The Republicans and health care
I. Overview
The recent health care reform law provides an excellent means by which to explain many of my predictions. Keep in mind that this post is not about whether the health reform law is good or bad--even though I am going to voice my displeasure over it. The point here is to examine the law in the context of what the Republicans are going to do about the law. To that end I will be discussing what the new law contains and also what was in the primary proposal from the Republicans, which is called the Patients' Choice Act.
I need to explain some labels. The new law is the Patient Protection and Affordable Care Act, or PPACA for short. To identify this law, I will use the following terms: PPACA, the "current law," the "new law," or the "health reform law." You can see the entire PPACA here. I will refer to the Patients' Choice Act by its full name, "PCA," the "Republican plan," or the "Republican proposal." You can see the entire PCA here. When I write about legislation or other specific laws, I usually include specific citations thereto. I have not done that with this post when referring to the PPACA and PCA. I might go back and do that, but working on this post gave me such a severe case of tired head that I got lazy in that regard.
I will repeat what I wrote in my previous post, namely that I think the health care reform legislation did not reform anything. In the early stages of the "reform" process I had a post discussing my displeasure with what was being proposed, which ended up being the basic framework for what was eventually signed into law. My basic complaint is that the "reform" largely left the status quo in place. For you doubters, realize this: before "reform" our health care system was based on and controlled by insurance, and after "reform" our health care system is still based on and controlled by insurance. Under the current law, every person will be required to have health insurance (or face a penalty), and thus the means of delivering health care will become even more entrenched in and controlled by the insurance industry. What the current law does is change access to and delivery of insurance, not the actual health care. The current law also does not address in a direct and/or meaningful way the cost of the actual health care. The current law does not come close to reform of the health care system. And as I said in September 2009, "as long as insurance is the dominating and determinative factor in the delivery of health care, costs will never go down."
All that being said, the Republicans are not going to repeal the health care reform law, and as I stated in my previous post, here are the reasons for my opinion:
In my opinion, the fact that the "reform" keeps the whole system insurance-based and requires everyone to have insurance keeps the insurance companies happy, and that makes the Republicans happy. Insurance is BIG business, and Republicans love big business.
There are several reasons the insurance industry should be happy. As mentioned, under the PPACA, every person will be required to have health insurance. That means more--to the tune of millions more--people will be paying for health insurance. The Rand Corporation conducted an extensive analysis of the health care bill and opined that the law would reduce the number of uninsured persons by 25 million by 2019. The Congressional Budget Office in late November 2009 completed an analysis of how the law would affect the cost of insurance premiums. The CBO estimates the number of additional insureds to be approximately 50% of 53 million, but I can't tell by what year the CBO thinks that will happen. It appears to be 2016, but I am not sure. In any event, estimates are that essentially 25 million more people would be purchasing insurance because of the new law, and that could be a big benefit to the insurance companies. Moreover, the CBO analysis mentioned above projects that premiums will actually increase between now and 2016 because of the new law. That increase will be higher for those purchasing individually as opposed to those in group plans. I am not saying that is a good thing for consumers. I am saying that the insurance companies should be happy about it because they will not be losing any money over the next few years (even though the amount they will be paying out will necessarily increase over current levels because more people with insurance likely means more people getting health care for which the insurance companies will pay).
The insurance companies should also be happy because there is no "public option." In other words, the federal government is not going into the health insurance business other than the expansion of the already existing Medicare/Medicaid program. In place of the public option "health insurance exchanges" will be established in each state. There will be one exchange for individuals who are not covered through an employer and another exchange for small businesses. I will explain how exchanges are supposed to work later. The PPACA sets out some standards for Exchange policies, and a federal agency will provide additional requirements based on those statutory standards. In other words, a federal agency will ultimately determine what constitutes a "qualified plan" that can be a part of an exchange. The operation of the exchanges will be left to the individual state governments. However, the insurance policies available through the exchanges will be private insurance from the insurance companies. I will also note that under the PPACA, some people will receive government subsidies to help pay for health insurance, but those subsidies do not reduce the premiums, and thus the amount paid to insurance companies.
Under the new law, there will be more government regulation of health insurance. The typical reaction by many is that "regulation is bad," and while I'm sure the insurance industry would rather not have any regulation, here's why I think the regulation which will be in place is not going to be a bad deal for the insurance industry. One thing that big business does not like is instability and unpredictability. If there is stability and predictability, businesses can make longer term plans and strategies, and that's generally a good thing. What the current health care law should do in spite of establishing increased regulation is provide some rules and requirements that stay in place and thus provide some stability and predictability. That combined with the fact that the whole system is still based on and controlled by insurance could benefit the insurance industry. I will discuss this more in the context of a possible repeal of the law. In the meantime, let me sum up this point as follows: regardless of what the regulation turns out to be, people are still going to be required to have private insurance and there will be no public option, and the insurance industry will be willing to work with (and/or around) regulation as long as those elements are in place.
If that explanation doesn't work for you, here's another one. It could have been a lot worse for the insurance companies. A public option would have established direct competition for private insurance, and a public option could have had a competitive advantage (at least in the short term). This was the major thing the insurance companies wanted eliminated from health care reform, and that's exactly what they got. They also got a mandate that everyone has to have health insurance. According to the CBO, they also got a system that actually will produce slightly higher premiums over the next few years, and they got government subsidies that will ensure that the full price of premiums will be paid to them. So the insurance companies got a system that is still based on their product, an increased market (because of the mandate), and some possible stability and predictability.
The bottom line is that the insurance industry came out pretty good under the new law. The insurance companies are going to benefit directly from the "reform," and that's why the Republicans are not going to repeal it.
But what do I know? I'm only a smart-ass lawyer. So how about the opinion of a former insurance insider? Wendell Potter spent a lot of time working for big insurance companies. He headed up communications for Humana, Inc., and then he went to CIGNA, where he eventually became head of corporate communications and the company's chief corporate spokesman. On the November 17, 2010, edition of "Countdown," he said this:
III. The insurance companies would lose favorable gains and risk losing much more, and the Republicans don't want to do that.
Repeal would mean that the insurance companies would lose a guaranteed significantly larger market (because of the mandate), a guarantee that premiums will be fully paid (through the subsidies), and a government-approved (and thus unchallengeable) system that keeps insurance as the controlling factor. Does anyone think the insurance industry wants to throw all that away?
