Today, I’m closing out the year of Health in 2 Point 00 from the ski slopes. In Episode 103, Jess asks me about the ACA ruling that the individual mandate is unconstitutional, whether Sutter Health got what they deserved after the $575 million settlement, health insurer Bright Health raising a huge $635 million round, and a rumor about a $250M Softbank investment coming next week. Wishing you all a very happy 2020! —Matthew Holt
Much of the terrain was easy going. Neither the justices nor the lawyers doubted that the healthcare and healthcare insurance markets involve interstate commerce — insurance and healthcare providers are usually national or at least regional operations, folks who cross state lines get sick and must be cared for away from home regularly, and people are often unable to relocate to another state for fear of losing employer-based coverage. Nor was it disputed that the mandate was sincerely motivated by and closely related to the regulation of these interstate markets. Those two conclusions are usually sufficient to justify the exercise of congressional power under the commerce clause of the Constitution.
But then things got more treacherous. The problem, suggested by numerous questions from the conservative justices on the court, was the slippery slope they saw created by the mandate — the idea that Congress was requiring individuals to buy something. If the feds can require each person to buy health insurance, what can’t they force people to purchase?
In recent years, politicians of every stripe have eaten their words about the wisdom of requiring all Americans to possess health coverage. This hasn’t been real news since the 2007 Democratic primary debates, when candidate Obama claimed his reasons for opposing the mandate were similar to those expressed by Hillary some 15 years ago.
A few years later it was President Obama’s turn. And by 2010, the entire Republican party performed a synchronized heel-face turn, virulently opposing the solution they advocated decades earlier. All of this culminated with the recent passage of the “Repealing the Job-Killing Health Care Law Act” in the House, by which point the mandate had become a 21st century Intolerable Act.
The media have dutifully reported each foible as if such strategic backpedaling were something new under the sun. But the 22-year path to ACA § 1501(b) is a story in its own right, a sort of philosophical history of American health reform policy.
Part I – The think-tank solutions (1989 – 1992)
Back in the late 1980s, the individual mandate wasn’t controversial at all–just another idea being kicked around in conservative think tanks. Although economist Mark V. Pauly, an adviser to the first Bush administration, is often cited as the mandate’s creator, conservative thinkers Stuart M. Butler and Edmund F. Haislmaier were dreaming up similar proposals at the Heritage Foundation as early as 1989.Continue reading…
The demise of the ACA individual mandate, along with Trump’s and Republicans’ efforts to repeal Obamacare in 2017, will trigger in election year 2018 a new phase of the long-running, bitter battle over the fate of ACA, the insurance marketplaces, and the direction of health reform in general.
Surprisingly, the Democrats appear to have the upper hand for the moment. Republican efforts to repeal the ACA in 2017 were deeply unpopular—only about 20 percent of the U.S. population supported them. Independents and moderate Republicans, in Congress and among voters, were notably opposed. And in the Senate, moderates killed the various ACA repeal bills (albeit by narrow margins).
The Republican tax bill is also unpopular.
Recent special election results in Virginia and Alabama—put Republicans off-balance and on-notice as well. In particular, the Alabama result bends the vote math in the Senate against any repeat ACA repeal efforts in 2018, and very likely beyond.
But, perhaps most surprising, the resurgence of interest in “coverage for all,” universal coverage, and “health care as a right” that started with Bernie Sander’s campaign in 2016 has continued to gain traction, even among some conservatives.
House Energy and Commerce Chairman Fred Upton along with Senate Finance Chairman Orin Hatch and Senator Richard Burr have outlined what is, at least for now, the Republican alternative to Obamacare.
Republicans will now argue they have a better health insurance reform plan and that Obamacare should be repealed and replaced by it––particularly if the Supreme Court plunges the new health law into chaos by throwing the subsidies out in 37 states.
They will have an uphill battle. Not because these Republicans don’t have a lot of good ideas, but because they have put a list of big and complicated changes on the table. Lots of people may not like Obamacare but Republicans have now really muddied the waters with a huge take it or leave it alternative that will have plenty of its own reasons to give voters pause.
Rumors have been circulating in the marketplace all week that the administration was thinking of extending the individual health insurance policies that Obamacare was supposed to have cancelled for as much as three more years.
Those rumors have now come out into the open with Tom Murphy’s AP story on Friday.
That the administration might extend these polices shouldn’t come as a shock. My sense has always been that at least 80% of the pre-Obamacare policies would ultimately have to be canceled because of the administration’s stringent grandfathering rules that forced almost all of the old individual market into the new Obamacare risk pool.
But with the literal drop dead date for these old policies hitting by December 31, 2014, that would have meant those final cancellation letters would have had to go out about election day 2014. That would have meant that the administration was going to have to live through the cancelled policy nightmare all over again––but this time on election day.
The health insurance plans hate the idea of another three-year reprieve. They have been counting on the relatively healthy block of prior business pouring into the new Obamacare exchanges to help stabilize the rates as lots of previously uninsured and sicker people come flooding in.
With enrollment of the previously uninsured running so badly thus far, getting this relatively healthier block in the new risk pool is all the more important. The administration’s now doing this wouldn’t just be changing the rules; it would be changing the whole game.
Republicans, and a few vulnerable Democrats, had essentially called for this last fall when legislation was floated in both the House and Senate with the “If You Like Your Policy You Can Keep It,” proposals. At the time, the administration and Democratic leaders rightly said if this sort of thing would have been made permanent it would have a very negative impact on what people in the new pool would pay––and on their already high deductibles and narrow networks.
At the beginning of this post I asked, Is Obamacare unraveling?
First, as I have said before on this blog, the law’s reinsurance provisions will mean Obamacare can keep limping along for at least three years. And, even making this change won’t alter my opinion on this. It will just cost the government more reinsurance money to keep the carriers whole.
