Commentary: Cover The Uninsured? Not This WeekJeff Lemieux
revised May 25, 2004
to correct a typographic error -- originally published May 11, 2004.
What a joke. The Robert Wood Johnson Foundation is allegedly spending $100 million to publicize "Cover The Uninsured Week." Meanwhile, Congress re-hashes old failed dead proposals and the Bush Administration offers nothing of consequence.
The only glimmers of hope on health coverage are (1) "beneath the radar" conservative interest in the small business pooling bill introduced in March by Senators Richard Durbin and Blanche Lincoln, and (2) a new initiative announced yesterday by the HR Policy Association under which large employers would offer group coverage to "affiliated" workers (part-timers, contractors, consultants, and the pre-65 retired) and their dependents. Either proposal could help put in place an improved infrastructure for future expansions of coverage.
Outline:
"Dysfunction As Usual" in Congress
House Republicans
House Democrats
Senate Republican Task Force
The Silver Lining? Two Constructive Approaches
A Conservative Version of Durbin-Lincoln?
The HR Policy Group's Proposal for "Affiliated" Workers
"Dysfunction As Usual" in Congress: Congress has done a particularly poor job responding to this year's call for solutions on the uninsured.
Here's the House Republican health coverage plan:
1. Another "symbolic" vote to cap medical malpractice awards, which everybody knows will not pass in the Senate. The Senate just isn't keen on caps. Or on practical, incremental alternative bills, like that sponsored by Senator Enzi. The hyper-partisans are having too much fun voting on sure-to-fail legislation, pitting lawyers against doctors in an endless partisan fund-raising battle. For example, Senator Rick Santorum -- a fire-breathing partisan most of the time -- recently told doctors they need to get the "scalp" of a Democrat on the malpractice issue before action will be possible. Needless to say, that sort of rhetoric does not create a good atmosphere for compromise and negotiation (or progress on what should be a very important legislative issue).
2. Another "symbolic" vote on Association Health Plans (AHPs), which everybody is pretty sure won't pass the Senate. AHPs are essentially a zero-sum distributional game intended mostly to support the membership and fundraising goals of small business membership and lobbying groups, such as the National Federation for Independent Business. AHP legislation (by other names) has been floated for this purpose for about a decade. The legislation sounds OK in theory, but it could cause serious problems in insurance markets in some states. Besides, AHPs wouldn't solve the fundamental problems of choice and portability for many people.
3. A modest proposal to expand Health Savings Accounts (HSAs). HSAs are feared by the left as harbingers of the collapse of generous employer-sponsored health benefits. They are revered by the right for the same reason. Both sides are a little overwrought, of course. HSAs are neither a panacea nor a signal of doom. But at their best, HSAs are probably only a bit player in the health coverage drama. They will not dramatically affect either health costs or the number of uninsured Americans.
Here are the House Democrats' likely counter-proposals:
1. The same old dead-in-the-water plan to allow people under 65 to "buy-in" to Medicare, which few, if any, Republicans support. Republicans fear this as government grab -- converting private insurance into public-sector coverage as part of a systematic attempt to create a single-payer government-run health system. Republicans are about as likely to pass a Medicare buy-in as to declare "Ted Kennedy Appreciation Day."
2. The same old dead-in-the-water "FamilyCare" proposal to allow adults in near-poor families to enroll in the public-sector State Childrens Health Insurance Program (SCHIP). Some moderate Republicans like this proposal on practical grounds. But others fear it as another government grab, like the Medicare buy-in. They wonder why Democrats don't just focus their public-sector health insurance proposals on those people who are truly poor.
3. A modest proposal to create improved purchasing pools for small businesses. We don't know exactly what the details of this bill will be. But the basic idea of trying to create fair, government-sponsored purchasing pools for small businesses is sound. However, expect liberal Democrats to insert enough "consumer protections" or insist on such generous benefits that health insurance companies would never be able to offer the required coverage.