Furthermore, repealing the PPACA would present future uncertainty for the insurance companies. There's a chance that the GOP loses power in the 2012 election, and then the Dems would be completely unrestrained in terms of coming up with a package that was detrimental to the insurance companies. Right now they know what they are dealing with for at least the next five years--a law that requires every person to have health insurance, a law which will make sure that all that insurance is paid for, and a basic set of rules on what the insurance companies can and cannot do. Repeal could open the door for a public option or true reform of the health care system that takes away power and control from the insurance industry. How is that risk worth it given what the current law gives to the insurance industry?
Also, the Republicans are not going to put the insurance industry in a position of potentially losing gains and possibly getting laws that are anti-insurance. As I stated earlier, insurance is BIG business, and Republicans are so tied to big business that they are not going to do anything to threaten big business in general and the insurance industry in particular. I'm not even going to bother to explain this point further. Anyone who thinks I am wrong can feel free to offer some proof.
IV. The current law already contains Republican ideas.
Some of the main features of the PPACA are ideas put forth originally by Republicans, "conservatives," and at least one right wing think-tank.
For instance, the "individual mandate" that everyone be required to have health insurance came from Republicans and that damn bleeding-heart commie organization known as the Heritage Foundation. Here's an excerpt from a March 23, 2010, Miami Herald article by John Dorschner:
In fact, in May of 2009, Republicans introduced a bill called "The Patients' Choice Act" which, as described in this article, provides for health insurance exchanges to be set up in the states--you know, like the current law. The Republican bill also called for subsidies for low income persons to pay for health insurance--as does the current law.
The Republican plan did not include an express individual mandate, as in 2009 Republicans decided their own idea was unconstitutional and that the government should not force people to buy insurance.
For a side-by-side comparison of the current law and the Republican proposal, go here. [NOTE: If you go to that link, here are some instructions. In the "Choose one or more proposals" box, click on "Final Health Reform Law" and "Senators Tom Coburn and Richrad Burr, etc." In the box below that, click on "Select All." Then click on the "Generate Comparison" button that appears.] Also, read this article about the Republican plan. I am going to discuss the Republican plan in more detail later. For now I simply want to point out that what is now current law that Republicans so vehemently opposed contains elements that originated with Republicans and were advocated by Republicans in 2009. You may be wondering why this matters. Well, it matters because now that the Republicans have some power, they have to do something, and if the current health care law gets repealed, they are going to have to come up with something in its place. And given that some of the core elements of the current law came from Republicans, I'm wondering whether they can come up with something really different from the current law.
V. The Republicans don't have anything different or better to offer.
A. The individual mandate
As shown above, Republican ideas are already in the current law, and that is one indication that Republicans have nothing different to offer regarding health care reform. Other indications are found in the Republicans' own "Patients' Choice Act." That bill warrants further analysis because it would likely be what the Republicans would put forth as a replacement for the current law.
The focus of the Republicans' effort to repeal--or otherwise get rid of--the current law is the individual mandate. I need to say at this point that I really do not like the individual mandate. My dislike is mostly due to my personality, in that I don't want anyone telling me what I have to do. However, for reasons I will attempt to explain, if insurance is to be the foundation of a health care system, having a mandate that everyone have insurance really is key to trying to manage the cost of the insurance and provide coverage to everyone. Of course, the fact that I want to change our whole system so that it is not based on and controlled by insurance is another reason why I don't like the individual mandate. That being said, I am not in this post trying to make the argument for what I want. Instead what I am doing is comparing the law we now have to what the Republicans proposed (and what they are likely to propose again if the current law is repealed or otherwise disposed of).
Now, back to the individual mandate. The Republicans claim that it is unconstitutional. They may be right. I am not going to go into the legal analysis here. Instead, I will make two other arguments. First, no one better put any bets down on what the Supreme Court might do on this issue. At first blush it might seem that, given the current composition of the Supremes, the chances would be very good that the individual mandate would be declared unconstitutional. However, such a ruling could have effects that go way beyond health care reform. Such a ruling could set the stage for dismantling all kinds of laws. Now I know that some people think that is a good thing, but I warn those folks to be careful what you ask for. That dismantling could become one huge, completely out of control metaphorical snowball. Trying to control the dismantling will be next to impossible. And anyone who might be concerned about there already being too much litigation already better get ready to have their heads explode, because there will be a huge increase in litigation. Our judicial system is neither designed nor equipped to handle a mass of change all at once. I could (and probably should) give an explanation about that, but for now I am asking the reader to trust me. I would add that I believe our society is also not equipped to handle that much change that quickly. Believe it or not, the Justices of the Supreme Court will likely consider such factors if they have to decide the constitutionality of the individual mandate, and if they do, they might decide not to declare it unconstitutional. More on what might happen in the courts in the last section of this post...
My second argument is that the Patients' Choice Act, while not having an express individual mandate, has a de facto mandate that everyone buy health insurance. In other words, what the current law seeks to do via an explicit provision the Patients' Choice Act would accomplish through a combination of provisions, and thus it is really no different than the current law in terms of a mandate that everyone buy health insurance.
Here's why I say that the Republicans' previous (and probable future) proposal has a de facto mandate. One of the main features of the Patients' Choice Act is the elimination of the current tax law which provides for an exclusion for employer-provided health insurance. In its place would be a refundable tax credit of $2290 for individuals and $5710 for families. This money would have to either be spent on buying health insurance or placed in a health savings account (HSA). This tax credit would be available to everyone, even those who have insurance through their employer. Most of the analysis I have read says that this arrangement would lead to a big decline in employers providing health care. Here 's one explanation:
Now, it is true that under the Republican plan, there will be no fine or penalty assessed to people who do not have insurance, and that is a difference between the Republicans and the current law. However, to me that is what we lawyers call a distinction without a difference. Under the Republicans' plan, you will not pay a penalty if you do not buy insurance, but you will not have adequate health care. So your choices are buy insurance or not be able to get adequate health care. Given those choices, what do you think most people will do? And what do you think most people will do when they basically will have access to money, but that access is only possible if they use it for health care?
