Category Archives: Health Policy

The Newly Released Public Option Proposal Will Reduce the Deficit by $68 Billion

Cross posted at the Wonk Room

Just when you thought the last nail had been driven in the public option coffin months ago, just like a phoenix rising from the ashes, the public option has once again returned to Congress.  As Noam Levey reported last night, “[c]reating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.” The legislation, HR 5808, is sponsored by Rep. Lynn Woolsey (D-CA) and the 128 cosigners are largely progressive caucus members and include all three chairmen of the committees of jurisdiction, Ways and Means, Energy and Commerce, and Education and Labor.

The Congressional Budget Office (CBO) scored the legislation and noted some promising findings.  The public plan, in this form, has always been a deficit reducer and this is no exception.  CBO found the proposal would reduce the deficit by $68 billion from 2014 to 2020. Despite likely lower reimbursements than private plans, CBO found providers would likely participate in large numbers because of the number of enrollees. CBO estimates the average public plan premium would be 5 to 7 percent lower than other private plans available within the exchange, making it more affordable to individuals.  They also estimate approximately 13 million or one in every three individuals eligible for exchange coverage would chose the public option.

The legislation looks very similar to the original House public option that passed the Ways and Means and Education Labor committees. It is important to remember the public option that passed the full House of Representatives in November of last year looked very different from this initial version. Both the original House bill and the new legislation would create an option for a public plan within the health insurance exchanges beginning in 2014.  Providers would be paid Medicare rates plus 5 percent in the initial years.  The providers will not be required to accept Medicare to enroll in the program.

Realistically, this chances of this public option bill passing this Congress, who is exhausted from the last public option fight and in full midterm mode, are slim.  This hasn’t deflated Woolsey who said, “This will be there for the next Congress.” Whether or not this proposal goes anywhere legislatively, it reminds more progressive voters and members of the party that the public option has not been forgotten.  States have already begun showing support for public run insurance systems, this support from the federal government can work to galvanize the effort.

In comparison to the original House version of the public option, as CBO notes, some of the savings are not as large.  This is primarily due to the fact, “that total federal subsidies for exchange participants will be substantially smaller under PPACA than they would have been under the legislation that was considered in the House.”  In other words, because we  aren’t spending as much as we were with the original House bill, we can’t save as much.

In comparison to a very early Senate public plan option, this public plan would cover more individuals and premiums would be cheaper for individuals.  Providers would likely see lower rates which would make them not favor this plan.  A public plan with payments linked to Medicare was never an option for this Senate.

A summary table comparing the three public option proposals is below.

Initial House Proposal HR 3200, Summer 2009 (later became a negotiated rate system) Early Senate Proposal for HR 3590, November 2009 (public option later dropped) Woolsey HR 5808, July 2010
Deficit Reduction
Not separately scored – unofficial estimates had a savings of $110 billion $3 billion 2014-2020 $68 billion 2014-2020
Premiums 10 percent cheaper than private plans in the exchange More expensive than private plans in the exchange 5-7 percent cheaper than private plansin the exchange
Estimated number of individuals enrolling 9-10 million 3-4 million 13 million
Payment Medicare rates with +5% bonus in first three years for physicians enrolled in Medicare Negotiated rates with providers Medicare +5% bonus for first three years
Sexy Fact The public plan can negotiate drug prices from the start. Provider participation is voluntary. Healthier enrollees, states could opt out of the plan, start up costs must be repaid. State based exchanges with a federal Medicare linked payment system.

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What the Healthy San Francisco Supreme Court Decision Means for National Health Care Reform

After a four year extensive legal battle, the Supreme Court abruptly ended one of the longest, most divisive, health insurance battles in recent history.

Contained in the Healthy San Francisco program is a mandate on employers in San Francisco to offer health insurance coverage to their employees. If failing to do so, the employer can meet the requirement by paying into the public program.  Small employers and non-profits are exempt. A very similar approach was adopted in many of the national health care reform proposals. The Golden Gate Restaurant Association unsuccessfully challenged this requirement in the 9th U.S. Circuit Court of Appeals in 2008.

Today, the US Supreme Court decided to not hear the final appeal from the Restaurant Association, ending their battle to eliminate this employer mandate.

While the questions raised by the city-wide employer mandate is far from the federal and constitutional questions raised in the court cases involving national health care reform, the Supreme Court’s willingness to throw aside such a hotly debated issue involving health insurance mandates points to the current vision of the Court.  The Restaurant Association may not have had the strongest legal argument to eliminate a mandate, but the Supreme Court has shown hesitancy to fully address the issues surrounding insurance mandates.