The Senate Republicans announced the recommendations of the six-month "task force" on coverage this morning. It is a comprehensive list of proposals. However, the list does not add up to anything meaningful or particularly innovative. It includes politically unrealistic proposals, fine-sounding platitudes without plans to implement them, and marginal ideas that would be unlikely to make much of a difference.
Here are the main coverage proposals:
1. Do a Better Job Enrolling Poor People in Public Programs. This is a great sentiment, with which Democrats would be quick to agree. But how to get people enrolled? The only suggestions are improved outreach and additional flexibility. Those are great, but we're already trying them. What about eliminating burdensome asset tests, which are a strong deterrent to program enrollment?
2. Enact the President's Tax Credit Proposal. The President's proposal has been on the table now for 4 years, and no one has lifted a finger to vote on it, in either the House or Senate. It was not funded in either the House- or Senate-passed Budget Resolution this year. Besides, this particular tax credit proposal is poorly designed. Businesses and labor dislike it because it could destabilize employer-based coverage, especially for smaller firms with low-income workers. This proposal is legislative dead meat.
3. Encourage Health Savings Accounts (HSAs). There's nothing wrong with health savings accounts. Combined with catastrophic (high-deductible) insurance coverage, HSAs are a promising new form of health coverage. But they are being touted as the one and only solution to the health costs and coverage problem. "Magic bullet" solutions in health care have usually fallen short of their proponents' claims. Besides, Congress passed a big HSA proposal last fall -- let's see how that works before enacting expensive new tax breaks that increase the federal deficit.
4. Forgive Student Loans for Graduates Who Purchase HSAs. This would be a fascinating idea if it extended to all types of health coverage. Otherwise, the proposal would create a gross economic distortion, favoring one type of health insurance -- HSAs -- over other types, ranging from HMOs to fee-for-service coverage to middle-of-the-road hybrid insurance plans. Conservatives usually preach that the federal government shouldn't make decisions about which types of products or services people buy. They usually decry "central planning" or "industrial policy" dictates. Why the inflexibility on HSAs?
5. Remove Barriers to Multi-State Pooling Options. This might be a good idea, especially if it helped small states band together to create larger insurance pools. However, policymakers should be careful that it would not lead to unregulated insurance plans (for which fraud can be a problem).
6. Extend Grants to High Risk Pools. This would cost $90 million (that's with an "m"), which sounds like a lot of money, but in Washington it's known as "accounting dust." According to the task force's write-up, the money would help cover 90,000 people, which is a meager 0.2 percent of the 44 million people without health coverage.
7. Extend the "Assets for Independence" Act to Include Health Coverage. The task force estimates this will help extend coverage to a whopping 20,000 people. That's 0.04 percent of the uninsured.
8. Enact Association Health Plans (AHPs), Or Not. In a fairly stunning admission that the AHP legislation is not fit for enactment, the task force hedges its bet on insurance "pooling" for small businesses. They recommend either doing AHPs, or doing something else. That's helpful.
The task force proposal does include some helpful proposals to reduce health costs. But even there, it does not include any groundbreaking new ideas to reach out to Democrats and craft compromises. For example, there are no new ideas for how to break the gridlock on medical malpractice reform.
All told, the Senate Republican proposals add up to very little. They do not represent breakthrough ideas that could be enacted quickly. Even if they were enacted this year or next, they would not solve the health coverage problem.
The Silver Lining? Two Constructive Approaches: Where does the Congressional dysfunction leave us?
There are two constructive things happening. First, the innovative Durbin-Lincoln Small Employers Health Benefit Proposal (SEHBP), which is modeled on the popular federal employees health program, has generated some bipartisan interest, and could be a starting framework for a stable coverage system for small businesses. The Senators put in a great deal of effort to come up with fair insurance rules that health plans could actually live with. The Durbin-Lincoln plan has a few rough spots, but its larger framework is sound.