So why does this matter? It matters because while the Republicans say they are against a law that expressly requires people to have health insurance, they are perfectly fine with a law that still effectively forces people to buy health insurance.
In other words, in terms of an individual mandate to buy health insurance, the Republicans don't have anything to offer that actually is different from the current law.
And I want to add two other points. Mitch McConnell, the Republican leader in the Senate, gave a speech on Nov. 18, 2010, in which he addressed the individual mandate: "By preventing the accumulation of excessive power, the Constitution is designed to reduce the risk of tyranny or abuse from the state or federal government...The health care bill would remove an important bulwark... So fighting this mandate couldn't be more important[.]" Here's what I want to know: Did Mitch McConnell complain about the Patriot Act or the illegal wiretaps of American citizens or any of the numerous acts by our government when the Republicans were in control of Congress and the White House that constitute tyranny and the abuse of power? I know the answer--NO.
My other point is that I find it odd and hypocritical that the Republicans think it is so wrong to force people to buy health insurance but they are perfectly fine with telling people how they have to spend money they receive to buy health insurance or other wise spend it on health care.
B. Health insurance exchanges and other insurance policies
The exchange is supposed to increase market competition in two ways: 1) between the various policies in the exchange, and 2) in the overall consumer market for health insurance. As for 2), what I mean is that the exchange is supposed to compete with the insurance policies that are not part of the exchange. In theory, this competition should help lower prices for all insurance and provide better service to consumers. The success and continued viability of an exchange is dependent on sufficient participation therein--both in terms of the the number of policies made available and the number of people getting their insurance through the exchange as opposed to outside the exchange. If either number drops, the exchange will like fail.
There are two factors which can cause an exchange to fail: "adverse selection," which can be caused by insurers "cherry picking." Before explaining this, I have to point out that under the current law and the Republican Patients' Choice Act, insurance companies would be free to offer insurance policies outside the exchanges. In other words, they would not have to offer all their policies through the exchanges, and not all of their policies would have to meet the requirements for policies in the exchanges. As will be explained, this is particularly significant under the PCA. "Adverse selection" occurs when
Under the PPACA, each state will be required to set up an insurance exchange for individuals and another exchange for small businesses. Under the Patients' Choice Act from the Republicans, the exchanges are strictly voluntary. In other words, states do not have to establish them. Thus, under the PCA, if a state decides not to have an exchange, individuals would still be subject to the same problems they faced before. And if more states choose not to have an exchange, then more individuals will be subject to those problems.
Under the PPACA and PCA insurance plans that are part of an exchange are subject to certain restrictions which act as consumer protection provisions. For instance, under the PCA insurance policies offered through an exchange would provide some protection against exclusion of preexisting conditions and excessive premiums and would require that anyone seeking insurance through the exchange would be able to purchase a policy regardless of health status. That is also true under the PPACA, but here's the difference: under the PCA those protections are required ONLY for policies offered through an exchange while under the PPACA all consumer protection provisions apply to all insurance policies--and the PPACA provides many more consumer protections that the PCA.
Because of these differences, there is a good chance exchanges would fail under the Republicans' Patients' Choice Act. Without requiring consumer protections to apply to ALL insurance policies--inside and outside the exchange--the PCA offers little incentive for insurers to participate in the exchange. Why subject yourself to all kinds of restrictions that you have avoided and can still avoid simply by not submitting policies to the exchange? And what incentive is there for insurance companies to stop cherry picking? Under the PCA, insurers could do exactly what they did in Texas, namely offer non-exchange policies to healthy companies and individuals, thus leaving all the unhealthy people--and their greater risks and costs--to the exchange. That makes good business sense for the insurance companies, so why won't they do that if the opportunity exists? And that opportunity will exist under the PCA.
On the other hand, that opportunity will be minimized if not eliminated under the PPACA. Every person will have to be guaranteed access to insurance regardless of health status regardless of whether they seek insurance in or out of the exchange. Every insurance plan, both in and out of the exchange, will have to take steps to spread risk, which means that a plan cannot simply be for all healthy people at the exclusion of unhealthy ones. All the insurance policies outside the exchanges will have to have the same consumer protections that policies in the exchange have. All of this reduces the incentive to cherry pick and create adverse selection. And that provides some incentive for the insurance companies to participate in the exchange, for two reasons 1) they can no longer profit from this sort of conduct, and 2) because of the individual mandate, they can have easy access to a greater number of possible insureds, and that will lead to profits for them. In other words, given the across-the-board consumer protections in the PPACA, it could be in the insurance companies' best interests to see that the exchanges succeed.
And here's something else to keep in mind. Under the PCA, if a state chooses to establish an exchange (and remember the state can choose not to do so), there is nothing in the PCA that says the state has to always maintain an exchange. If the exchange is failing, the state can shut it down. Thus, if cherry picking and adverse selection occur, the state can simply decide to end the exchange. Since the PPACA requires states to open and maintain an exchange, states do not have the option to shut down an exchange.
The bottom line is that exchanges under the PCA have a high risk of failing, and if that happened, we would be left with the same insurance system we had before the current law. Not only is that not "change we can believe in." It's no change at all.
The recent health care reform law provides an excellent means by which to explain many of my predictions. Keep in mind that this post is not about whether the health reform law is good or bad--even though I am going to voice my displeasure over it. The point here is to examine the law in the context of what the Republicans are going to do about the law. To that end I will be discussing what the new law contains and also what was in the primary proposal from the Republicans, which is called the Patients' Choice Act.
I need to explain some labels. The new law is the Patient Protection and Affordable Care Act, or PPACA for short. To identify this law, I will use the following terms: PPACA, the "current law," the "new law," or the "health reform law." You can see the entire PPACA here. I will refer to the Patients' Choice Act by its full name, "PCA," the "Republican plan," or the "Republican proposal." You can see the entire PCA here. When I write about legislation or other specific laws, I usually include specific citations thereto. I have not done that with this post when referring to the PPACA and PCA. I might go back and do that, but working on this post gave me such a severe case of tired head that I got lazy in that regard.
