Why the Affordable Care Act, as Construed by the Supreme Court, Will Fail

Thom Lambert —  8 October 2012

I’ve recently posted to SSRN a new paper with the same name as this post.  The paper asserts, in greater detail, a number of points I’ve previously made on TOTM:

  • Health insurance premiums will rise under the (SCOTUS-modified) ACA, because the Act’s “guaranteed issue” and “community rating” mandates will generate widespread adverse selection that cannot be corrected through the (now constitutionally constrained) penalty system the Act imposes.
  • Underlying medical costs will continue to outpace inflation because the ACA does nothing to alleviate the primary driver of health inflation: the lack of price competition among providers, an artifact of the federal tax code’s encouragement of overly generous health insurance policies that ultimately amount to “pre-paid health care.”
  • Insurance coverage will expand far less than ACA proponents promisedbecause (1) the Act encourages employers to drop insurance coverage for lower-income workers, and (2) SCOTUS has largely disabled the Act’s Medicaid expansion.

I’ve been talking about these matters quite a bit lately.  On Constitution Day, I participated in this discussion of the ACA with my Missouri colleagues Phil Peters (a health law expert), Josh Hawley (a constitutional scholar and former Roberts clerk), and Stan Hudson (associate director of MU’s Center for Health Policy).  (My remarks begin at 23:45.)  On September 25, I presented a lecture on the ACA at my undergraduate Alma Mater, Wheaton College.  My PowerPoint presentation is not visible in the Wheaton video, but I’m happy to share it with anyone who’s interested.  Just email me at lambertt at missouri dot edu.

Thom Lambert


I am a law professor at the University of Missouri Law School. I teach antitrust law, business organizations, and contracts. My scholarship focuses on regulatory theory, with a particular emphasis on antitrust.

3 responses to Why the Affordable Care Act, as Construed by the Supreme Court, Will Fail


    I’m a total non-believer in insurance of every kind. When I need health care, of course I will take advantage of the emergency care available locally, since I have already paid half its costs by way of general taxes; I will use health care available free to me at my local clinics in Brazil; I will rely on dental and health care available at a reasonable price in Mexico, the Czech Republic, Hungary and Thailand.

    I think there might be a great future in transporting uninsured folks to Mexico, where they might enjoy the availability of health care as it was in the 1950s and 1960s. Docs and dentists there actually advertise their prices!

    A young, single, childfree man living in Texas would have to be an idiot to participate in health care via Obamacare. Most of his premiums would go to kids, breeders, and hypochondriac women. A bus ticket, or even a plane ticket, to Mexico would be far cheaper.

    northfork investor 8 October 2012 at 6:36 pm

    while i don’t disgree with Lambert that it would be nice to stimulate price competition among health care providers (and insurers) and to end the tax subsidization of health insurance, he has very little empirical support for several of his conclusions. The table on page 6 is devoid of either data-driven or logical support and implicitly ascribes a value of near-zero to the benefits of health insurance for healthy people. There are many reasons to doubt this;however, even if some of these heathy (and not-accident prone) people stupidly ascribe no value to health insurance at least their penalties will pay some of the other costs of the health care system.

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