The Association argues the mandate violates federal law, rather than a Constitutional debate like that of the State Attorney General’s case against national reform. The fact that the Court defended state law over federal restrictions does not hurt the proponents of health reform and the constitutionality of national reform.  These are separate questions on federal versus state powers.  In fact, a repeal of the San Francisco employer mandate would have hurt the case for the Attorney Generals.  It would have been a blow to the health insurance regulatory power of the states, in favor of federal law.  So in this case, conservatives hoping for a repeal of health reform should have been rooting for San Francisco.  I imagine that image does not appear likely.

But like I said, these are very different issues, with a great deal of nuanced differences.  Health reform does not limit a state’s ability to set mandates and create additional regulations for insurers.  The employer mandate in San Francisco is designed very differently in terms of penalty than national health reform.

This is why, the most important piece to look at is the attitude of the Supreme Court.  While the individual and employer mandate are very different under a microscope, they are one of the few health insurance mandates that currently exist in this country.  Legal reactions to mandates are important, because there is relatively few legal decisions and little history behind such laws.

The Supreme Court’s desire to avoid this specific issue of insurance mandates gives hope to defenders of health reform that a case against a similar individual mandate will also be refused.

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Graph of the Day: How the Media Covered Health Care Reform

Today, Pew Researchers released a report on how the media covered the health care reform debate.  Igor Volsky beat me to the punch this morning with some great analysis and you should take a look at it.

In his piece, Volsky gives a personal glimpse of how the media and Republicans played to the politics and sensationalism:

Republicans successfully exploited the media’s desire for easy to understand left/right talking points coverage and flooded the airwaves with all kinds of attacks, forcing Democrats to respond and the media to amplify. For instance, during my appearances on cable news shows, the producers would ask me for “my take” on the issue in a pre-show interview and input the answers into the computer without ever interrogating my responses. The more confrontational I became, the more praise I received. During one particularly heated segment, the producer came into my ear and told me what a good job I’ve done ’shouting down’ my conservative opponent. The veracity of my responses or the informational value of the segment was completely irrelevant. It was the back and forth that mattered most.

The most telling tale of the media portrayal is illustrated in this chart, below:

The health care reform debate may have centered only on politics within the media, but I doubt that it was what was discussed around kitchen tables all over the county.  The arguments over politics may have contributed to opinions of the bill, but the public has had a greater appetite for ideological battles than the demise of the “gang of six,” Howard Dean’s departure from protocol, or analysis of whether Obama was too slow to step into the legislative process.

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Arnold’s Smart Move

I’ve been a critic of Arnold Schwarzenegger’s (R-CA) policies for the better part of his term as governor.  But Thursday, his support for the California Medicaid would make opponents proud.

Arnold had been a wavering, sometimes supporter of health care reform throughout the debate.  More recently, in early January, he called the legislation “health care to nowhere” despite the fact it looked very similar to reforms he proposed in California.

Thursday, the California governor came out in strong support of the health care reform law, becoming the first Republican governor to do so. “The bottom line is this: If national health care reform is going to succeed, it has to be a partnership, like with everything, a partnership between the state and the federal government,” he said.

Now for the fun part.

Arnold’s announcement came the in the same letter as the state ask from the US Department of Health and Human Services for over $4 billion a year in additional Medicaid funds.  This Medicaid waiver has been in the works for a long period of time, but with the state’s fiscal distress the waiver is larger than the state has asked for in the past. It is needed in the state too. With nearly 1/4 of the population uninsured and historically low Medicaid payments, the waiver will go a long way to help doctors and low-income individuals in the state.  The waiver would expand eligibility for Medicaid coverage to 200% federal poverty, well above the reform’s 133%.

Of course, HHS Secretary Kathleen Sebelius praised the Governator immediately after his move.  She needed this win, as state after state has been uncooperative to say the least in signing on to implement the reforms.

Now, with talk of changing the constitution reemerging to allow the Austrian born Republican governor to run for president, the Governator has once again returned to the spotlight as a national model for moderate conservatism.  Yey?

By Emma Sandoe

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Graph of the Day: Health Care Reform Timeline

Although the commentary could be done without, take a look at this timeline graphic (from the Health Insurance Providers):
Health Care Reform

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Social Justice and Allowing Youth to Stay on Their Parents’ Plan

After the signing of the health care reform bill David Leonhardt of the New York Times called the move the, “federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago.” While he is right in “nearly every major aspect of the health bill” (now law) does push toward economic equity– one key area where this is far from the case is the popular provision that allows children to stay on their parent’s plan till the age of 26.