I will repeat what I wrote in my previous post, namely that I think the health care reform legislation did not reform anything. In the early stages of the "reform" process I had a post discussing my displeasure with what was being proposed, which ended up being the basic framework for what was eventually signed into law. My basic complaint is that the "reform" largely left the status quo in place. For you doubters, realize this: before "reform" our health care system was based on and controlled by insurance, and after "reform" our health care system is still based on and controlled by insurance. Under the current law, every person will be required to have health insurance (or face a penalty), and thus the means of delivering health care will become even more entrenched in and controlled by the insurance industry. What the current law does is change access to and delivery of insurance, not the actual health care. The current law also does not address in a direct and/or meaningful way the cost of the actual health care. The current law does not come close to reform of the health care system. And as I said in September 2009, "as long as insurance is the dominating and determinative factor in the delivery of health care, costs will never go down."
All that being said, the Republicans are not going to repeal the health care reform law, and as I stated in my previous post, here are the reasons for my opinion:
- The insurance industry got a lot of what it wanted.
- If the law is repealed, the insurance companies would lose favorable gains and risk losing much more.
- The Republicans are not going to subject their close friends the insurance companies to such loss and risk.
- The current law already contains Republican ideas.
- The Republicans don’t have anything better to offer.
In my opinion, the fact that the "reform" keeps the whole system insurance-based and requires everyone to have insurance keeps the insurance companies happy, and that makes the Republicans happy. Insurance is BIG business, and Republicans love big business.
There are several reasons the insurance industry should be happy. As mentioned, under the PPACA, every person will be required to have health insurance. That means more--to the tune of millions more--people will be paying for health insurance. The Rand Corporation conducted an extensive analysis of the health care bill and opined that the law would reduce the number of uninsured persons by 25 million by 2019. The Congressional Budget Office in late November 2009 completed an analysis of how the law would affect the cost of insurance premiums. The CBO estimates the number of additional insureds to be approximately 50% of 53 million, but I can't tell by what year the CBO thinks that will happen. It appears to be 2016, but I am not sure. In any event, estimates are that essentially 25 million more people would be purchasing insurance because of the new law, and that could be a big benefit to the insurance companies. Moreover, the CBO analysis mentioned above projects that premiums will actually increase between now and 2016 because of the new law. That increase will be higher for those purchasing individually as opposed to those in group plans. I am not saying that is a good thing for consumers. I am saying that the insurance companies should be happy about it because they will not be losing any money over the next few years (even though the amount they will be paying out will necessarily increase over current levels because more people with insurance likely means more people getting health care for which the insurance companies will pay).
The insurance companies should also be happy because there is no "public option." In other words, the federal government is not going into the health insurance business other than the expansion of the already existing Medicare/Medicaid program. In place of the public option "health insurance exchanges" will be established in each state. There will be one exchange for individuals who are not covered through an employer and another exchange for small businesses. I will explain how exchanges are supposed to work later. The PPACA sets out some standards for Exchange policies, and a federal agency will provide additional requirements based on those statutory standards. In other words, a federal agency will ultimately determine what constitutes a "qualified plan" that can be a part of an exchange. The operation of the exchanges will be left to the individual state governments. However, the insurance policies available through the exchanges will be private insurance from the insurance companies. I will also note that under the PPACA, some people will receive government subsidies to help pay for health insurance, but those subsidies do not reduce the premiums, and thus the amount paid to insurance companies.
Under the new law, there will be more government regulation of health insurance. The typical reaction by many is that "regulation is bad," and while I'm sure the insurance industry would rather not have any regulation, here's why I think the regulation which will be in place is not going to be a bad deal for the insurance industry. One thing that big business does not like is instability and unpredictability. If there is stability and predictability, businesses can make longer term plans and strategies, and that's generally a good thing. What the current health care law should do in spite of establishing increased regulation is provide some rules and requirements that stay in place and thus provide some stability and predictability. That combined with the fact that the whole system is still based on and controlled by insurance could benefit the insurance industry. I will discuss this more in the context of a possible repeal of the law. In the meantime, let me sum up this point as follows: regardless of what the regulation turns out to be, people are still going to be required to have private insurance and there will be no public option, and the insurance industry will be willing to work with (and/or around) regulation as long as those elements are in place.
If that explanation doesn't work for you, here's another one. It could have been a lot worse for the insurance companies. A public option would have established direct competition for private insurance, and a public option could have had a competitive advantage (at least in the short term). This was the major thing the insurance companies wanted eliminated from health care reform, and that's exactly what they got. They also got a mandate that everyone has to have health insurance. According to the CBO, they also got a system that actually will produce slightly higher premiums over the next few years, and they got government subsidies that will ensure that the full price of premiums will be paid to them. So the insurance companies got a system that is still based on their product, an increased market (because of the mandate), and some possible stability and predictability.
The bottom line is that the insurance industry came out pretty good under the new law. The insurance companies are going to benefit directly from the "reform," and that's why the Republicans are not going to repeal it.
But what do I know? I'm only a smart-ass lawyer. So how about the opinion of a former insurance insider? Wendell Potter spent a lot of time working for big insurance companies. He headed up communications for Humana, Inc., and then he went to CIGNA, where he eventually became head of corporate communications and the company's chief corporate spokesman. On the November 17, 2010, edition of "Countdown," he said this:
The Tea Party folks may think that Congress might repeal this legislation, but there ain't a chance because what the insurers like about this is the requirement that we all have to buy their products, and there's no public option to funnel any of that money away from them. They‘ll be getting new revenue that will be converted into profits for their shareholders.Moreover, repeal could end up not benefiting the insurance companies, as explained next.
III. The insurance companies would lose favorable gains and risk losing much more, and the Republicans don't want to do that.
Repeal would mean that the insurance companies would lose a guaranteed significantly larger market (because of the mandate), a guarantee that premiums will be fully paid (through the subsidies), and a government-approved (and thus unchallengeable) system that keeps insurance as the controlling factor. Does anyone think the insurance industry wants to throw all that away?
Furthermore, repealing the PPACA would present future uncertainty for the insurance companies. There's a chance that the GOP loses power in the 2012 election, and then the Dems would be completely unrestrained in terms of coming up with a package that was detrimental to the insurance companies. Right now they know what they are dealing with for at least the next five years--a law that requires every person to have health insurance, a law which will make sure that all that insurance is paid for, and a basic set of rules on what the insurance companies can and cannot do. Repeal could open the door for a public option or true reform of the health care system that takes away power and control from the insurance industry. How is that risk worth it given what the current law gives to the insurance industry?
