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The latest Republican strategy – cutting off your nose to spite your face.

No, this is not about plastic surgery.

The phrase refers to one who attempts to do harm to another, but in so doing harms themselves

Yep, we are talking about health reform.

The Affordable Care Act as Republican policy

President Obama has rebutted criticism that his health care reform was too radical by arguing that it is modeled after successful legislation that became law in Massachusetts under then Republican Governor, Mitt Romney – and that was based on ideas originally proposed by the Heritage Foundation.

From the perspective of the ivory tower of the Heritage Foundation, or from the myopic world of Republican health care policy, there may actually be some arguable distinction.

But from the perspective of real health care reform, say single payer, it is a distinction without a difference.

The only thing that separates Obama’s Affordable Care Act from Mitt Romney’s Massachusetts imitative is the political affiliation of its author.

As soon as Obama and the Democrats signed on, Romney signed off.

The Affordable Care Act as Democratic policy

But Romney wasn’t the only one to turn and run from an idea they once embraced.

Tim Pawlenty, a Republican contender for president briefly, thought Mitt Romney was on to something in 2006, the year of the Massachusetts healthcare reform law.

He expressed openness to the concept of the individual mandate and support for the idea that everyone should be in a health care plan.

Likewise John Huntsman was an eager proponent of health reform measures that would expand coverage.  He openly supported the individual mandate until it was obviously going nowhere in Utah.  He settled for a more modest version of the insurance exchange concept that distinguished Romney’s legislation.  Utah and Massachusetts are the only working models for the other states trying to implement health care exchanges.

The pickle

Three of the current field of Republican candidates endorsed in some way, the concepts central to what is now derisively referred to as Obamacare – individual responsibility, make the markets work better, allow for profit insurance companies.  Don’t they sound like concepts that are more likely to come from the Republican side of the aisle?

But they have the name of the current President associated with them and for that reason, Republicans will not allow them to succeed.  It’s personal, you see.

State Exchanges

Take the state health insurance exchanges.  Another idea that is more likely to be associated with Republicans than Democrats – allow each state flexibility in setting up their own exchanges.  But if they don’t create their own exchanges, the federal government will do it for them.

This seems to put some Republican governors in a rather curious pickle.  If they do create an exchange for their own state, they would be adopting values traditionally associated with Republicans:  individual responsibility, the growth of a new market for insurance companies, local autonomy.  The alternative is generally not attractive to Republicans – let the federal government do it.

But there is a catch.  It is a catch that some Republican governors just cannot bring themselves to overcome.  By consenting to the creation of their own exchange they would be acquiescing to the will of President Obama.

It’s personal, you see.

Kansas Governor, Sam Brownback (R) turned down federal seed money to start its exchange.  He piously asserts that, given pressure on the federal government to reduce expenditures, states should not rely on the feds in setting up their own exchanges.  But the absence of federal funds has halted Kansas’ progress to create its own exchange, which may prompt a federal takeover.

Oklahoma Governor, Mary Fallin (R), turned down federal money to help it build its own exchange.  Sounds noble enough.  They want to do it themselves.  Or do they?  According to the Governor, she was “pleased to announce this agreement that accomplishes my goal from the very beginning: Stopping the implementation of the President’s federal health care exchange in Oklahoma.”

Florida Governor Rick Scott (R), has declined federal funds to set up an exchange in Florida, an exchange the state has yet to authorize.  Remember Rick Scott? – the guy who made his money as the head of a for profit hospital chain that pleaded guilty to defrauding the federal government and paid almost $2 billion dollars in settlements.

Texas Governor, Rick Perry, (R), presiding over the state with one of the highest rates on uninsured residents,  has vowed to oppose any effort to create an exchange in Texas as long as the legal questions around the Affordable Care Act are unresolved.  That does not mean he cannot accept the grant money handed out by the feds to create the non-existent exchange, not to mention $60 million in Early Retiree Reinsurance program grants – also a part of the Affordable Care Act.

Louisiana Governor Bobby Jindal (R), has also refused to set health care insurance exchange in his state because it would advance Obamacare regulations.

It’s personal, you see.

It doesn’t have to be rational.

Photo Credit:     FLICKR  Sara_Mc

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Two recent studies allow different conclusions on the cost of health care reform.

