Health-Care Reform, 2015

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

At the federal level, the prospects for successful implementation remain far better, not least because of the consistent support for the law that will be forthcoming from Washington so long as President Obama holds office. Nonetheless, the complexity of the decisions placed upon federal officials–perhaps the most common phrase in the law is “the Secretary shall,” a reference to the secretary of health and human services–guarantees that some will be made poorly or turn out badly, while others will pose difficult trade-offs and substantial uncertainties.

In particular, while the states grapple with the thorny problem of creating exchanges, the federal government will face its own challenges in regulating employment-based plans. The Congressional Budget Office’s (CBO) prediction of 30 million newly insured Americans at relatively modest federal cost (or at least modest by health care’s inflated standards) rests heavily on the assumption that virtually all employers now providing insurance will continue to do so, even if their plans are subject to new rules. That, however, is an assumption worth interrogating.

The problem here is not political will or administrative skill. The problem is that the third pillar of the law–the less voluntary, more regulated, less subsidized system of workplace insurance–creates a basic structural dilemma: trying to improve the generosity or security of private employment-based insurance will create costs and administrative hassles for employers that could reduce their willingness to provide insurance at all. Put bluntly, the primary tool that the act grants federal officials–the rules for employment-based plans–can be used aggressively only at the risk of undermining the primary means of coverage in the law.

We can see this dilemma most clearly in the arcane but crucial matter of “grandfathered” health plans. Under the ACA, existing employer-based health plans that remain fundamentally unmodified are exempt from a number of regulations designed to make sure that group and individual plans provide reasonable guarantees of security, affordability, and access to preventive care. These grandfathered plans, in effect, occupy a regulatory netherworld between the new world of health insurance and the old, and so identifying what counts as a change that would cause an existing plan to lose this special grandfathered status is critical.

In June, the Obama Administration issued guidelines for determining whether plans could remain grandfathered that were stronger than many consumer advocates had expected. Yet even these guidelines–which are likely to be weakened in the regulatory review process–still ensure that most employer plans (including, almost certainly, the anemic plans offered by low-wage companies that sponsor coverage, like Wal-Mart) will pass regulatory muster. And regardless of their grandfathered status, employer plans can cover just 60 percent of subscribers’ medical costs–the current norm is roughly 80 percent–and still not violate the law, which means employees could be paying 40 percent plus their share of the premium. This is apparently the price to be paid for a law that, as the proposed regulations revealingly put it, “balances the objective of preserving the ability of individuals to maintain their existing coverage with the goals of ensuring access to affordable essential coverage and improving the quality of coverage.”

The structural bind raised by the reliance on employment-based insurance only hints at the deeper dilemma: Effective implementation and administration of the ACA will not, by themselves, ensure that the key goals of the legislation are met. Even if every step envisioned by the law is successfully taken by 2015–a big if, as we’ve seen–there will still be large gaps in coverage and weak restraints on costs. Insurers won’t be blatantly turning people away, or pricing the sickest out of the market altogether. But they will still be charging premiums that exceed many people’s means, and those premiums will still be rising far too rapidly. While regulators overseeing private plans will know much more about what insurers offer and spend their money on, getting them to change what they offer and spend their money on will be another matter.

In short, Harkin’s starter home needs some major improvements. Unfortunately, the political winds are already threatening to knock the home down.

The Next Political War

The political battle over health reform did not end on the night of March 21, when the House of Representatives passed the Senate bill. It simply entered a new phase, going from conventional to guerilla war. And conservatives have long shown themselves to be better at guerilla warfare than progressives. The fights over the individual mandate are a mere prelude to the struggles to come, which will concern the greatest fault line of contemporary American politics–redistribution, or more precisely, the raising and spending of money to ensure health security.

Redistribution is the soft underbelly of health reform. As the political scientist Theda Skocpol points out:

The 2010 health reform promises subsidies to millions of working peopleof modest means, whose employers do not provide health insuranceand who cannot afford to buy it themselves in the existing marketplace.Most of the revenues to pay for coverage expansion come fromAmericans making more than $250,000 a year, as well as from fees on businesses and cuts in subsidies to private insurersinvolved in Medicare.

This redistribution relies on a grab bag of financing sources, virtually all of which are divorced from the receipt of benefits. Many of these sources are both highly visible and highly unpopular among deep-pocketed interest groups and mobilized segments of the population. As Paul Pierson and I document in our new book, Winner-Take-All Politics, these players have gained in strength over the last generation at the expense of organized labor and middle- and working-class voters.

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