Also, the Republicans are not going to put the insurance industry in a position of potentially losing gains and possibly getting laws that are anti-insurance. As I stated earlier, insurance is BIG business, and Republicans are so tied to big business that they are not going to do anything to threaten big business in general and the insurance industry in particular. I'm not even going to bother to explain this point further. Anyone who thinks I am wrong can feel free to offer some proof.
IV. The current law already contains Republican ideas.
Some of the main features of the PPACA are ideas put forth originally by Republicans, "conservatives," and at least one right wing think-tank.
For instance, the "individual mandate" that everyone be required to have health insurance came from Republicans and that damn bleeding-heart commie organization known as the Heritage Foundation. Here's an excerpt from a March 23, 2010, Miami Herald article by John Dorschner:
"The truth is this (the individual mandate) is a Republican idea," said Linda Quick, president of the South Florida Hospital and Healthcare Association. She said she first heard the concept of the "individual mandate" in a Miami speech in the early 1990s by Sen. John McCain, a conservative Republican from Arizona, to counter the "Hillarycare" the Clintons were proposing.The Heritage Foundation made an individual mandate a key component of it's health care proposal in 1992, as shown in this document. Moreover, the Heritage Foundation's 1992 proposal supported a system based on the system used by federal employees, which is essentially an insurance exchange.
McCain did not embrace the concept during his 2008 election campaign, but other leading Republicans did, including Tommy Thompson, secretary of Health and Human Services under President George W. Bush.
Seeking to deradicalize the idea during a symposium in Orlando in September 2008, Thompson said, "Just like people are required to have car insurance, they could be required to have health insurance."
Among the other Republicans who had embraced the idea was Mitt Romney, who as governor of Massachusetts crafted a huge reform by requiring almost all citizens to have coverage.
In fact, in May of 2009, Republicans introduced a bill called "The Patients' Choice Act" which, as described in this article, provides for health insurance exchanges to be set up in the states--you know, like the current law. The Republican bill also called for subsidies for low income persons to pay for health insurance--as does the current law.
The Republican plan did not include an express individual mandate, as in 2009 Republicans decided their own idea was unconstitutional and that the government should not force people to buy insurance.
For a side-by-side comparison of the current law and the Republican proposal, go here. [NOTE: If you go to that link, here are some instructions. In the "Choose one or more proposals" box, click on "Final Health Reform Law" and "Senators Tom Coburn and Richrad Burr, etc." In the box below that, click on "Select All." Then click on the "Generate Comparison" button that appears.] Also, read this article about the Republican plan. I am going to discuss the Republican plan in more detail later. For now I simply want to point out that what is now current law that Republicans so vehemently opposed contains elements that originated with Republicans and were advocated by Republicans in 2009. You may be wondering why this matters. Well, it matters because now that the Republicans have some power, they have to do something, and if the current health care law gets repealed, they are going to have to come up with something in its place. And given that some of the core elements of the current law came from Republicans, I'm wondering whether they can come up with something really different from the current law.
V. The Republicans don't have anything different or better to offer.
A. The individual mandate
As shown above, Republican ideas are already in the current law, and that is one indication that Republicans have nothing different to offer regarding health care reform. Other indications are found in the Republicans' own "Patients' Choice Act." That bill warrants further analysis because it would likely be what the Republicans would put forth as a replacement for the current law.
The focus of the Republicans' effort to repeal--or otherwise get rid of--the current law is the individual mandate. I need to say at this point that I really do not like the individual mandate. My dislike is mostly due to my personality, in that I don't want anyone telling me what I have to do. However, for reasons I will attempt to explain, if insurance is to be the foundation of a health care system, having a mandate that everyone have insurance really is key to trying to manage the cost of the insurance and provide coverage to everyone. Of course, the fact that I want to change our whole system so that it is not based on and controlled by insurance is another reason why I don't like the individual mandate. That being said, I am not in this post trying to make the argument for what I want. Instead what I am doing is comparing the law we now have to what the Republicans proposed (and what they are likely to propose again if the current law is repealed or otherwise disposed of).
Now, back to the individual mandate. The Republicans claim that it is unconstitutional. They may be right. I am not going to go into the legal analysis here. Instead, I will make two other arguments. First, no one better put any bets down on what the Supreme Court might do on this issue. At first blush it might seem that, given the current composition of the Supremes, the chances would be very good that the individual mandate would be declared unconstitutional. However, such a ruling could have effects that go way beyond health care reform. Such a ruling could set the stage for dismantling all kinds of laws. Now I know that some people think that is a good thing, but I warn those folks to be careful what you ask for. That dismantling could become one huge, completely out of control metaphorical snowball. Trying to control the dismantling will be next to impossible. And anyone who might be concerned about there already being too much litigation already better get ready to have their heads explode, because there will be a huge increase in litigation. Our judicial system is neither designed nor equipped to handle a mass of change all at once. I could (and probably should) give an explanation about that, but for now I am asking the reader to trust me. I would add that I believe our society is also not equipped to handle that much change that quickly. Believe it or not, the Justices of the Supreme Court will likely consider such factors if they have to decide the constitutionality of the individual mandate, and if they do, they might decide not to declare it unconstitutional. More on what might happen in the courts in the last section of this post...
My second argument is that the Patients' Choice Act, while not having an express individual mandate, has a de facto mandate that everyone buy health insurance. In other words, what the current law seeks to do via an explicit provision the Patients' Choice Act would accomplish through a combination of provisions, and thus it is really no different than the current law in terms of a mandate that everyone buy health insurance.