From JAMA

The first study, published in the Journal of the American Medical Association (JAMA), reports on the George W. Bush expansion of prescription drug coverage under Medicare – referred to as Medicare Part D.  The researchers found that that the five year old Medicare Part D program resulted in significant reductions in non-drug medical spending for those who had limited access to drugs prior to the enactment of the law.

Sunrise or sunset?

The researchers found that the program saves $12 billion dollars annually.  The savings come primarily in reduced in-patient hospitalizations and emergency room use.  The savings admittedly do not offset the $55 billion annual cost of the program.   The study only looks at the savings to Medicare.  It does not examine any other outcomes such as reduced mortality or quality of life improvements.

With more affordable access to prescription drugs, seniors can better manage chronic conditions and avoid acute episodes that might land them in the ER or in the hospital.

From Health Affairs

A more recent study published in the policy journal, Health Affairs, includes in its headline (academics prefer to call them titles) “Reform drive(s) faster spending growth.”

Is it any wonder that most news reports highlighted the spending growth?  But “faster” growth is faster by a 0.1% – that is one tenth of one percent on a $2.6 trillion dollar health spend in 2010.  If you were going 60 mph on the highway and increased you speed 0.1%, it would barely register on your speedometer.

White House Deputy Chief of Staff Nancy-Ann DeParle wrote on a White House blog post.

The bottom line from the report is clear: more Americans will get coverage and save money and health expenditure growth will remain virtually the same.

Senator Orin Hatch (R-UT) released a statement that had a different perspective. “The central promise of the White House’s partisan health law was that it would reduce health care costs, but unfortunately, as the report shows, this law is only making things worse.”

ROI

But John Nail points out in the employee benefits blog, bentelligence, some of the ROI on that 0.1%

• 30 million fewer uninsured Americans
• 300,000 saved lives
• fewer medical bankruptcies
• state based market reforms to improve access to health insurance
• improved consumer protections
• health care payment reforms and quality improvement initiatives

He adds:

“This is a partial list of the most obvious ROI for this modest .1% investment or increase in costs over 10 years.

Thats right .1%! That translates into a few billion dollars a year:

• less than ethanol subsidies, or
• tax breaks for hedge fund managers or
• 10% of  the cost of oil company subsidies

none of which add anything to GDP or any ROI for the American people.”

The Commonwealth Fund

But the Commonwealth Fund makes a point that others missed.  The projections for 2020 made in 2011 are lower than the projections made in 2010 and in 2009.  The slow down in the economy and the resultant record low growth rates for health spending in 2009 and 2010 (4.0% and 3.9% respectively) have lowered estimates for 2020.

As the author, Karen Davis, points out

“By using the higher 2009 health system spending baseline, analysts assumed that providing coverage for the uninsured and premium subsidies would be more expensive for the federal government than now appears to be the case. The offsetting revenue estimates, by contrast, are less sensitive to the slowdown in health expenditures—legislative provisions such as taxes on wealthy individuals, lower Medicare Advantage payments, and productivity adjustments for hospitals can still be expected to produce significant federal budget savings. If scorekeepers were to redo original estimates based on these new projections, the deficit reduction generated by health reform would be greater.”

The common thread

Buried in the Health Affairs article is a brief statement that  reinforces a conclusion of the JAMA study on Medicare Part D:

“insurance expansion can typically lead to more efficient use of health care services.”

Are you listening Senator Hatch?

Photo credit:  JL McGee – all rights reserved

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If employers are mandated to provide health insurance,will it be a job killer?  Will it cost American workers income in the form of lost wages?

For the anti-American conservative forces in this country, the answer to this question is a no-brainer – a resounding “Absolutely!”.

For those less ideologically hamstrung, the answer might be “Don’t jump to conclusions”.

The Robert Wood Johnson Foundation (RWJF) released a study recently that concluded conservative fears were without basis.

In the words of the RWJF:

“In contradiction to past research and long-held economic theories, a new study finds that that when facing a “pay-or-play” mandate requiring employers either provide health benefits or contribute to a public option health plan, employers did not lay off staff or cut wages appreciably as a result.”

Novel legislation

The San Francisco law was notable in several ways.  Several states had attempted to legislate some form of an employer mandate.  All were vigorously opposed by anti-American conservatives and business interests who argued – guess – that it would hurt business, cost jobs, and therefore hurt workers.  Those efforts that survived were challenged in court on the grounds that the ERISA preemption clause prevented states from taking this course.

