Friday, November 19, 2010


State governments, like California’s, that are already well into the efforts involved in establishing insurance exchanges meeting ACA requirements, may be starting to worry after the mid-term election results.

With Republican politicians apparently unified in their determination to roll back health care reform, is there a risk that come 2014 there will be neither a statutory requirement nor any funding to support exchanges? Could states’ efforts to build exchanges be in vain?

About-to-be-Speaker Boehner is promising a House bill to repeal ACA early in 2011. It’s likely to pass, but then will almost certainly die in the Senate. In the highly unlikely event of a repeal bill passing the Senate, it will then certainly be vetoed by President Obama.

In the cynical world of politics, of course, having Democrats kill a reform repeal bill is exactly what Republicans are aiming for, so that it’s almost certain that the Boehner bill will be little more than a simple repeal, rather than any attempt to restructure reform in accordance with conservative principles. Having watched the Democrats tie themselves in knots during the 2009 reform debate, no sensible Republican politician will want to risk the same by proposing anything much more specific than a simple rollback.

All of this is part of the prologue to the 2012 election, when Republicans—still playing on public confusion and dissatisfaction with reform—hope to capture the Senate and the White House. And that’s really the big worry for states trying to implement ACA.

President Palin (h-m-m, maybe) will certainly make repeal of ACA a priority. So where does that leave state exchanges, which even under the current reform legislation don’t have to be implemented until 2014, but for which planning and implementation efforts may take three or more years?

One problem that President Palin will face is that, after four years of unrelenting Republican criticism of ACA, people will expect the new administration to have an alternative. And with unrelenting premium increases continuing and perhaps as many as sixty million uninsured, this expectation will be accompanied by considerable public pressure. In other words, a simple rollback of ACA isn’t in the cards.

A second problem for President Palin is that her own party (Republican, not Tea) will be less than unified in their opinions. In fact, some of the pre-ACA proposals for insurance exchanges came from the GOP side of the aisle. This shouldn’t be too surprising, since it was the conservative Heritage Foundation that was an early backer of the exchange concept, while key congressman Paul Ryan is a strong supporter of a voucher approach, something that needs an exchange in order to be effective.

So, will our first female president dump the insurance exchange model along with the parts of reform she really hates? Probably not. Aside from the likelihood of outcries from states who will already have made major investments in their exchanges, it’s a model that could support a conservative rewrite of ACA.

What’s a reasonable conclusion? While there will continue to be plenty of uncertainty about implementation of many details of reform, the states that have already indicated their intent to establish exchanges probably will continue to have federal support. After all, what could be more Republican than effective market competition?

Thursday, November 18, 2010


A combination of commission reports and announcements from individual senators this week points to efforts to think beyond the current provisions of the Affordable Care Act, although with varying motivations.

On the surface, the release of draft recommendations from the co-chairs of the National Commission on Fiscal Responsibility and Reform, set up by President Obama earlier this year, would seem to be the most likely to lead to change. The Commission’s charge is a challenging one: “to identify policies to improve the [nation’s] fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” It’s also one that inevitably includes some emphasis on health care expenditures, especially Medicare and Medicaid.

With the Commission’s final report due on December 1, the co-chairs’ draft might be expected to be both detailed and politically realistic. However, the almost universally negative reaction to the draft from Commission members, politicians, and interest groups, suggests that neither is the case and that the likelihood of a final set of recommendations gaining majority approval is very slim indeed.

For Medicare and Medicaid the co-chairs’ draft might be summarized as “everyone pays a little more, everyone gets a little less.” Medicare and Medicaid cost-sharing would be increased, fraud would be reduced (as usual), adopt tort reform (as usual), expand successful cost containment demonstrations (if there are any), and cap Medicaid long-term care payments (that should improve nursing home conditions), etc, etc.

Meanwhile, elsewhere in the DC swamp, a second commission just released its deficit reduction recommendations. This “unofficial” commission, created by the Bipartisan Policy Center and co-chaired by former Senator Pete Dominici and Alice Rivlin (also, oddly enough, a member of the President’s National Commission) produced much more aggressive recommendations for health care than the “trimming the undergrowth” approach of their cross-town rival.

The BPC commission’s proposals include phasing out the tax exclusion for employer health benefits, hiking Medicare premiums, and gradually moving Medicare to a partial voucher program, and imposing big taxes on sweetened drinks. It’s a package that, were it to be implemented, stands a much better chance of bending the health care cost curve. Implementation, however, seems as unlikely as for the “official” commission co-chairs’ draft, with liberals and conservatives alike already raining objections on the recommendations.

Meanwhile, individual senators are tossing out ideas.