The provision in the law enables children to claim dependent status under their parents’ health insurance till the age of 26.  The major reason this provision is in the bill is purely political.  Probably one of the most popular and least controversial ideas, it is a reform that goes into effect immediately.  Voters able to participate will immediately see the benefits of their children being covered. There are two schools of thought regarding the implications of this provision.

President Barack Obama and Democratic leadership will tell you the story of children graduating from college only to find no insurance available because of the poor economy and difficulty finding a job.  There is security in knowing that these recent college graduates can stay on their parents’ plans and are able to get their feet on the ground.  Most importantly they are covered in case of an emergency.

However, the long term implications of the policy and the impact it will have on low income populations is of great concern.  The population that is most effected by this are upper income and upper-middle income families.  These are the populations that are most likely to have health insurance offered by their employer, health insurance with dependent coverage, and parents that are able to pay the additional cost of dependent coverage.

The fear comes in the assumption that this is a majority of the population.

Of concern, coverage in the university setting is threatened if college administrators begin to assume college students will opt for parent coverage.  While it is true that many plans currently cover children still enrolled in college, the additional burden of proving college enrollment and the low cost of the college plans often draw many away from the parent coverage and on to university plans.  College plans are very low cost due to the fact the insurance pool is made up of largely young, healthy individuals. As more college students go to their parents’ plans this may raise the costs for older enrolled students.

The impact this provision will have on employer benefits is also of concern.  If employers begin to assume young people will be covered by their parents we face a situation where employer sponsored coverage is further threatened. For large employers, the desire to bring young, healthy individuals into the insurance pool and keep costs lower will out way the desire not to cover young people, but professions geared at young adults and smaller businesses may opt not to cover.  Because of other provisions in the health care reform bill, young adults have more options of purchasing insurance coverage, however, employer sponsored coverage is preferable under our current health care system.

Most importantly, as mentioned, these provisions benefit upper income individuals and neglect assisting lower income individuals– further creating social inequities.  While there is no doubt that the health care reform law has moved our country in a direction of social equity, voters today will not accept a purely social justice bill.  The dependent coverage provision is designed to provide middle to upper income voters with the security of knowing their own children are protected, potentially at the detriment of less advantaged young people.

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update (3-28-10 2:30pm): Read this article in the Washington Post about this issue.

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The Thirty Year History Of Republicans Supporting the Individual Mandate

Over the course of the White House summit on health care reform, Republican members of Congress repeatedly reminded Americans of their opposition to the controversial individual mandate or requirement to purchase insurance. Senator Chuck Grassley (R-IA) said, “The high cost of this bill comes from a non-constitutional mandate.” Minority Leader John Boehner also attempted to bring up the constitutionality of the mandate in a discussion on the deficit.

In August, Grassley laid out a strong defense of the policy by saying, “through an individual mandate and that’s individual responsibility and even Republicans believe in individual responsibility.” A long time supporter of the policy, again in June he said, “there isn’t anything wrong with it [an individual mandate], except some people look at it as an infringement upon individual freedom.”

Republican support for the individual mandate policy goes back further than this health care reform discussion. Earlier this month, Julie Rovner profiled a history of the policy dating back to the 1980’s

In fact, says Len Nichols of the New America Foundation, the individual mandate was originally a Republican idea. “It was invented by Mark Pauly to give to George Bush Sr. back in the day, as a competition to the employer mandate focus of the Democrats at the time.”…

“We called this responsible national health insurance,” says Pauly. “There was a kind of an ethical and moral support for the notion that people shouldn’t be allowed to free-ride on the charity of fellow citizens.”

The policy was originally included in many Republican proposals including the proposals during the Clinton administration. The leading GOP alternative plan known as the 1994 Consumer Choice Health Security Act included the requirement to purchase insurance. Further, this proposal was based off of a 1990 Heritage Foundation proposal outlined a quality health system where “government would require, by law every head of household to acquire at least a basic health plan for his or her family.”

More recently, the Heritage Foundation continued to support the proposal under the Massachusetts health care reform effort passed into law while Mitt Romney was governor. While the proposal did change over the course of the reform process in the state, and Romney and Heritage tried to walk back their support, as Romney admitted this weekend it is, “the ultimate conservative plan.”

The questions raised by tenther individual mandate opponents have largely been debunked by constitutional law experts. Grassley and other Republican are appealing to conservative voters with their recent opposition rather than the constitutional questions. If there had been problems with the legality of the requirement, the argument would have been raised at one point in the last thirty years.

By Emma Sandoe

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