The San Francisco law survived both gauntlets with the Supreme Court deciding just a year ago not to hear an appeal of a lower court decision upholding the law.

The law requires that employers with more than 20 employees to spend a minimum amount for health insurance for their employees who work more than 10 hours per week.  They can satisfy that requirement in one of three ways: Paying for health insurance directly; paying into a medical reimbursement account; or paying into the city’s “Healthy San Francisco” public option health plan.

For smaller (less than 100 employees), the required spending amount is $1.17 per hour and for larger employers, it is $1.76.  This is not a lot of money.  $1.76 per hour for a full time employee represents less than half the cost of comprehensive coverage in San Francisco.

Study conclusions

So how did the anti-American right wing hysteria hold up to rational scrutiny?  Not to well.

They find little to no effect on employment and little to know effect on wages.  They explain the results with the observation that “high impact” industries such as the restaurant industry, had little room to lower wages, businesses would not be at a competitive disadvantage by complying with the law, and consequently they could pass along some of the costs to customers.  Only 10% of employers with more than 20 employees did not offer health insurance prior to the 2007 law.  But surprsingly 75% of firms needed to increase spending to meet the mandate.

Only about 25% of restaurants in the San Francisco area employ more than 20 workers, but those restaurants employ more than 2/3 of the workers in the industry.  About ¼ of those restaurants chose to tack on a surcharge to their menu prices which they attributed to the new mandate.

I use the phrase “attribute to the new mandate” because the researchers also determined that more than two-thirds of those restaurants offered health insurance prior to the 2007 mandate.  Now it could be that “offer” is not the same as election, which might raise employer costs.  It could be that the restaurants simply wanted to raise prices and they judged a surcharge might be more palatable to their customers.  Or it could be that they wanted to make a political statement.  Not tied to the same scientific rigor as the researchers of this study, I would choose the last option as the most likely explanation.  It will be interesting to see how many surcharges continue now that the legal challenge is settled.

Ideology challenged

I was particularly intrigued by the part, “in contradiction to past research and long-held economic theories”.  The researchers conclude

While neoclassical theory indicates that in the long run workers pay for these additional benefits either through real wage reductions or lay-offs for low-wage workers, these effects have been muted in San Francisco in the first two years into implementation of the employer health spending mandate. …thus far the Health Care Security Ordinance has expanded coverage with little negative impact on the labor market.

Because this study challenges neoclassical economic theory, I am sure there will be funding from conservative think tanks to discover and amplify its faults.

Meanwhile, a whole lot more San Francisco workers have access to the health care in the Bay City.

And I understand you can still find good food in restaurants there.

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Early in my career I was invited by a teacher’s union local in a rural Pennsylvania school district to discuss their benefit package.  I was working for a carrier at the time, and they had that carrier’s benefit program.  “Your insurance sucks,” was their blunt assessment.

Clear directions?

It seemed that they were negotiating with an un-enlightened management whose attitude toward union “demands” was that, if the union wanted it, it must be a benefit improvement that would cost them money.

So they refused to make any changes at all, even updates that reflected changing delivery systems such as coverage for outpatient surgery or outpatient chemotherapy (Am I showing my age?).  I explained to the union that these coverages were available, that most plans did have them, even plans that our carrier offered.

She accepted my logic but then suggested I needed to convince the local union membership.  I was invited to make my case at a session during an in-service day.  As I sat in the audience, the local union president introduced my pitch by saying, “Before I introduce the next speaker, I would like to take up a collection for Patty, whose outpatient chemotherapy bills are not being paid by our insurance.”

Déjà vu all over again

I tell this story because this scenario continues to plays itself out in varying forms today.   How do you manage change and manage costs in an ever-changing world of health care?  How do you walk the line between principled (block-headed?) opposition to change, and appeals that tug on the heartstrings?  Where is rational analysis in this process?

In New York state a version of this same story is again unfolding.  Instead of Patty its Megan Bonstein’s insurance that sucks.  It won’t pay for the oral chemotherapy drug Tasigna. But Megan has an ally in her case.  The Leukemia and Lymphoma Society.

It seems that Tasigna costs $11,000 a month.  If Tasigna were a more traditional chemotherapy drug that is administered intravenously in a doctor’s office, it would be covered by most insurance plans.  But it is not.  It is a pill.