By asking if it is unraveling, what I really wonder about is the whole sense of fairness in the law and the expectation that everybody needs to get the Democrat’s definition of “minimum benefits” whether they want them or not.
This week, three senior GOP senators (Orrin Hatch, Tom Coburn, and Richard Burr) announced their proposed Patient Choice, Affordability, Responsibility, and Empowerment (or Patient CARE) Act. Given that each of this group is a heavyweight mainstream Republican and that Senator Coburn is one of the few physicians in the Congress, the draft Act deserves a serious look.
Although the first part of the draft would repeal the ACA, other parts would continue a number of the ACA’s reforms while introducing some changes in attempts to control costs and reduce the numbers of uninsured, creating a kind of Obamacare Lite.
The draft proposes to continue the ACA’s ban on lifetime insurance caps, its coverage of dependents up to the age of 26, and the ACA’s savings in Medicare costs. It also continues, although in a weaker form, the ACA’s subsidies for low-income individuals and the ban on medical underwriting, and allows states to continue to operate insurance exchanges (although without any federal funding).
On the other hand, the three parts of the ACA that have taken the most heat from Republicans – the individual mandate, the Medicare IPAB, and the expansion of Medicaid eligibility – would all be eliminated.
If you had a health insurance policy that was cancelled, you are now exempt from the individual mandate and its tax penalty should you not decide to buy a replacement policy. In addition, you can now sign up for the very high deductible Catastrophic Plan that was originally reserved only for those under the age of 30.
If you did not have a health insurance policy that was cancelled, you are still subject to the individual mandate and you are not entitled any special treatment toward signing up for the Catastrophic Plan. You must pay the full price for an exchange plan and accept whatever out-of-pocket costs and network limits it might have for the money.
The administration made this change under the “hardship” provisions already part of the law. They have simply defined hardship as having lost your old individual plan and your not being able to find something without it being a “hardship” to purchase, presumably over price or coverage.
This change was brought about when a number of Democratic Senators, some of them facing a tough reelection battle, demanded this concession.
The change was made without consulting the health insurance industry and it was a surprise to them. It is another Obamacare change months after their 2014 rates were set under the presumption all of these cancelled policyholders would be paying a lot more premium into the pool than they pay today.
One has to believe this will not be the last concession to Democrats under reelection pressure.
One has to wonder how this can’t other than undermine further how people feel about Obamacare––particularly its fairness––and taking their “social responsibility” to sign-up seriously.
“If you want everyone to be able to get insurance, everyone has to actually have insurance.
Most people agree that one shouldn’t be denied insurance because of illness and pre-existing conditions. This is probably the least controversial aspect of healthcare reform. The problem is, you can’t insist that insurance companies sell to all comers at reasonable rates unless you also guarantee a sufficiently large risk pool that includes the healthy as well as the sick.
If you don’t see to it that the healthy sign up, people will go without insurance until they get sick, and the pool of the insured will become so costly that premiums will quickly spiral out of control.
So, to make sure everyone CAN get insurance, everyone MUST get insurance.
This isn’t a moral or political stance, it’s not something you can choose to believe in, it’s basic economics.
The problem with the ACA’s approach to ensuring universal coverage is that the incentives for the healthy to sign up are too weak.
The healthy who decide not to purchase insurance will have to pay a penalty, but that penalty will usually be substantially lower than the price of insurance. Perversely, this weakened approach to ensuring universal coverage could make things worse than they are today. How?
Today, if I’m healthy and uninsured, I know that if I develop a serious illness, I won’t be able to get coverage. At all. This is an incentive for me to go out and spend the money on insurance. Once the ACA is in full force, if I decide that I would rather pay the (cheaper) penalty than buy insurance, I have the security that should I become sick, assuming it’s not a super emergency, I will be able to get insurance to cover future costs, since policies will have to be offered to all. This security blanket for those who choose to remain uninsured is a major problem.”
The Federal Shutdown is Over. The Health Care Fight is Just Getting Started. Here’s What May Happen Next…
Just another day of trying to log in to healthcare.gov.
Two weeks after its launch, the federal health insurance exchange is a “failure,” says the Washington Post‘s Ezra Klein. Some officials deserve to be fired, according to Robert Gibbs, who until February 2011 was one of President Obama’s closest advisers.
And those are the Affordable Care Act’s supporters.
Even the president conceded on Tuesday that healthcare.gov had “way more glitches than I think are acceptable.”
Those glitches could take months — or even years — to fix, according to reports. But there’s a key deadline looming: Jan. 1, 2014, when the ACA’s individual mandate takes effect.
Under the mandate, millions of Americans who were expected to use the exchanges to obtain health insurance will face fines if they haven’t purchased coverage by Feb. 15, raising the question of whether the mandate or other Obamacare provisions should be postponed — an uncomfortable position for an administration already trying to implement a politically divisive law.
But at this late date, what parts of the ACA can legally be delayed?
“In a sense, all of it,” Timothy Jost, a Washington & Lee law professor, told me. But “there’d be a high political price to pay. And delay could result in litigation.”
Jost was among several experts who spoke with me about the health insurance exchanges’ bumpy rollout, the ripple effects for the mandate and other provisions, and what it could all mean for implementing the ACA.
What Agencies Can and Can’t Do
When considering a delay to Obamacare, it’s important to understand the difference between statutory and discretionary deadlines.
For example, the ACA’s language directly calls for many mandatory deadlines — like rolling out the individual mandate or implementing a slew of insurance market reforms on Jan. 1, 2014.
But the agencies also have had considerable leeway on how they’ve chosen to apply the law — like choosing an Oct. 1 launch date for the exchanges, a deadline that retrospectively seems ambitious.