Health-Care Reform, 2015

What the next health-care fight will look like—and why it might be even harder than the last one.

Five years after passage, the ACA will be neither an endangered, crippled program nor a sweeping, uncontroversial success. Like Social Security in 1940, it will be a work in progress–one that could head in very different long-term directions: expansion and solidification, or erosion and fragmentation. How the first five years of the ACA are handled will shape the road taken. But, as Social Security’s history shows, the next five are likely to be even more critical.

The Implementation Imperative

Wilbur Cohen, the architect of Medicare, was fond of saying that successful social programs were “1 percent inspiration and 99 percent implementation.” As a brilliant administrator, he could be forgiven for a little hyperbole, especially since the exaggeration was in the service of an essential truth: Getting from good laws to favorable outcomes is no easy task. This is particularly so when laws lean heavily on the cooperation and partnership of multiple parts and levels of government and many private-sector actors with differing interests. In this respect, Cohen’s Medicare was a model of simplicity–a single national program automatically enrolling a defined population and dealing with a few key stakeholders, most notably hospitals and doctors, whose main interest was higher reimbursements.

By comparison, the ACA looks like a Rube Goldberg contraption. Its basic structure mixes state and federal responsibilities, competing administrative centers of authority, and public and private activities in a manner that can be charitably described as complex. The most Medicare-like aspect of the original legislative package was the so-called public option–a public insurance plan competing with private plans for the business of nonelderly Americans, an idea I have long championed. However, the public option was stripped from the legislation in the Senate to batten down wavering Democratic votes and overcome a GOP filibuster. A simple, popular element that could have provided a major tool of cost containment was lost.

The simplest way to describe the new law is that it creates three pillars of coverage, supported by a foundation of regulations and spending. The first pillar is an expansion and upgrade of Medicaid, the existing state-run program providing health coverage to the less affluent. Even though the federal government will finance virtually all the expansion, states will have to reach those who are eligible and ensure that coverage on paper means in fact that doctors and hospitals will be willing to take often-penurious payments–something many states do poorly now and will continue to do poorly after reform.

The second pillar is the creation of new health-insurance “exchanges” that will allow small employers and Americans who do not receive employer-based coverage to choose among regulated private plans, with much of the premium expenses for middle- and low-income Americans borne by the federal government. The plan is to have these exchanges set up by the states by 2014, but the federal government will establish them directly if states do not. Moreover, states can also establish them in cooperation with other states, an option that might be attractive in less populated regions or where multi-state metropolises exist. And the federal government will contract with at least two private health plans directly–at least one a nonprofit–to provide coverage on a nationwide basis. These national plans will also be offered through the exchanges.

The third–and, in terms of the number of Americans covered, the broadest–pillar will be regulated and subsidized private coverage through employers. Large employers (those with more than 50 workers) will be required to provide minimum coverage to their workers or pay a fine. The terms of employment-based plans will be regulated. And, eventually, the favorable tax treatment of those plans will be limited. In essence, the ACA gradually transforms the present voluntary, regulated, subsidized system of workplace insurance into a less voluntary, more regulated, and less subsidized system.

The Affordable Care Act, Age Five

Each of these three pillars raises distinct implementation challenges and significant unknowns. This is in part because, at the insistence of the Senate, the law leans so heavily on the states for the expansion of coverage and regulation of insurers, making the ACA in essence not one reform law, but a framework within which as many as 50 could blossom–or wilt.

Even if the full-throated state challenges to the law crumble, that will not stop many states from fumbling the establishment of the exchanges, the regulation of insurers, and the expansion of Medicaid. Across the states, the administrative capacities of public officials vary enormously, as does the will of those officials to use the capacities they have. In many cases, state regulators are badly outgunned by insurers and providers tenaciously defending their economic turf. As a result, the initial rollout of the law is destined to be one of mixed success.

Much hinges, therefore, on how the federal government uses the fallback authority at its disposal. When states fail to develop plans for workable exchanges, or fail to carry out those plans, the federal government needs to step in, as it did in setting up temporary high-risk insurance pools (a stopgap measure in the law until the exchanges go live in 2014) in the nearly two dozen states without their own plans this past July. Indeed, a paradox of the law is that reform’s strongest advocates at the state level should be willing to encourage state leaders not to set up their own exchanges, pressing instead for state officials to conserve resources and enlist the federal government to contract with and oversee private plans directly. Not only would it be less costly for one federal agency to set up exchanges in different states than for each state to independently establish its own, the feds also have the will, expertise, and resources to ensure the exchanges are established on solid terms, prevent insurers from gaming the system, and demand efficiencies from insurers. (Revealingly, private plans regulated by the Federal Employees Health Benefit Program have among the lowest administrative costs in the business.)

• 1
• 2
• 3
• 4
• 5
• 6
• 7
• 8

Post a Comment

Name

Email

Comments (you may use HTML tags for style)

Verification

Note: Several minutes will pass while the system is processing and posting your comment. Do not resubmit during this time or your comment will post multiple times.