So the Leukemia and Lymphoma Society is lobbying the New York state legislature to make coverage for oral chemotherapy medications a mandated benefit.  Is Tasigna a more effective treatment?  They don’t say.  They do say that some oral chemotherapy treatments are more cost effective.

What is the position of the American Association of Health Plans in New York?  They are against it because it would raise the cost of health care and prompt people to drop coverage.

Sentimentalism vs. stubborn opposition.  The bleeding hearts vs. the blockheads.  Sound familiar?  Yet this is how much of health policy decisions are made in this country.

Where is rational analysis?

Who is asking the questions:  Does this therapy work?  Is it effective?  Is it cost effective? Is it being prescribed correctly and appropriately?

It seems that this therapy only works on patients with a specific gene mutation.  It is also made by Novartis who makes a similar drug, Gleevic, whose patent will expire in 2015. They wouldn’t be motivated by concerns about protecting their profit sources, would they?

This tug of war between the block-heads and the bleeding hearts repeats itself in state legislatures throughout the country.  It is why states have implemented an average of 43 mandated benefits, requiring coverage for benefits ranging from chiropractors to massage therapists.  And the bleeding hearts aren’t necessarily defined by political persuasion.  Texas has 60 mandated benefits and Wisconsin has 35.

Enter health care reform

But things should change with the new Health Insurance Exchanges required under the Affordable Care Act.  The federal government will define some benefit packages that must be offered in the exchanges and experts predict that there will be disincentives for states that add additional requirements for mandated benefits.

In addition, the stimulus bill passed early in the Obama administration included money for research on comparative effectiveness.  How do and can policy makers decide on the relative effectiveness of different therapies?  A new therapy may be marginally better, but if it is significantly more expensive, should it be a universal replacement for the older therapy or a selective replacement and what would those criteria be?

So amid the mindless rancor around health care reform, there are glimmers of hope that rational thought may prevail.  It is an uphill struggle.  As Michael Shermer points out in his new book, The Believing Brain, it is difficult for the human brain to rationally reach conclusions that contradict our prejudices.

So what happened to those teachers in Pennsylvania?  They eventually did get the benefit improvements they were looking for.  Can the achievement be attributed to the triumph of rationalism?  What do you want to believe?

Photo Credit:   Flickr Superburchl

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Paul Krugman called it McKinsey Gate.  The New America Foundation called it a kerfuffle.

Three congressional committees threatened to investigate.

What provoked this outrage?  A survey?!

The survey by the normally respected McKinsey & Co revealed that 30% of employers were likely to drop their employer sponsored health insurance (ESI) after the insurance exchange provisions of the Affordable Care Act (ACA) kicked into place in 2014.  This contrasted sharply with a study by the Congressional Budget Office that predicted that only 7% of employers would likely drop coverage.

The kerfuffle

The McKinsey survey has been described as an “outlier”, inconsistent with the results of other studies, in addition to the CBO study, including Rand, the Urban Institute, and the International Foundation of Employee Benefit Plans.

McKinsey defends its work by stating that it has not produced an economic model but rather has surveyed actual decision makers.  But this response too is not enough.  Some have gone so far as to impugn the professionalism of the survey firm that conducted the research, Ipsos, a French marketing firm.  Many criticized McKinsey’s initial unwillingness to provide specific methodological details about its study.  Later the firm relented and released specific details but that barely quieted the critics.

As McKinsey admits in its own study, the future is difficult to predict.  Critics argue that when employers are fully informed they will see the advantages of continuing to offer ESI.

The kerfuffle obfuscation

But arguing over the specifics of one study versus another misses the larger point.  To the extent that McKinsey has challenged previous predictions, perhaps their work has positive value.

It is useful to put the McKinsey study and health care reform into more recent trends in employer sponsored health insurance.

• Fewer employers are offering health insurance to their employees.  That decline is especially acute in smaller firms that tend to function in a more competitive compensation market.
• Those that do, offer it to fewer employees by
  • moving certain job functions to part time employees or contract employees
  • offering incentives to employees to use other coverage
• Making employees pay more through higher premium, deductibles and co-payments
• Limiting their own risk exposure by attempting to make employee health care benefits into a defined contribution voucher program.

Reversing trends?

What does the ACA do to reverse these trends?