Here's why I say that the Republicans' previous (and probable future) proposal has a de facto mandate. One of the main features of the Patients' Choice Act is the elimination of the current tax law which provides for an exclusion for employer-provided health insurance. In its place would be a refundable tax credit of $2290 for individuals and $5710 for families. This money would have to either be spent on buying health insurance or placed in a health savings account (HSA). This tax credit would be available to everyone, even those who have insurance through their employer. Most of the analysis I have read says that this arrangement would lead to a big decline in employers providing health care. Here 's one explanation:
By repealing the exclusion and establishing a refundable tax credit unrelated to employer-based coverage, the Patient’s Choice Act would take away the main federal tax subsidy for employer-sponsored insurance and likely lead a large number of employers to discontinue offering coverage. Since individuals could claim the tax credit regardless of whether they obtained their coverage through their employer or on their own, many employers likely would conclude they no longer needed to provide coverage. Smaller employers, who are the least likely to offer health insurance today, would be the most likely to take this step. People who lost access to employer-based coverage would have to seek coverage either through a health insurance exchange (if an exchange were established in their state) or the existing individual insurance market.I'm not saying that a major decline in employer-based health insurance is in itself good or bad. Right now I am examining it in the context of this specific proposed legislation. From what I have seen, providing health insurance is a huge cost for employers, and if existing incentives are taken away, a smart business move for them probably would be dropping their insurance plans. But let's look at the effect of this in the context of the Patients' Choice Act. If a given employer drops insurance coverage, the employees are going to have to find some other way to pay for health care. The choices under the Patients' Choice Act are private health insurance or HSAs. For some individuals $2290 per year might cover their annual health costs, so maybe an HSA alone could work for individuals--as long as nothing even semi-major goes wrong with their health. Otherwise, $2290 per year is not going to come close. And if an employee has a family of 4, $5710 per year is not going to go very far, so it is unlikely that an HSA alone would be sufficient for families. Thus, 1) individuals and families are going to need some kind of insurance to make sure they can get adequate health care, and 2) if employers drop their insurance plans, individuals and families are going to need to buy health insurance. Now add to this the fact that under the Patients' Choice Act people do not get the proposed tax credits unless they use that money for health care, and you have a situation where people really will have no choice but to buy health insurance. That is a de facto mandate.
Now, it is true that under the Republican plan, there will be no fine or penalty assessed to people who do not have insurance, and that is a difference between the Republicans and the current law. However, to me that is what we lawyers call a distinction without a difference. Under the Republicans' plan, you will not pay a penalty if you do not buy insurance, but you will not have adequate health care. So your choices are buy insurance or not be able to get adequate health care. Given those choices, what do you think most people will do? And what do you think most people will do when they basically will have access to money, but that access is only possible if they use it for health care?
So why does this matter? It matters because while the Republicans say they are against a law that expressly requires people to have health insurance, they are perfectly fine with a law that still effectively forces people to buy health insurance.
In other words, in terms of an individual mandate to buy health insurance, the Republicans don't have anything to offer that actually is different from the current law.
And I want to add two other points. Mitch McConnell, the Republican leader in the Senate, gave a speech on Nov. 18, 2010, in which he addressed the individual mandate: "By preventing the accumulation of excessive power, the Constitution is designed to reduce the risk of tyranny or abuse from the state or federal government...The health care bill would remove an important bulwark... So fighting this mandate couldn't be more important[.]" Here's what I want to know: Did Mitch McConnell complain about the Patriot Act or the illegal wiretaps of American citizens or any of the numerous acts by our government when the Republicans were in control of Congress and the White House that constitute tyranny and the abuse of power? I know the answer--NO.
My other point is that I find it odd and hypocritical that the Republicans think it is so wrong to force people to buy health insurance but they are perfectly fine with telling people how they have to spend money they receive to buy health insurance or other wise spend it on health care.
B. Health insurance exchanges and other insurance policies
1. How insurance exchanges work
Now it's time to explain how insurance exchanges are supposed to work. The link above gives the following explanation:
A health insurance exchange is an organized marketplace for the purchase of health insurance set up as a governmental or quasi-governmental entity to help insurers comply with consumer protections, compete in cost-efficient ways, and to facilitate the expansion of insurance coverage to more people. Exchanges do not bear risk themselves – they are not insurers. Rather, they would contract with private insurers and possibly offer a public plan option to cover specified populations (such as those obtaining coverage through small employers and those without employer coverage). Ideally, an exchange would promote insurance transparency and accountability, facilitate enrollment and the delivery of subsidies, while also playing roles in spreading risk (i.e., ensuring that the costs associated with those with high medical need are shared broadly) and containing costs.Here's a practical explanation from Ezra Klein:
Imagine that you decided you didn't like your current health insurance and you wanted to change it. Your employer very likely doesn't offer any alternatives. If you do have a choice, it's almost certainly not between more than three different plans.(emphasis added). I am one of those individuals who have been screwed over in all the ways described above. Anyone who claims that there is a good free market for individuals is flat out wrong. The health insurance exchange is supposed to give individuals the same benefits as those in large groups AND give individuals more choice and protection.You could, of course, spit at your employer's offerings and go buy insurance on your own. But the individual insurance market is a scary place. You're on your own, so you have no bargaining power with insurers. Providers can simply refuse to sell you health insurance, or they can jack up your prices because of past illness. They can sell you a plan that's insufficient for your needs and that's thick with loopholes and technicalities. A favored trick, for instance, is to sell plans that don't cover any preexisting conditions: If you go to a doctor complaining of back pain, but it turns out you've felt back pain before, they don't have to cover any costs relating to the ailment.
The Health Insurance Exchange gives you another option. Unlike your employer, it will have a wide array of competing providers offering different plans with varying benefit levels, emphases and price tags. Unlike the individual market, insurers won't be able to discriminate based on your health history or your future risk. Plans will have to be certified as meeting a minimum level of comprehensiveness. Plans that routinely screw over members will lose customers to competing insurers.
The Health Insurance Exchange combines the benefits of choice that are theoretically available on the individual market with the bargaining power and scale that's generally accessible only in large employers[.]
The exchange is supposed to increase market competition in two ways: 1) between the various policies in the exchange, and 2) in the overall consumer market for health insurance. As for 2), what I mean is that the exchange is supposed to compete with the insurance policies that are not part of the exchange. In theory, this competition should help lower prices for all insurance and provide better service to consumers. The success and continued viability of an exchange is dependent on sufficient participation therein--both in terms of the the number of policies made available and the number of people getting their insurance through the exchange as opposed to outside the exchange. If either number drops, the exchange will like fail.
