Health Reform Implementation

A few quick highlights from the annual Mercer survey on employer sponsored health coverage released Tuesday. (The full report will be out later this month.)

The key finding: Asked whether they will stop providing health coverage when the exchanges start running in 2014, most employers said, “Not likely.”

Big employers were particularly unlikely to anticipate dropping coverage, absorbing the penalty, and letting workers buy insurance through the exchanges. Only six percent of employers with 500 or more employees -- and three percent of those with 10,000 or more -- say they are likely to terminate their health plans and send workers to the exchange.

Elections, especially off-year elections, are mainly referenda on the economy. This one was no exception, and the recent health reform legislation was viewed as part of the problem, a source of unnecessary federal spending. Ads opposing the Affordable Care Act, many fueled by new and unregulated campaign spending, topped those favoring it by a 5-1 margin. Having voted in favor of the legislation also hurt many Democrats among voters who feel the legislation did not go far enough. Among Republican voters, according to Gallup, repealing the Affordable Care Act is the number one priority.  

So does this mean that the legislation is fated to be “ripped up, root and branch,” as Indiana Congressman Mike Pence predicted on election night?

Probably not. The reasons go well beyond President Obama’s veto pen and the simple political reality that benefits, even those slated to roll out over time, are rarely withdrawn.

The main reason is that the legislation, despite being passed without bipartisan support, represents a genuinely bipartisan approach that tackles two major and intensifying social and economic problems: inadequate health insurance coverage and out-of-control health care costs.

By now it is obvious that the Establishment was snookered on Obamacare. The political impact of that miscalculation will be felt today, as voters repudiate the Democrats who supported the legislation. But what will happen next on healthcare? Right now, the Establishment seems clueless, and yet fortunately, insurgent Establishmentarians, led by Maria Shriver and Sandra Day O'Connor, are breaking with elite orthodoxy, offering a better healthcare solution.

In Washington and on the campaign trail, you hear a lot about "repeal" and "defund." How that unfolds will depend partly on the outcome of Tuesday's elections, and partly on how public opinion evolves as more elements of health reform go into effect and Americans begin to experience the benefits -- and not experience the drastic prophesies about government-takeovers and rationing. If Republicans take over the House, as widely anticipated, they will certainly not lack for ways in which they can challenge and attack health reform, using their oversight powers and perhaps trying to block some of the regulations. (Marilyn Werber Sarafini at Kaiser Health News has a good piece on how they House Republicans may go about this.) With President Obama in the White House and the Senate likely to remain in Democratic hands, the House Republicans of course cannot simply strike down the legislation.

How health reform plays out in the states, however, remains an open question. Governors are often -- not always but often -- more pragmatic than their Congressional counterparts. As we take pains to point out, even states that are fighting health reform in court are often quite actively preparing the groundwork for implementation. (Even Minnesota, one of two states that didn't seek exchange planning grants, is taking part in the federally-funded early retiree reinsurance program, according to a report in POLITICO.) Our colleague Leif Haase wrote last week about aspects of the state exchanges, particularly progress being made in California, and the pros and cons of having the federal government rather than the states take on the exchanges. Our friends at Academy Health State Coverage Initiative responded with a detailed comment, which we thought was worth bringing to your attention in a post of its own:

Theda Skocpol, a professor of sociology and government at Harvard, and I spoke about the breadth of the new health reform law and the challenges that lie ahead at a health policy forum in New York Wednesday night sponsored by the New America Foundation, Demos, and the American Prospect (which recently put out this special report on health reform implementation).

Skocpol (coincidentally -- I don't think the event organizers knew this -- was a college professor of mine years ago before either of us were neck deep in health politics and policy) and Lawrence Jacobs, of the Humphrey Institute of Public Affairs at the University of Minnesota, who has done insightful work into health politics, have co-authored a new book called "Health Care Reform and American Politics: What Everyone Needs to Know.” It offers a clear and accessible explanation of how we got to where we are, what the law achieved, and whether it can succeed in the political and economic context that we are likely facing.

The headlines lately are full of stories about the touchy politics of health reform or the legal challenges in the courts. So from time to time it's useful to check on how implementation is actually going in the states, even states pursuing legal challenges.  If you poke your head outside of the Beltway (or talk with those intrepid voyagers who do), you’ll see that -- while their stories might not be grabbing headlines at the moment -- the on-the-ground implementation efforts are by and large moving ahead quite nicely.

A few days ago at the Alliance for Health Reform event, “Designing a Marketplace that Works: Steps to Affordable Coverage,” Joel Ario (from HHS) and Michael McRaith (from the Illinois Insurance Department), amongst others, surveyed the current status of exchange development.  Their message, echoing what you’ve heard from anyone from NAIC since the insurance commissioners began tackling MLR (medical loss ratio) during the last couple of months, is that January 1, 2014 is the shortest 3-plus years away you’ve ever seen. But both Ario and McRaith, returning from “the field,” seemed confident that states are on track, that they are focused and in sufficiently high gear to make the deadline to have functioning insurance exchanges.

In the wake of California’s first-in-the-nation passage of legislation creating a health benefit exchange under the terms of the Affordable Care Act, our readers asked, in effect, “What’s the fuss”? After all, federal regulations on exchanges are still being written. And federal law provides for fallback authority to create state-based exchanges should states fail to act on their own by 2014, when the exchanges are required to be up and running.

Indeed, health expert Jacob Hacker, in an important piece, has argued that “reform’s strongest advocates at the state level should be willing to encourage state leaders not to set up their own exchanges, pressing instead for state officials to conserve resources and enlist the federal government to contract with and oversee private plans directly.” Hacker believes that direct federal action will make exchanges cheaper to establish, ensure that the exchanges offer a robust set of benefits, and prevent insurers from bending the rules in their favor.

The votes are in. State insurance regulators, from the National Association of Insurance Commissioners (NAIC), voted unanimously Thursday morning on definitions for the Medical Loss Ratio (MLR). The “medical loss ratio” refers to the amount of money insurers spend on providing actual health and medical care to their customers. The Affordable Care Act sets minimum standards for the MLR -- large, group insurers have to spend at least 85 percent of their money on medical care (it’s 80 percent for small group or individual policy insurers). That means that only 15 percent can go to expenses that don’t specifically improve patient health, like administrative overhead and advertising costs.

The NAIC spent the week in Florida trying to reach a consensus on MLR policy -- answering questions like: what counts as “medical” spending? Will the MLR calculation take place at the state or national level? And how do we account for changes in the role of brokers in the new insurance marketplace? HHS will rely heavily on the NAIC recommendations to craft final regulations.

State government officials should not step in and block portions of the health care reform law that they disagree with. The law was intentionally designed to empower state and local authorities; they have the power to adapt and transform the law according to their unique market needs. If governors and their appointees refuse to implement the law, then the millions of Americans who have been waiting for solutions for their health care to improve will need to exercise their democratic ability to influence the process.

Jim Abrams of the AP has a good overview piece on the remarkably productive Congress -- everyone may yell about gridlock but this Congress has passed a historic health care bill, the economic stimulus package, Wall Street accountability (not to mention making college loans more affordable, Cash for Clunkers to help revive the auto industry, credit card consumer protection, tax credits for first-time home buyers, and regulation of tobacco, to name a few).

It’s the most productive Congress, Abrams quoted several experts as saying, since the Great Society years, when a Democratic-led Congress created Medicare, Medicaid and passed civil rights laws -- and then got hammered in the next election.