There are things it clearly does not do.  It does not abolish the model of employer sponsored health insurance. It does not require that all employers offer health insurance.  It does not require employers to offer health insurance to all employees.

In short, it does not choose any action that would be clear and simple.

It does offer a mixed bag of incentives and disincentives, couched in a complicated array of regulatory requirements.

The new exchanges

First there is the health insurance exchanges.  While the exchanges will differ from state to state, they will share some commonality.

• No medical underwriting – coverage will be available regardless of previous medical history.
• Limits on plan design and cost sharing.
• Ability to compare plans on a uniform basis
• Subsidies are available to individuals whose family income is less than 400% of the federal poverty level.

This is good for individuals and small groups who have traditionally found it difficult, sometimes impossible, to purchase health insurance.  The small group market has seen the greatest erosion of employer-sponsored health insurance over the last twenty years.  Will these exchanges stop the bleeding?  Most practitioners that I talk to are skeptical, but hopeful.

It seems that the practitioners that McKinsey has surveyed are equally skeptical and McKinsey is hopeful that they will present consulting opportunities.  But that is another blog post.

What does ACA say to larger employers?

Again there is a complicated array of regulations that can impose additional costs on employer-sponsored plans.  They include:

• Removal of certain plan limits
• Expanded eligibility rules for dependents
• Expanded benefits
• non-discrimination rules
• more stringent claims and appeals regualtions

In addition, employers must consider:

• Whether their firm meets the regulatory definition of a “large” employer
• The family income of their employees
• The cost sharing as a percentage of that family income
• Whether or not their coverage is “affordable” according to the regulations
• Whether or not any full time employees receive a subsidy from the Exchange.

And then the hard part

And that is the easy part.  Employers will have to balance the following factors in making the decision to continue to offer or not offer health insurance.

• How much is the penalty for not offering health insurance?
• What are the tax consequences of crossing the threshold into a “Cadillac Plan” territory?
• Will changes to benefit offerings violate new anti-discrimination rules?
• What are the short and long term consequences of “grossing up” employee income so that employees can buy coverage from the Exchanges?
• What will be the employee disruption factor?

The wild cards

There are two big wild card questions that could trump all of the number crunching efforts to quantify the preceding list of factors.

First, what does the boss want?  After all, the boss likes his insurance and new anti-discrimination rules will make it difficult to separate his plan from the rest of the employees.

Second, and the biggest wild card of all – what are the bosses competitors doing?  If just one large player in a major industry decides to pull the plug on its employer-sponsored health plan, the whole system could collapse quicker than the stock market in 2008.

And that is the silliness of  the McKinsey Gate kerfuffle.  No amount of sophisticated modeling or stringent survey protocols can predict the outcome of a system that ultimately depends on the willingness of players to continue to play without clear moral, legal, or financial penalties for doing otherwise.

Saving employer sponsored health insurance may be a bit like the debate over “saving” Medicare.  It may exist in name, but will provide very little protection.

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Has Vermont carved a path toward single payer health care or caved into powerful insurance company lobbies?

Maybe just a little bit of both.

Has Vermont drawn a new line in the sand for health care reform or outlined a sketchy drawing towards the future?

Yes to that as well.

On May 27^th, 2011 Governor Peter Shumlin fulfilled a campaign promise to move the state toward a single payer health care system when he signed H-202.

As the saying goes, you can’t make an omelet without breaking a few eggs.  In this case, the analogy works pretty well.

H-202 outlines a path that takes features from current state and federal realities and blends it with recipes offered by the federal health care reform to take Vermont where previous federal and state lawmakers have feared to tread.

Should we be surprised that the descendents of the Vermont Republic break several cherished taboos in their legislative approach to health care reform?  Should we be upset that so many details need to be filled in along the way?

The Vermont law declares health as a right, not a privilege.  This is significant.  While I have challenged the notion of a health care as a right, the people who organized grass roots support for this quantum leap forward have used that rallying cry as a reminder of our obligation to provide for those in need.

If I were to characterize the Vermont process it would be – design; build; and remodel.  It is an incremental journey toward a revolutionary change; an evolutionary approach to species change.

