Posts Tagged ‘Snowe’

I’m Fed Up with This

February 8, 2010

I used to follow the pundits and read the inside stories about the progress of health reform.  During the past year, I’ve avidly read Politico.com and the NY Times, watched Washington Week in Review, and followed #hcr on Twitter to keep up with what’s happening.  But I’m fed up with the way that the Republican spin has become the conventional view of things.

Latest example — in today’s Politico Pulse lead, Chris Frates writes:

President Barack Obama announced Sunday that he will hold yet another meeting on health care reform. But this one comes with two twists – it will be televised and bipartisan. The move seems designed to help counter the public’s distaste for legislation that Democrats crafted behind closed doors and rammed through both chambers with little Republican support. [emphasis mine]

You gotta be kidding.  First, the legislation was not “crafted behind closed doors” any more than most bills in Congress.  On the contrary, the legislation has been available for public scrutiny since the original bills were introduced last spring in the House.  You could even go further back to Sen. Baucus’s white paper in November 2008, which laid out the basic framework for all the bills that followed.  When each subsequent bill was introduced, the Kaiser Family Foundation and many others produced “side-by-side” comparisons so that people could understand the key elements of the bills.  The details (the public option, the insurance exchange, the affordability credits, the excise tax, the Medicare Advantage reductions, the “doughnut hole”, and many more) were agonizingly dissected by the mainstream media, the bloggers, and interest groups.  As Jon Cohn said today,

The idea that Republicans haven’t had a chance to present their ideas on health care reform is a bit mind-boggling. Five separate congressional committees had hearings; each chamber had floor debates. That’s hundreds of hours the GOP had to talk about health care, all of it in public view and televised on C-SPAN.

And the Democrats “rammed it through both chambers”?  Anyone watching the process objectively would say that the Democrats did just about everything they could to accommodate Republican interests and wishes.  First, they wrote a bill that incorporates many Republican ideas in an attempt to get bipartisan support.  It’s built on the existing private insurance and medical care delivery system; it’s not the single-payer plan that many progressives wanted.  It uses market forces to control costs rather than regulation and government price setting.  And it includes pet Republican ideas such as tort reform and allowing people to buy insurance across state lines.  (Ezra Klein has summarized this nicely in a new article.)  Second, the Democrats included the Republicans in almost every step of the process.  The best example was the “Gang of Six” led by Sen. Baucus.  For weeks during the summer and early fall, we watched the Democrats’ attempt to accommodate the wishes of Grassley, Enzi, and Snowe.  But it became clear that the Republicans were only stringing the Democrats along.  They never intended to get on board; they only wanted to drag out the process.  And when the votes were finally taken, it was clear that the Republicans had decided – for purely political reasons – that they would oppose any bill.  For them, defeating the Democrats was more important than reforming health care and saving the lives of the uninsured. Their obstructionist tactics were appalling, and their hypocrisy was sickening.  The basic facts: this is a bipartisan bill that the Republicans chose to oppose, despite the best efforts of Democrats to accommodate them.

But most of the media seem to have been co-opted by the Republican spin machine.  I would have expected better from a so-called independent press.

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Last Chance to Fix the Exchanges

October 17, 2009

Last Chance to Fix the Exchanges

We all know that well-designed health insurance exchanges are a critical element for good health reform, right?  And we also hear that exchanges are part of all five reform bills in Congress, so we should be satisfied, right?  Wrong.  There are some good design elements in the various bills, but the best components from each need to be pulled together as the bills are merged, amended, and worked over in conference.

Health insurance exchanges are arguably the key to successful reform, but most of the recent health reform debate has focused on other issues – subsidies for low-income people, the penalty for noncompliance with the individual mandate, taxes on high cost insurance plans, cost containment measures, protections against high out-of-pocket expenses, etc.  Many of the other elements can be tweaked if we don’t get them quite right in the first version of reform, but it’s critical to establish the right design framework for exchanges at the beginning.

The exchanges are needed to address three critical problems that most small employers and individuals face in the current health insurance market:

COSTS — Individuals and small employers pay much higher premiums than large employers for similar health benefit plans, due primarily to high insurance administrative and selling costs for this segment and a lack of bargaining power.

CHOICE — Very few employees of small employers are offered a choice of health plans; most insurers will offer coverage to small employers only on a “sole source” basis.  This also makes coverage less “portable when people change jobs.

