The Affordable Care Act (ACA), or “Obamacare,” has survived its first year, and to the dismay of conservative fear-mongers who assumed it would fail, the law appears to be achieving exactly what it sought: the growth of health care costs is slowing down, and millions more Americans have coverage. Liberals are rightfully celebrating.
Yet liberals should not be too self-righteous. Few people remember, but there was another, more ambitious health care bill passed by the House in November 2009 that could have become law, had there not been a last-minute scramble to get legislation across the finish line. This bill contained a public option, stronger price regulations, a national exchange, and a better way of approaching an employer mandate. These features would have placed the ACA on even steadier footing than where it stands right now, and liberals who want to build on the achievements already made need to understand why the stronger bill was better.
Loss of the public option
Before proceeding, it’s worth recapping what ACA does, and how it came to be. A popular metaphor for the ACA is that it is a three-legged stool: It creates a regulated exchange for people to buy insurance that ignores preexisting conditions; there’s an individual mandate requiring all people to sign up for insurance; and to make sure everyone can afford insurance, there are subsidies available for households with low incomes.
Both the House and the Senate were on board with these parameters when talk of health reform began. However, the 2009 House bill on insurance was seen as more aggressive than the relatively cautious Senate version. The two were supposed to go through a merging process called reconciliation once they both passed, but the surprise victory of Republican Scott Brown in the special election to fill Ted Kennedy’s Massachusetts Senate seat in January 2010 deprived the Democrats of the 60 votes they needed for that to happen. The House responded by passing the Senate bill instead, giving us the ACA that is currently the law of the land.
The House bill was basically abandoned, along with its public insurance option that would exist in all the exchanges, holding down costs by using the government’s large footprint to compete with private insurers.
What would the insurance market look like today with a public option? First and foremost, it would help people buy insurance in markets where there is little choice. More choice in any market means more competition, and in the insurance world, this translates to lower premiums. It would also make a major difference in states where there are only a few insurer choices.
Still, private insurance companies didn’t inflate their premiums as much as people feared. According to the Congressional Budget Office, premiums in 2016 will be 15 percent below what they had been projected to be by then in 2009. However, the CBO also estimated last fall that an aggressive public option would reduce the deficit by almost $160 billion over the next 10 years. Why? Because the CBO estimates that premiums would be 7 to 8 percent lower than the private plans offered by “Obamacare.” That’s a lot of savings for both families and the government.
This is important, because affordability is still a weak point in the ACA. According to a recent Kaiser study, almost half of the people enrolled in health plans approved by the ACA have trouble affording their monthly premiums and still aren’t sure if they’d be able to pay should they suffer a serious illness or injury. More than 60 percent worry that the cost of coverage will only grow. This, no doubt, contributes to the unpopularity of the bill and the liability it imposes on Democrats.
The 2009 House health care bill could have ended up being more popular than the current version, with its extra features muting the unpopular parts of reform.
Even with premiums in check, experts are concerned about the growth of so-called skinny or narrow networks. This is where providers control costs by picking a narrower network of doctors and other health care providers and facilities. These narrower networks are usually made of lower-cost alternatives, and benefit from guaranteeing doctors a bigger share of new patients. These narrower networks are a major driver of the lower than expected premiums.
But the repercussions for patients could be serious if they find themselves without specialists to treat specific ailments.
A public option that could piggyback off providers from the Medicare program would guarantee one major provider in each network. What’s more, under the House bill, the exchanges would have required a basic level of network adequacy to participate; it would have also negotiated more aggressively on the quality of the plan and networks. The Democrats’ original bill also had more generous subsidies than what finally made it into the ACA, and capped out-of-pocket costs at lower rates too.
Though liberals point to the premium costs as a sign of success, regular people judge the program on their out-of-pocket expenses and overall affordability and access. If the ACA fails in this dimension, it’ll never get the popular support it needs to be self-sustaining. A public option would help across the board here.
The employer mandate has been another major roadblock for the ACA. The current “Obamacare” plan requires employers with more than 50 full-time workers to pay a part of the health care costs for employees who work more than 30 hours a week, or pay a fine. This is unpopular with employers, and it fuels larger worries that workers are getting their hours capped or that expanding businesses are hitting a major road bump the moment they reach 50 employees.
As the Roosevelt Institute’s Richard Kirsch writes, the way the final House bill tackled this issue was much smarter: Under the House plan, employers that didn’t provide health care to their employees would pay a percentage of payroll as a tax to cover health care. Consequently, there would be no incentive to juke the number of new hires or their hours. Also, current health insurance premiums don’t vary according to an employee’s income, which discourages employers from hiring lower-wage workers. Charging a percentage of payroll for coverage would help companies cover the costs even as the system moves towards the exchanges.
Much of the framework for the ACA was set far before Barack Obama ran for office, and this framework took universal Medicare and other single-payer plans off the table. However, Obama had proposed not including an individual mandate in his 2008 proposal, even though he later was convinced it was a necessary part of reform.
The individual mandate remains one of the biggest liabilities for “Obamacare.” It’s one of the features of reform that people are most likely to know about, and it’s also the most unpopular part of reform. According to Kaiser polling, only 35 percent of people have a favorable view of the mandate, though 78 percent recognize it as part of the ACA.
According to Larry Levitt, a senior vice president at the Kaiser Family Foundation, ACA couldn’t have passed muster without a mandate, even though it is very unpopular. “Without an individual mandate insurers wouldn’t have participated in the exchanges,” he said. “Premiums would not only have been significantly higher, chances are many of the exchanges couldn’t have worked at all.”
But, Richard Kirsch notes that his team investigated through surveys and found that “the mandate wasn’t so unpopular if there was a public option to go with it and people saw it as affordable.”
Simply put, the 2009 House Bill could have ended up being more popular, with its extra features muting the unpopular parts of reform.
At this point, Republican sabotage is unlikely to destroy health care reform, but public opinion will continue to matter — and the parts of the bill that people find disappointing are exactly what the House bill could have remedied. Putting that argument forward as the next step in health care reform will be necessary to convince voters of this matter.