Design

A friend use to say, “plan your work and work your plan.”  Likewise, measure twice and cut once.  Carefully plotting out a design change as profound as this is critical to success and Vermonters were careful to not over prescribe in the legislation.  Vermont must create a five member board, nominated by the governor and approved by the legislature.  That Board must wrestle with a broad range of issues that would lie outside the scope of most health plans in today’s market.  They include:

• Designing a benefit package
• Setting payment rates and methodologies
• Addressing adequacy of health workforce issues
• Hospital budgets and capital expenditures
• System performance and quality
• Health information technology.
• Approving rate requests.

That’s a tall order and time will tell whether it is best left to a single entity.

Build

The build phase uses the structure outlined in the Patient Protection and Affordable Care Act.

It will build the insurance exchange that will allow individuals and small businesses to shop for health insurance.  The number of insurers will be limited and will include a “public option”, the Green Mountain Health Plan.  Benefit design options will be limited as well and will be prescribed by the Green Mountain Board.

It will offer comprehensive, affordable, high quality health care coverage for all Vermonters, regardless of income, health status or availability of other coverage.

As required by ACA, there will be a ban on pre-existing conditions and all Vermonters will be eligible regardless of employment status.

Remodel

The remodel phase may be the most challenging phase as the Green Mountain Board will need federal waivers allowed under the ACA to create a single payer health plan.  That plan will combine the people currently enrolled in Medicare and Medicaid with a broad swath of the Vermont population, including public employees, individuals and small groups.

To Vermont’s credit, they added a feature near to my own experience.  They also included workers’ compensation in the Green Mountain Health Plan.  I have seen too many people delay treatment while lawyers argue whether a specific treatment is the responsibility of the health plan or workers’ compensation, an utter waste of both financial and human resources.

A late Senate amendment requires that the Green Mountain Board determine that certain legislative goals will be met with the implementation of the single payer system before the transition to a single payer system.

With the federal waivers, the program will be funded by

• Federal Medicaid funds
• Federal Medicare funds
• State Medicaid funds
• State contributions for its employer plans
• Employer contributions for small group plans
• Individual payments for individual insurance.
• Employer payments for the medical portion of workers’ compensation (normally 50% of workers compensation premiums)

Critics are quick to question how the program will be funded; yet it is hard to image how the program would need substantial supplemental funding.  In fact, I could image a scenario where the state could reduce certain taxes and replace them with a revenue neutral dedicated income tax that would highlight the total cost of health care in Vermont, much of which is obscured under current financing methods.

The Vermont law lays out an ambitious program that goes far beyond the roles assumed by most health care purchasers, including even Medicare.

Like Medicare, the Green Mountain Board will promote provider payments reforms with some of the same models proposed in the ACA, Accountable Care Organizations, and Medical Homes.

The Green Mountain Board also folds in powers traditionally assumed by states such as certificate of need (approval of capital expenditures) and hospital budgets, approval of health insurance rates, approval of a Health Information Technology Plan, development and maintenance of an adequate health care work force, as well as developing and maintaining a system to evaluate overall system performance and quality.  That is a pretty tall order.

Vermonters have pushed the envelope on health care reform. What was once off the table is now being served up as the main course.

For those who have brought the state this far, their work is just beginning.  Not only must they wrestle with the devilish details that confound any change, they will also confront those evil demons who will make every effort to thwart and reverse this initiative.

Like many, I have questions and I hope Vermonters and others will join a dialogue and offer their own thoughts and perspectives on how this process will unfold over the next five years.

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An historic event occurred on May 26^th 2011.

The New York Times noted it with a single paragraph.

On that date, Vermont Governor, Peter Shumlin, “launch(ed) the first single payer health care system in the United States” by signing into law H-202 passed by the Vermont legislature just days earlier.

Click here to view the embedded video.

ACA paves the way

The Vermont law could only be possible in the wake of the Patient Protection and Affordable Care Act (ACA) signed by President Obama 14 months earlier.

That point may be missed by those who criticize the ACA as meaningless and the Vermont bill for falling short of the single payer ideal.  Yet the ACA paved the way for the Vermont initiative in several ways.

First it established a national will for health care reform.  Despite the bluster and the moneyed and mindless opposition to health care reform, the public has repeatedly expressed support for health care reform, even if not for this health reform legislation.   As Canadian survey researcher, Oleh Iwanyshyn, notes in the blog, poll stuff, Americans may not like or understand many of the specific initiatives in the bill, but they clearly supported and continue to support health care reform.