There are two factors which can cause an exchange to fail: "adverse selection," which can be caused by insurers "cherry picking." Before explaining this, I have to point out that under the current law and the Republican Patients' Choice Act, insurance companies would be free to offer insurance policies outside the exchanges. In other words, they would not have to offer all their policies through the exchanges, and not all of their policies would have to meet the requirements for policies in the exchanges. As will be explained, this is particularly significant under the PCA. "Adverse selection" occurs when
healthy and sick people to separate into different insurance plans...which can cause plans attracting less-healthy enrollees to become increasingly unaffordable over time. In addition to harming vulnerable individuals, adverse selection would undermine the very sort of competition based on price and quality that should drive insurers to offer better-value benefits, and it could unravel health-insurance exchanges over time.Why this happens is explained by "cherry picking." This op-ed piece explains how this shut down the insurance exchange in Texas in 1999.
our exchange failed not because it wasn’t needed, and not because the concept wasn’t sound, but because it never attained a large enough market share to exert significant clout in the Texas insurance market. Private insurance companies, which could offer small-business policies both inside and outside the exchange, cherry-picked relentlessly, signing up all the small businesses with generally healthy employees and offloading the bad risks—companies with older or sicker employees—onto the exchange. For the insurance companies, this made business sense. But as a result, our exchange was overwhelmed with people who had high health care costs, and too few healthy people to share the risk. The premiums we offered rose significantly. Insurance on the exchange was no longer a bargain, and employers began backing away. Insurance companies, too, began leaving the alliance.As explained below, the exchanges proposed by the Patients' Care Act would be susceptible to adverse selection and cherry picking.
2. Insurance exchanges in the PPACA and PCAAs noted, both the current law and the Republicans' proposal call for state-run insurance exchanges, but there are major differences.
Under the PPACA, each state will be required to set up an insurance exchange for individuals and another exchange for small businesses. Under the Patients' Choice Act from the Republicans, the exchanges are strictly voluntary. In other words, states do not have to establish them. Thus, under the PCA, if a state decides not to have an exchange, individuals would still be subject to the same problems they faced before. And if more states choose not to have an exchange, then more individuals will be subject to those problems.
Under the PPACA and PCA insurance plans that are part of an exchange are subject to certain restrictions which act as consumer protection provisions. For instance, under the PCA insurance policies offered through an exchange would provide some protection against exclusion of preexisting conditions and excessive premiums and would require that anyone seeking insurance through the exchange would be able to purchase a policy regardless of health status. That is also true under the PPACA, but here's the difference: under the PCA those protections are required ONLY for policies offered through an exchange while under the PPACA all consumer protection provisions apply to all insurance policies--and the PPACA provides many more consumer protections that the PCA.
Because of these differences, there is a good chance exchanges would fail under the Republicans' Patients' Choice Act. Without requiring consumer protections to apply to ALL insurance policies--inside and outside the exchange--the PCA offers little incentive for insurers to participate in the exchange. Why subject yourself to all kinds of restrictions that you have avoided and can still avoid simply by not submitting policies to the exchange? And what incentive is there for insurance companies to stop cherry picking? Under the PCA, insurers could do exactly what they did in Texas, namely offer non-exchange policies to healthy companies and individuals, thus leaving all the unhealthy people--and their greater risks and costs--to the exchange. That makes good business sense for the insurance companies, so why won't they do that if the opportunity exists? And that opportunity will exist under the PCA.
On the other hand, that opportunity will be minimized if not eliminated under the PPACA. Every person will have to be guaranteed access to insurance regardless of health status regardless of whether they seek insurance in or out of the exchange. Every insurance plan, both in and out of the exchange, will have to take steps to spread risk, which means that a plan cannot simply be for all healthy people at the exclusion of unhealthy ones. All the insurance policies outside the exchanges will have to have the same consumer protections that policies in the exchange have. All of this reduces the incentive to cherry pick and create adverse selection. And that provides some incentive for the insurance companies to participate in the exchange, for two reasons 1) they can no longer profit from this sort of conduct, and 2) because of the individual mandate, they can have easy access to a greater number of possible insureds, and that will lead to profits for them. In other words, given the across-the-board consumer protections in the PPACA, it could be in the insurance companies' best interests to see that the exchanges succeed.
And here's something else to keep in mind. Under the PCA, if a state chooses to establish an exchange (and remember the state can choose not to do so), there is nothing in the PCA that says the state has to always maintain an exchange. If the exchange is failing, the state can shut it down. Thus, if cherry picking and adverse selection occur, the state can simply decide to end the exchange. Since the PPACA requires states to open and maintain an exchange, states do not have the option to shut down an exchange.
The bottom line is that exchanges under the PCA have a high risk of failing, and if that happened, we would be left with the same insurance system we had before the current law. Not only is that not "change we can believe in." It's no change at all.
C. Conclusion as to what the Republicans have to offer
When it comes to alternatives to the PPACA, the Republicans have a big bag of nothing. The current law already has as two of its main features ideas that originated with the Republicans--the individual mandate and insurance exchanges.
Now they are complaining about the individual mandate, which is really ridiculous since their own Patients' Care Act operates as a mandate as well. Without the mandate, the whole deal for the insurance industry under both the PPACA and PCA is a non-starter. Why? Because without a mandate, there would be a chance that some other form of health coverage could get started, and that is the last thing the insurance industry wants. On the other hand, an individual mandate, be it express or de facto, helps keeps the whole system insurance-based, which is exactly what the insurance industry wants. And there is no question that the Republicans want to keep the insurance industry happy. Anyone who thinks otherwise is either delusional or naive to the point of being a danger to others. So it is not plausible to think that the Republicans are sincerely against an individual mandate. Also, as I mentioned earlier, if the system is to be insurance-based, an individual mandate makes sense. The mandate, when combined with exchanges, will increase the number of insureds, which should increase the bargaining power of consumers, increase competition among insureds, and give insurance companies incentive to offer policies that provide good coverage for good prices. That's the theory anyway. And , in my opinion, the exchanges are not likely to succeed without the mandate. So, a mandate that everyone have health insurance is a key way to try to provide the factors which could increase quality and decrease price over time. In other words, any effort to "reform" an insurance-based health care system to reduce insurance costs, increase access to insurance, and improve service to the consumer pretty much requires an individual mandate. The Republicans know this, so again I say their objections to the individual mandate concept are not sincere.