CONVENIENCE – It’s a tremendous administrative burden for small employers to manage health benefits for their employees.

There are three design elements that are crucial to achieving these goals:

How big? Who’s in? Size is important; as Sen. Olympia Snowe put it, “The more the merrier.”  Sufficient size will attract more insurers and offer wider choice to consumers in the exchange.  It will also enable the insurers to achieve economies of scale and reduce administrative costs and premiums.  And allowing more categories of groups into the exchange will allow more people to get the benefits of expanded choice, reduced hassle for administering health benefits, and improved portability of health coverage.

How to avoid the “death spiral”. Many exchanges in the past have collapsed when high cost people joined and stayed in the exchange while low cost people purchased coverage outside the exchange.  Ideally, the exchange would be the sole market for individuals and small groups.  Since this is probably unrealistic politically, it is necessary to put in place mechanisms to minimize the danger of the death spiral.  For example

  • The same insurance regulations (e.g., guaranteed issue, rating, benefit design, etc.) should apply inside and outside the exchange.
  • Insurers should be required to set their premiums based on the entire pool of the combined markets (inside and outside the exchange).
  • Insurers should be prohibited from advantaging their comparable non-exchange products in any way (e.g., through the use of different marketing, application processes, etc.)
  • If an insurer participates in the individual and small group markets outside of the exchange, it must also participate inside the exchange.

What role for the exchange? An exchange can play a variety roles ranging from passive provider of consumer information to active purchaser of health benefits on behalf of consumers.  A narrower role would leave the consumers to deal directly with the insurers.  (If this is the case, there won’t be any savings in administrative or marketing expenses.)  But the exchange could play a broader role by managing the enrollment process, determining eligibility for subsidies, collecting premium contributions from multiple sources, administering a risk equalization mechanism to protect insurers from adverse selection, contracting selectively with insurers, and even negotiating rates.

I’ve put together a simple chart comparing the key design elements from the three bills.

Senate Finance Senate HELP House TriCommittee
How Big?Who’s In? Reasonably inclusive.Individuals + small employers (<100) in 2015; state option to add large employers (>100) in 2017 Somewhat inclusive.Individuals + small employers (<50); state option to add large employers (>50) Somewhat restrictive.Individuals + very small employers (<20) phased in by 2014; option to add large employers (>20) in 2015.
Avoiding the “Death Spiral” Some features to reduce danger of death spiral Reasonably strong features to reduce danger of death spiral Unclear or weak features to reduce danger of death spiral
Role Limited role.  All insurers must be made available in the exchange Substantive role, but does not include negotiating rates with insurers Active role, including accepting bids and negotiating with insurers

Here is my recipe for the best policy blend to address these problems.  (It’s basically one from column A, one from column B, and one from column C.)

How big/Who’s in — Use the Senate Finance Committee bill as a starting point, but consider expanding further.  (Sen. Wyden’s proposed amendment would accomplish this by allowing employees of larger groups to join the exchange, but there would need to be stronger protections against a “death spiral” for the exchange.)

Avoiding the death spiral – Use the Senate HELP bill as a starting point, but add language to (a) prohibit insurers from advantaging their comparable non-exchange products in any way, and (b) require insurers that participate in the individual and small group markets outside of the exchange to also participate inside the exchange.

Role Use the language in the House bills, which allow a more active role for the exchanges, including selective contracting.  (The proposed Kerry amendment would achieve this in the Senate bills as they are merged.)

Other commentators have made the point about the importance of designing insurance exchanges right.  Jon Cohn included it in his recent list of “The Top Ten Things Worth Fighting For”.  (Just to show how important it is, it’s on his list twice: #5 – Strengthen the Exchanges, and #10 – Open up the Exchanges.)  Elliot Wickes posted a new blog at Health Affairs on the essential characteristics of exchanges in health reform.  Earlier this summer, Alain Enthoven, Peter Lee/John Grgurina, Joe Minarik, David Riemer and Ezra Klein posted excellent commentaries on exchange design.

The design of health insurance exchanges is too important to be brushed aside or used as simple political bargaining chip.  If we don’t get it right in the bill this year, it will be very difficult to fix it in future years.  If we get it right, however, exchanges will address the problems of cost, choice and convenience faced by small employers and individuals, and it will help to bring healthy competition and drive down overall costs in the health insurance market.

Note: Revised slightly 10/28/09 after helpful conversation with Alain Enthoven.