Failure can also show a way

The failures of the ACA also opened a door for the Vermont initiative.  The health care exchange idea is still a complex and confusing idea to most people.  There is only one part of it they truly understand.  Sick people cannot be denied health care insurance.  But all of the emerging guidance and discussions about eligibility for Medicaid and subsidies and exchanges is very confusing.

The world was looking for someone to simplify this system and Vermont had an idea.

The ACA paved the way for Vermont in another way.  The ACA was modeled after another state initiative, a state very close to Vermont, a state Vermonters were able to observe very closely – Massachusetts.  Like ACA, the Massachusetts was an historic achievement.  It was the first state since the passage of ERISA in 1976 to find a way around that law’s “preemption”.

Vermont unties the knot

The ERISA preemption severely limits the power of states to enact laws establishing universal health care coverage.  Hawaii’s employer mandate, passed the year before ERISA, was granted an exemption in 1983 with the clear message that other states should not expect similar treatment.  Massachusetts found a way to cut through this Gordian knot with the individual mandate.

Here is the curious rub to this history.   Supporters of the ERISA preemption in 1976, like Senator Jacob Javits from New York, also supported, and in fact, expected, a federal health care reform effort.  They did not want states to put up roadblocks to that effort.  Why, 35 years later, when Congress has a clear public mandate for health care reform, does it look to a model whose only merit is that if finds away around the federal restrictions?

Lastly, the ACA does provide a legal framework to encourage state initiatives for health care reform.  They got into the law over the objections of the White House and they are not effective until 2016, but they are there.

So Vermont took the bait.  They did what Congress and the President were too weak-kneed to do.  They enacted a law that blazes a path toward a single payer system in Vermont.

This initiative could not have happened without significant grass roots effort.  That effort preceded H-202 and the ACA by several years.  It is they that deserve the credit for this historic achievement.

Next: a closer look at the new Vermont law.

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Americans are not stupid;  at least not the 48% of Americans living in New York’s 26^th Congressional District.  Polls show that the victory by Democratic candidate, Kathy Hochul, in this traditionally conservative district was a reaction against the Republican budget proposal approved by most House Republicans and calling for a radical transformation of Medicare.

Paul Ryan, the Budget Committee Chairman who concocted this most recent Republican idea to kill Medicare,  would have you believe that his plan would not hurt seniors, his plan to to end Medicare as we know it would not hurt seniors.

He thinks people who are 54 years old – the first ones who will fall under Ryan’s plan -aren’t thinking about needing Medicare.

He thinks those older than 54 won’t feel threatened by his voucher plan idea.

He thinks people will somehow fall for this “kick-the-can-down-the-road” ploy.

What goes around …

There is some delicious satisfaction to watching Republicans squirm as Democrats accuse them of “ending Medicare as we know it.”

Dana Millbank, writing in the Washington Post, described Ryan’s own demagoguery on Medicare and health care reform:

Speaking on the House floor in 2009, he said the Democrats’ health-care legislation would “take coverage away from seniors,” “raise premiums for families” and “cost us nearly 5.5 million jobs.” Later, he said the health plan would bring about government “rationing” of health care.

He also labeled the plan “a government takeover of our healthcare system,” claimed America was at a “tipping point” toward a “European social welfare state,” and gave a wink to the “death panel” allegations. His suggestion that the legislation would result in the IRS getting “16,000 agents” to police the health-care law was knocked down as “wildly inaccurate” by Factcheck.org.

But Paul Ryan and the Republicans are not backing away from their lies and their distortions.  They must feel  confident that with the corporate money faucet turned up, they can convince Americans of anything.

The Huffington Post quotes a spokesperson for Carl Rove’s American Crossroads groups:

The GOP can’t and won’t retreat from the Medicare valley it has occupied. “We know that bell can’t be un-rung, and we wouldn’t want to,” said a well-placed GOP aide. “We’re on the right side of history.”

Just the facts

I can’t speak to history yet, but they are clearly on the wrong side of the facts.

Paul Ryan lies when he says his plan won’t affect seniors.  It most definitely will affect  the seniors who will be voting just two short presidential elections from now.  Americans aren’t fooled by that little trick.

What does it mean to replace Medicare with a voucher system?

Imagine you had access to an almost free new car.   Someone comes along and says, “This car is costing us too much money.  So we are going to give you cash instead.  Oh, and if car prices go up, well our ‘voucher’ won’t increase.”