And in fact, the PCA is actually less of a reform than the PPACA. As shown, it contains a high risk that exchanges, if established at all, would have a high risk of failing. Given that any consumer protections under the PCA would come only through exchanges, the PCA presents very little protection for consumers. Also, the exchanges would be a key to providing the competition and bargaining power to individuals requisite to lowering costs and increasing service over time. Again, given the chance of failure of the exchanges under the PCA, the PCA really would not reform anything, because we would likely end up with exactly what we had before.
This analysis of the PCA is important because the PCA was the only purely Republican bill to be considered. It was put together and sponsored by Tom Coburn and Richard Burr in the Senate and Devin Nunes and Paul Ryan--the GOP star on budget matters--in the House. In my opinion, the PCA will be the legislation put forth again by the Republicans if the opportunity arises, and that is why I continue to say the Republicans have a big bag of nothing.
VI. So what are the Republicans going to do?
The Republicans are not going to repeal the PPACA.
So, they are going to put on a show for their energized and angry base. They will continue to rail against the PPACA, especially the individual mandate, and they will blame the Democrats for not changing anything. That way they keep their base placated to a degree and don't have to incur the risks inherent to actually doing something substantive.
As for the effort to have the mandate declared unconstitutional, the Republicans will continue to pursue that, but don't expect results anytime soon. Given that the matter has to make its way to judgment in the U.S. District Court and then go to the Court of Appeals before it evers gets a chance to go to the Supreme Court, the matter is not likely to be resolved soon. More to the point, it might not be resolved before the 2012 election. In fact, I would bet that although the Republicans will continue to pursue the case, they will not try to expedite the matter because delay would work to their advantage. As long as the case is not fully and finally resolved, the Republicans still do not have to come up with policy and legislation to replace the mandate, and they can still bitch and moan about the mandate. If the case is resolved quickly and the mandate is found unconstitutional, then the Republicans will have to do something, and they don't want that. If the case is resolved quickly and the mandate is found constitutional, the chances of the Republicans ever being able to change the current law go down significantly, and they don't want that. See, either outcome could adversely affect the Republicans in the 2012 election. By not getting a final ruling one way or the other, the Republicans can continue what has worked for them--bitch and demonize the other side without having to back up anything with real, meaningful action.
And that is precisely what I predict the Republicans will do.
When it comes to alternatives to the PPACA, the Republicans have a big bag of nothing. The current law already has as two of its main features ideas that originated with the Republicans--the individual mandate and insurance exchanges.
Now they are complaining about the individual mandate, which is really ridiculous since their own Patients' Care Act operates as a mandate as well. Without the mandate, the whole deal for the insurance industry under both the PPACA and PCA is a non-starter. Why? Because without a mandate, there would be a chance that some other form of health coverage could get started, and that is the last thing the insurance industry wants. On the other hand, an individual mandate, be it express or de facto, helps keeps the whole system insurance-based, which is exactly what the insurance industry wants. And there is no question that the Republicans want to keep the insurance industry happy. Anyone who thinks otherwise is either delusional or naive to the point of being a danger to others. So it is not plausible to think that the Republicans are sincerely against an individual mandate. Also, as I mentioned earlier, if the system is to be insurance-based, an individual mandate makes sense. The mandate, when combined with exchanges, will increase the number of insureds, which should increase the bargaining power of consumers, increase competition among insureds, and give insurance companies incentive to offer policies that provide good coverage for good prices. That's the theory anyway. And , in my opinion, the exchanges are not likely to succeed without the mandate. So, a mandate that everyone have health insurance is a key way to try to provide the factors which could increase quality and decrease price over time. In other words, any effort to "reform" an insurance-based health care system to reduce insurance costs, increase access to insurance, and improve service to the consumer pretty much requires an individual mandate. The Republicans know this, so again I say their objections to the individual mandate concept are not sincere.
And in fact, the PCA is actually less of a reform than the PPACA. As shown, it contains a high risk that exchanges, if established at all, would have a high risk of failing. Given that any consumer protections under the PCA would come only through exchanges, the PCA presents very little protection for consumers. Also, the exchanges would be a key to providing the competition and bargaining power to individuals requisite to lowering costs and increasing service over time. Again, given the chance of failure of the exchanges under the PCA, the PCA really would not reform anything, because we would likely end up with exactly what we had before.
This analysis of the PCA is important because the PCA was the only purely Republican bill to be considered. It was put together and sponsored by Tom Coburn and Richard Burr in the Senate and Devin Nunes and Paul Ryan--the GOP star on budget matters--in the House. In my opinion, the PCA will be the legislation put forth again by the Republicans if the opportunity arises, and that is why I continue to say the Republicans have a big bag of nothing.
VI. So what are the Republicans going to do?
The Republicans are not going to repeal the PPACA.
So, they are going to put on a show for their energized and angry base. They will continue to rail against the PPACA, especially the individual mandate, and they will blame the Democrats for not changing anything. That way they keep their base placated to a degree and don't have to incur the risks inherent to actually doing something substantive.
As for the effort to have the mandate declared unconstitutional, the Republicans will continue to pursue that, but don't expect results anytime soon. Given that the matter has to make its way to judgment in the U.S. District Court and then go to the Court of Appeals before it evers gets a chance to go to the Supreme Court, the matter is not likely to be resolved soon. More to the point, it might not be resolved before the 2012 election. In fact, I would bet that although the Republicans will continue to pursue the case, they will not try to expedite the matter because delay would work to their advantage. As long as the case is not fully and finally resolved, the Republicans still do not have to come up with policy and legislation to replace the mandate, and they can still bitch and moan about the mandate. If the case is resolved quickly and the mandate is found unconstitutional, then the Republicans will have to do something, and they don't want that. If the case is resolved quickly and the mandate is found constitutional, the chances of the Republicans ever being able to change the current law go down significantly, and they don't want that. See, either outcome could adversely affect the Republicans in the 2012 election. By not getting a final ruling one way or the other, the Republicans can continue what has worked for them--bitch and demonize the other side without having to back up anything with real, meaningful action.
And that is precisely what I predict the Republicans will do.
posted by WCharles @ 11/23/2010 05:51:00 PM
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