Very-vulnerable-to-defeat-in-2012 Senator Ben Nelson, actually isn’t so much tossing out ideas as soliciting them. He’s desperate to find an alternative to the ACA individual mandate (not a big winner in the Senator’s home state of Nebraska) and has asked the GAO to come up with suggestions. Stay tuned…

One proposal that stands a better chance has come from Senators Ron Wyden (D) and Scott Brown (R). They want to move up to 2014 the possibility of states’ being granted ACA waivers. This is something that vulnerable senators like Ben Nelson (and maybe Scott Brown, too, by 2012) could find very appealing: potentially it offers states the opportunity to try to achieve what reform was intended to do, but without the unpopular ACA. The downside is that passage of the proposal could result in having fifty health care systems with different rules (not to mention the effects of the uncertain future in every state); the upside is that there might be one among them that is effective.

Or maybe, all these ideas will die an early death…

Saturday, November 13, 2010


American businesses spend a lot of time complaining about overregulation, but with the passage of the Affordable Care Act now some eight months in the past, it’s the lack of regulations that is becoming a problem.

The most obvious and urgent area concerns the medical loss ratio provisions of ACA. With just six weeks left before the MLR rules will be imposed on insurers who must decide whether to remain in certain markets, the Secretary of Health and Human Services still has not released final regulations.

It’s not all the fault of HHS. The core definitions and computations of MLRs were entrusted to the National Association of Insurance Commissioners, who initially promised delivery by the end of May, then delayed, and delayed, and delayed, before finally submitting their proposal to HHS in late September. Given the likely impact of the NAIC proposal on some insurers in the individual market (and on their consumers), and the certain Republican response to their problems, it’s not surprising that Secretary Sebelius is hesitating.

HHS has already backpedaled on MLR rules for mini-med policies like those offered to McDonalds’ employees, and supposedly is now trying to craft “special rules” for calculating these plans’ administrative costs for MLR purposes, presumably in an effort to allow them to pass the ACA ratio test. The trouble is, creating special rules for the plans that would otherwise fail the MLR test by the widest margin opens up a major can of worms. Why not have special rules for more generous plans? Why not have special rules for every type of high-deductible plan? How can the dilemma be solved without rejecting the regulatory language that ACA delegated to the NAIC?

Meanwhile in an another part of the insurance swamp, it’s state governments who may be starting to be anxious about the lack of ACA regulations. Those states, like California and Washington, that are moving fastest towards implementation of insurance exchanges, are about to discover that vague and contradictory language in ACA is going to make policymaking hazardous and IT design of dubious value. Without at least having draft regulations, states will find it hard to make critical policy and procedural decisions. Republican state governors may shed few tears over the problem, but unless the GOP succeeds in rolling back reform, even they may prefer to implement their own exchanges rather than yield to federal control—and that means having regulations sooner, not later.

Wednesday, November 3, 2010


Having pulled off a very big win in the House of Representatives and substantially reduced the Democrats’ majority in the Senate, Republicans are now faced with deciding just what strategy to adopt towards health care reform.

GOP leaders are already promising a bill to repeal reform early in the new session, but with the Senate and the White House in Democratic hands, this is political posturing. Almost certainly there will be a repeal bill offered, and the odds are that it will pass the House, only to die or be vetoed in the following weeks. Given the huge amount of public confusion about the contents of the Affordable Care Act, much of it created by commentators on the right, the best guess is that the Republican bill will be a simple one, intended just to roll back most ACA provisions. The real objective, however, given its certain fate, will be to reemphasize how out of touch Democrats are with the “will of the people.”

More realistically, Republicans will then turn to their alternative strategy, of trying to starve reform of funding by voting against the budget. This is a risky strategy, as Newt Gingrich discovered in the time of the Clinton administration, but with Democrats having just a half-dozen majority in the Senate, it could be one that forces some compromises by the Democrats.

What might such compromises look like? It may be too late for the much-debated medical loss provision to be eliminated, although many Dems would surely be glad to offer this embarrassment up as a sacrifice. Medicare changes are an obvious area, since the program is dependent on the federal budget. Insurance exchanges could also be a victim, perhaps being reduced to a series of demonstrations, for example only in states where governors are actually eager to put them in place. Given the Tea Partiers’ emphasis on slashing expenditures, some of the subsidies and credits in ACA may also see some cutbacks, although neither party’s leaders will want to be accused of taking away individuals’ entitlements. There may also be a few areas, like the opt-out provision for lower-income group plan enrollees, that would simplify ACA without significantly generating political opposition on either side of the aisle. One last possibility, given the Democrats’ small Senate majority, is a revival of some of the features of last year’s bi-partisan Wyden-Bennett bill, like changing the tax treatment of employer premium payments, although the tempting threat to union negotiating power may not be enough to offset other employee and employer concerns.

One area where a compromise will not happen is the individual mandate. The White House will not give on something so fundamental to universal coverage—or so necessary to spread insurance risk and premium dollars—while many Republicans may feel confident that the Supreme Court will find it unconstitutional and be willing to wait for that ruling.

Finally, it’s also possible that Republicans may really not worry too much about repealing reform. With the majority of state houses in GOP hands, and given the inherent difficulties of implementing insurance exchanges and expanding Medicaid, there may be political advantages to waiting for the inevitable problems to start to become apparent in the fall of 2012, just in time for the next presidential election.