But it gets better than that.  The Ryan plan insists that you not buy direct; you must buy from a third party insurer. Continuing the car analogy, instead of getting that car direct from the factory, you now have to buy it through a middle man.   Everyone knows that middle men (and women) are not free.

The Ryan plan may keep a government program called Medicare solvent.  It will abandon Medicare’s goal of contributing to the financial security of our senior citizens by providing for their health security.  It will sacrifice the solvency of seniors for the solvency of Medicare.

Seniors , current seniors and will-be seniors, are and should be scared by the Ryan budget proposal

Photo Credit:  FLICKR  lucaohman

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Will health care reform adhere to the KISS principle – Keep It Simple, Stupid?

Will it make health care simpler?

Is Mount Everest higher than K2?

Is the Sears Tower in Chicago taller than the Empire State Building in New York City?

Is Bill Gates richer than Warren Buffet?

It is relative.

The Patient Protection and Affordable Care Act (ACA) will eliminate medical underwriting.  That will make life simpler for those with pre-existing medical conditions.

Health care reform will also create state health insurance exchanges.  That will make it simpler for some people to shop for individual and small group health insurance policies.

But for many Americans, health care will still present some daunting choices.  And policy makers are already trying to get ahead of that process.

Those who earn up to 138% of the federal poverty income people will qualify for Medicaid, greatly expanding the number of people who will be eligible.  Those who earn more than 138% of poverty income will qualify for subsidies in the new health insurance exchanges.

I can only imagine the intense debate between those in Congress who wanted the threshold at 135%, the “135ers” and those who demanded 140% – the “140ers” claiming victory when the final number was closer to their number.

Eligible? Yes, but

Just because someone is eligible for coverage does not make them covered.

First they have to figure out what they are eligible for.  Did they earn 138% or 139% of the federal poverty income?  Did that income they earned during the second week of December count?  Will they be eligible for a subsidy or not?  If so, how much?  What is the penalty for failure to enroll?

A group of policy makers are concerned about the  “subsidy eligible uninsured population.”  The Center for Health System change asks in its Research Brief:  “Who are the Uninsured Eligible for Premium Subsidies in the Health Insurance Exchanges?”  Will they purchase health care coverage?

This is an important question because the success of the ACA depends on inducing healthy people to buy something they may not feel they need and they may not be able to afford.

This group of people is currently uninsured and will likely be eligible for the subsidy.  Are they risk takers – willing to take their chances with no health insurance?  Are they healthy and thus less likely to see the benefits of health insurance?

How true is the stereotype of the “young invincible”?

Their conclusion is that healthy uninsured are no greater risk takers than unhealthy uninsured.  In short, if the price is right they will buy health insurance.

And therein lies the challenge to simplify the system, to make it comprehensible AND affordable.

We may learn that the “subsidy eligible uninsured population” may be risk- averse but also complexity averse.

The report concludes that outreach efforts to increase enrollment in the exchanges and to streamline enrollment will be “crucial to the success of the exchanges”.

Simplicity is key to success of the ACA.  It will have a big mountain to climb.

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Mitt Romney not backing away from the health care reform law that he pushed forward in Massachusetts.

In a speech he delivered in Ann Arbor, Michigan, the state where his father had been governor, the presidential aspirant went on to say that what was right for Massachusetts is not necessarily right for the rest of the country.

He then proceeded to trot out the tired Republican formulas for health care reform:  block grants to states, selling insurance across state borders, medical liability reform, and shifting more costs onto individuals.

I would have offered a different response for Mr. Romney.

The federal law on employee benefits, ERISA, ties the hands of states who want to expand health care coverage.  It’s called the ERISA preemption.  We came up with a solution that ducks the federal preemption.  It works in Massachusetts because Massachusetts has a high rate of unionization, a high rate of income and a very low rate of uninsured.  That is not a solution that could work in states like Texas or Mississippi that have none of those.

The federal government has the power to ignore ERISA and to design a system that would be simpler and affordable for all.  Because it would eliminate the convoluted eligibility requirements under the current system, because it would eliminate the Byzantine and arcane payment rules under the current system, because it would standardize rules, it would be a much simpler system.

That simplicity would save the system billions and billions, more than enough to pay for the expanded coverage.

Our next door neighbor, Vermont, is attempting something like that.

That is a state example that Congress could emulate.

I can dream, can’t I.