Health Care Reform Developments

Some quick tidbits and news items concerning health care reform you hopefully find useful – or at least interesting:

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This makes three District Court Judges who have upheld the PPACA and two who have opposed it. Most of the reports on this most recent decision note that the three Judges finding the PPACA constitutional were appointed by President Bill Clinton, a Democrat, while the two declaring the individual mandate unconstitutional were appointed to the bench by Republican presidents. This focus on the party affiliation of the appointing president comes up frequently when appellate courts, including the Supreme Court, make a decision. It’s important not to get too caught up in this.

Yes, presidents tend to support judges with similar perspective to the law – and to what constitutes justice –as they have. Which means Democratic appointees tend to be more “liberal” and Republican appointees more “conservative.” (I use the quotes because these terms don’t always mean the same thing in the context of legal decisions. The Supreme Court decision in Citizens United, for example, which overturned decades of precedent to unfetter corporations’ ability to contribute to campaigns, can be cited as an example of judicial activism, something conservatives often decry, yet in this case was a result Republicans applauded). But judges, like people in general, are full of surprises. Chief Justice Earl Warren, generally regarded as a liberal judge, was appointed by President Dwight Eisenhower. Justice Lewis Powell was appointed by President Richard Nixon. And so on. My point here is not that courts are immune from politics or what’s happening in society. I’m simply pointing out that assuming you can predict how other court decisions concerning the PPACA will be resolved by looking at the party of the president appointing the judge or justices is of limited value.

Seeking Clarification: When Federal District Court Judge Roger Vinson found the individual mandate provision of the PPACA exceeded Congress’ authority under the Commerce Clause he further declared that this made the entire law unconstitutional. However, he did not issue an injunction preventing implementation of the law. Which raises an interesting question: should states and the federal government continue to implement the PPACA or not?

The Justice Department has asked Judge Vinson to clarify his ruling. The concern expressed by the DOJ is that stopping state and federal officials from moving forward in implementing the law while various suits against it make their way to the Supreme Court “would pose a risk of substantial disruption and hardship for those who rely on the provisions hat have already been implemented. Others assert that Judge Vinson’s ruling is clear: the government lacks authority to enforce the law in the 26 states connected to the suit decided by Judge Vinson.

Judge Vinson wants to move quickly to clarify the situation. He has given states party to the suit until tomorrow to respond to the Administration’s argument that implementation of the law should proceed in spite of his finding the law unconstitutional.

CLASS CHANGES: Secretary of Health and Human Services Kathleen Sebelius, acknowledging the long-term care provisions of the Patient Protection and Affordable Care Act are “far from perfect” is looking to make some significant changes to this part of the law. The PPACA gives HHS a great deal of latitude in developing and overseeing the Community Living Assistance Service and Supports Act program. Under this program, employees will be automatically enrolled in this long-term care plan without regard to pre-existing conditions. After participating in the program for at least five years enrollees would be eligible for no less than a $50 per day benefit.

According to CQ HealthBeat, Secretary Sebelius has expressed concern about the long-term sustainability of the program unless it can be designed to attract healthy individuals and not just those with health problems. She cited a clear need for a strong educational program.

According to Modern Healthcare, the changes to the CLASS Act program being considered by HHS include indexing premiums to projected benefits; offering a range of payments instead of a $50 daily benefit (indexed to inflation); modifying qualifications; and eliminating loopholes that allow enrollees to receive benefits even if they only sporadically pay premiums.

Be Careful What You Wish For:  I’m frequently asked why the PPACA is written the way it is, why Democrats wanted to insert the federal government so deeply into the health insurance world. Why couldn’t they let the markets handle things? The reason is that they (and many Republicans) don’t think the market was working well. I’ll write more about this in a later post, but it’s important to put the health care reform debate in context. Premiums were skyrocketing. Rescissions, many of which seemed inexcusable, was front-page news. Job-lock due to pre-existing conditions was viewed as dampening the economy. Health insurance company executives were receiving huge sums of money while a rapidly increasing number of middle-class Americans were finding it impossible to afford insurance coverage. Again, more details on this to come, but the response was the PPACA: insurance market reforms coupled with increased subsidies to help more Americans obtain more regulated products. (And yes, a whole lot more, but for now, please allow me to oversimplify).

