has been so consuming that it has pulled attention away from many problems not addressed by the controversial healthcare law. Yet those problems are only going to get more acute, which could leave a lot of Americans wondering what the law was supposed to accomplish in the first place.

The principal problem is cost. While the law is designed to extend healthcare coverage to millions of uninsured Americans, it does not directly take on the healthcare inflation that threatens to bankrupt the country. There are a number of provisions in the law meant to make coverage more affordable for individuals. And some new pilot programs will create a chance to experiment with cost-lowering innovations.

But overall, the law mostly shifts costs from place to place—largely through new taxes and fees—while doing little to bring down the overall cost of healthcare.

[RELATED: See why the fight over Obamacare will continue.]

That's a huge problem because the cost of healthcare has been rising at about twice the rate of inflation, and the United States spends far more on healthcare per person than any other advanced nation. That has put extreme pressure on many family budgets. And with baby boomers just starting to flood into Medicare, the mushrooming cost of care for seniors represents the single biggest threat to the solvency of the federal government.

Healthcare inflation has slowed a bit over the last two years, which could indicate that consumers are signing up for cheaper plans with higher deductibles, and being more careful about the way healthcare dollars are spent. But it could also reflect fewer people covered by employer plans, since more people have been laid off.

And if fewer people are getting care they need—especially preventive care—that could cause a spike in costs in the future.

There are many thoroughly studied ideas for how to cut healthcare costs in ways likely to benefit most Americans. One general concept is that consumers need to bear more costs on their own, instead of having access to a wide range of services covered 100 percent by their plan, as Medicare tends to do. If more of the cost comes out-of-pocket, consumers are likely to be much more careful about how they spend their healthcare dollars, especially if they can pocket some of the savings from money not spent.

[RELATED: See how the Supreme Court's ruling could harm the economy.]

But implementing the sort of cost-saving measure that would make a difference is difficult and politically perilous. The biggest payoff in terms of lowering cost would probably come from Medicare reforms that pass more cost on to patients. But that's obviously unpopular with seniors, since it would cut into cherished benefits. With Medicare likely to go broke without some kind of profound change, reforms seem inevitable—but not until disaster is imminent and politicians can plausibly claim there's no other choice.

There are other widely acknowledged ways to cut costs: Pay doctors and hospitals for the quality—not the quantity—of care they provide. Introduce better technology that will make care more efficient, while cutting down on errors and redundancy (which the new law will do, to some extent). Encourage or even force patients to adopt healthier habits. Reduce the malpractice suits that drive up costs for doctors and patients while doing little to improve the quality of care.

Yet all of those things would cut revenue flowing to somebody or impose controversial new rules, which means opposition is strong, and lobbying in favor of the status quo well-funded.

Meanwhile, the Affordable Care Act entails a complicated set of levers and pulleys meant to generate incentives (or penalties) that, with luck, will lower costs. But it's all unproven and even supporters of the law acknowledge the difficulty of forcing costs down. The bad news for those sick of the fight over healthcare reform means there's going to be a lot more of it.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.