Second, a group of over 50 large employers has decided to quit waiting for the government to act. They have formed a coalition to offer group health coverage to people associated with their firms, who are nevertheless not eligible for their regular health benefits. These are precisely the sorts of people who need better coverage options. The employer coalition has a lot of tough work to do, designing their insurance pool and setting up workable, sustainable rules. However, their effort is promising, and it deserves a close look in the coming months as the details are announced.
Government-Sponsored Small Business Insurance Pools. The first constructive idea would be to re-write the Durbin-Lincoln small business pooling proposal with a few practical modifications, and a small injection of conservative ideology.
With age-based premium setting rules, and a desire to allow any licensed health plan to offer coverage in the new purchasing pools for small employers, the Durbin-Lincoln proposal has already moved a considerable distance from Democratic orthodoxy, and has thereby captured the interest of quite a few conservative thinkers.
However, Republicans in Congress would certainly insist on some changes before embracing a Democratic bill.
Instead of a nationwide, federally-run system, the conservatives would probably be more comfortable with pools created by states, with local or sub-state pricing regions to ensure that insurance rates are as fair as possible for people living in areas with low health costs.
Instead of making the government strictly responsible for the cost of very sick enrollees (the Durbin-Lincoln bill and Senator Kerry's health plan would have the government cover a percentage of any enrollee's health costs above $50,000 a year), conservatives might support limited government funding for privately run reinsurance or risk-sharing arrangements.
Here's a possible political scenario:
It's August. Senator Kerry is doing well in the polls. Health care issues are one of his strong points.
President Bush's political advisors decide they should do something on health coverage before the election, to help put the "compassion" back in the slogan of "compassionate conservatism."
They call key Republican leaders in the House and Senate and ask "What can we enact into law this year on health coverage and costs, on a non-confrontational, bipartisan basis?"
The only area of health coverage that seems like a decent candidate for bipartisanship and consensus is government-sponsored pooling for small businesses.
It would take a miracle, but the Administration's desire for another signing ceremony on health care -- especially since the Medicare drug benefit seems to be a mixed political blessing so far -- might be enough to spark some action on health coverage just prior to the elections.
HR Policy Group Proposal for "Affiliated" Workers. The second hope for real progress on health coverage is the HR Policy group's proposal to provide health coverage for over 50 large companies' affiliated workers and dependents (workers connected to the businesses in some way, but not eligible for regular health benefits).
In theory, the group would offer (but would not subsidize) discounted coverage options for those workers, giving them better choices of coverage and stronger consumer protections than are available in the market for individual health insurance.
Importantly, the HR group's proposal emphasizes comparative cost and quality information, which is a key to improving health care. It could also help lower costs.
The details of the HR Policy group's proposal are not yet written. Unsubsidized health coverage is a very tricky business. It's hard to offer guaranteed rates without creating winners and losers. Unsubsidized pools can fail if they don't attract sufficient numbers of younger and healthier enrollees to even out the risk profile.
But it's easy to understand why the companies are trying to do something on their own. Waiting for a dysfunctional government to act could mean waiting too long.
Like the Durbin-Lincoln bill, the HR group has offered an innovative basic plan that is a possible model for real progress.
At some point, the two groups -- the legislators and the businesses -- should discuss how to allow the large business group's pools to qualify for the same modest federal subsidies that the Durbin-Lincoln bill would offer to small employers.
A modest government subsidy, combined with fair but realistic rules and strong employer participation and support, could be the foundation for real, long-term solutions on health coverage.
Working out the details would certainly be a more interesting project than the usual partisan shouting and gridlock.
Links:
Senate Republican Task Force on Health Care Costs and the Uninsured Detailed Policy Proposals (May 11, 2004)
CoverTheUninsuredWeek.org
Centrists.Org The Durbin-Lincoln Small Employees Health Benefits Programs (SEHBP) (revised March 4, 2004)
HR Policy Group Coverage Proposal for Affiliated Workers (May 10, 2004)