However, when government engages in managing a segment of the economy no single lawmaker, regulator or party gets to determine where that involvement ends. Democrats may have wanted to assert control over the behavior of what they consider to be irresponsible insurance companies. But they’re getting a whole lot more: conservatives using health care reform to advance their anti-abortion agenda. This in turn has opened the door for broadening the abortion debate beyond government health care programs. Representative Chris Smith has authored a bill that would disallow tax deductions by businesses if their health care plans coverage abortions while employees would have to treat premiums paid on their behalf for such plans as taxable income.

As I wrote over a year ago, it was inevitable that conservatives would use the tools crafted by liberals concerning health care reform to advance their own goals. It’s as if politicians believe the balance of power will never change. Democrats control Congress and the White House so the health care reform law will only be used to advance progressive causes. The reality, however, is that pendulums swing – and political pendulums swing quickly and far. One party may craft the power tools, but the other party will always get a turn at using them.

Compromise on Public Health Plan Not Easy to Find

If Congress is to enact comprehensive health care reform on anything approaching a bi-partisan basis, Democrats are either going to have to jettison their calls for creating a public health care plan to compete with private insurers or fashion a compromise that makes such a government-run plan acceptable. This won’t be easy.

Last week, 17 Senators  signed a letter to Senate Finance Committee Chair Max Baucus and Health, Education, Labor and Pensions Committee Chair Edward Kennedy insisting that a public health plan needed to be a part of any health care reform package.  The 16 Democrats and one independent argued that “There is no reason to believe that private insurers alone will meet the public purpose of ensuring coverage for all Americans at affordable prices for taxpayers.” According to The Hill, the originator of the letter, Senator Sherrod Brown, told reporters that “A public plan option ‘would provide competition to the sometimes dysfunctional private insurance market.'”

Seventeen Senators is a significant block of votes, especially when they’re expressing the position of the Obama Administration as well. Yet Republicans are, thus far, united in their opposition to a government-run plan.  And not all Democrats are sold on the idea, either. The New York Times counts Democratic Senators Ben Nelson and Arlen Specter as among those expressing “reservations about a public plan.” If these and other moderate Senators object to the public plan, their liberal colleagues will be faced with the need to either give in on the issue or give up on comprehensive health care reform.

Thus the search for common ground.

The New York Times reports Senator Charles Schumer is attempting to do just that. The article  is indispensible reading as Senator Schumer’s was asked to search for a compromise by Finance Chair Baucus. Senator Schumer identified four principles that might make a public health insurance plan acceptable to moderates:

  • “The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
  • “The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
  • “The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
  • “To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.”

This approach was echoed, with less specificity, during testimony before the House Ways and Means Committee by the new Secretary of Health and Human Services, Kathleen Sabelius. According to The Wall Street Journal, she told a Congressional  Committee, “What I can assure is that it can be done as a level playing field.” The key, she went on to say, is how the program is set up. “It is about the rules that are established at the beginning.”

But there’s the rub. The rules in the beginning are not necessarily those that apply long term. California had a government managed health plan competing with private carriers in the small group market not all that long ago. The Health Insurance Plan of California (HIPC) was created by AB 1672 as part of a comprehensive small group health care reform package. The HIPC operated under many of the prinicples put forward by Senator Schumer. Ultimately the HIPC, which was spun off from the government and became the PacAdvantage, failed.

Yet almost immediately after it’s creation, legislators from both sides of the aisle put forward proposals to buttress the plan by giving it special status. Government, regardless of the party in charge, when seeking to build new programs, tends to look to existing programs as a foundation. Which means the level playing field promised by Secretary Sabelius may not last long. The principles enunciated by Senator Schumer may not last. As with any public program, once a government run health plan is in place, the rules that apply can be changed at any time. And someone is likely to try.

This doesn’t mean the search for a compromise shouldn’t continue, but  it highlights the difficulty involved. Unless the restrictions on the public plan aimed at preventing it from gaining an unfair advantage in the market are strong and long lasting, any compromise will simply be a milestone on an inevitable journey.