• Obamacare is here to stay?

    Sam Baker in the Hill yesterday:

    President Obama’s reelection, and an expanded Democratic majority in the Senate, dealt the final blow to Republicans’ hope for repealing the Affordable Care Act. And though conservatives still say the law will be a disaster once it’s fully implemented, they’re finally acknowledging that it will, in fact, be fully implemented.

    “Repeal of the whole thing, I just don’t see now how that’s possible,” said Grace-Marie Turner, president of the Galen Institute, a conservative healthcare think tank. The Wall Street Journal’s conservative editorial page also admitted defeat Wednesday. With Obama in the White House for another four years, the healthcare law “will spread like termites in the national economy,” the paper wrote.

    Austin, I, and a number of others said this yesterday, but even I’m surprised to see it confirmed so quickly on the right. I’m curious to see if this means that there will be no more “repeal” bills in the House. It would make me extremely happy to see us turn to productive discussions on how to make the law better. David Frum offers some suggestions.

    1) One of the worst things about the Democrats’ plan is the method of financing: an increase in tax on high-income earners. At first that tax bites only a very small number, but the new taxes will surely be applied to larger and larger portions of the American population over time.

    Republicans champion lower taxes and faster economic growth. We need to start thinking now about how to get rid of these new taxes on work, saving and investment — if necessary by finding other sources of revenue, including carbon taxes.

    2) We should quit defending employment-based health care. The leading Republican spokesman in the House on these issues, Rep.Paul Ryan, repeatedly complained during floor debate that the Obama plan would “dump” people out of employer-provided care into the exchanges. He said that as if it were a bad thing…

    3) We should call for reducing regulation of the policies sold inside the health care exchanges. The Democrats’ plans require every policy sold within the exchanges to meet certain strict conditions.
    American workers will lose the option of buying more basic but cheaper plans. It will be as if the only cable packages available were those that include all the premium channels. No bargains in that case. Republicans should press for more scope for insurers to cut prices if they think they can offer an attractive product that way.

    4) The Democratic plan requires businesses with payrolls more than $500,000 to buy health insurance for their workers or face fines of $2,000 per worker. Could there be a worse time to heap this new mandate on smaller employers? Health insurance comes out of employee wages, plain and simple. Employers who do not offer health insurance must compete for labor against those who do — and presumably pay equivalent wages for equivalent work.

    I agree with some of these more than others, but if we could have a debate on these points instead of whether the law stays or goes, I’d be a happy man.


    • Interesting writing by Frum. I don’t agree with all of his points (number 3 brought me the standard eyeroll) but it’s nice to see conservatives who acknowledge that that the system we haven’t is questionable at best and will not be viable in the long term.

      I think number 2 might be the first time I’ve seen a conservative admit that the employer-based system is something we need to do away with. That’s very interesting, indeed.

      That said, I’m not convinced that he represents a majority of the GOP’s thinking. Or even a significant minority, at this point. This is all a part of the larger debate over whether the party will move towards the moderate center and embrace compromise, or push rightwards as they’ve done during the past four years.

    • I agree, like SS and Medicare/Medicaid when a gov’t benefit is perceived as being “free” then the populace will always vote to preserve it. *sigh* Too bad really since increasing cost in medical care is really a generational issue (too many users not enough payers). Voters will eventually realize that merely having coverage doesn’t guarantee a timely visit with a GP or perhaps you won’t see a GP but a Nurse who has had additional training. On the other hand the alternative isn’t much better. I know a lot of the GOP espouse a free market approach (The system prior to the implementation of the ACA was NOT a free market approach), but it would require some drastic changes to the law such as revoking the law which requires hospitals to provide emergency care regardless of whether or not the patient has insurance.

      • “increasing cost in medical care is really a generational issue (too many users not enough payers).”

        The US has the lowest ratio of elderly to non-elderly of any industrialized country. We won’t be in as bad shape as Japan is today (on this ratio) for over 50 years, if ever. So this really doesn’t fly as an excuse.

        We can, and must, do better at providing basic health care.

    • Interesting this new reality.
      1. Frumm is even willing to consider a carbon tax to avoid raising taxes on the sacred 1%… that says a lot.
      2. Good. Insurance should be separate from employment.
      3. This is just stupid. It will allow people to buy “non-coverage” cheaply and then be stuck with non-coverage when they need it.

      More signs of the inevitability of ACA… Ezra Kleins Wonkblog this morning… there is now a scramble by states to make decisions about insurance exchanges (which they were hoping would go away).

    • #2 is not the first time I’ve heard conservatives say we need to do away with employer based healthcare. I think I’ve heard some AEI people endorse this (at one of their health reform events), for instance.

      For the record, I personally agree with phasing out employer-based health care, but it’s going to take a lot of time to get there, if we get there at all. For better or worse I think the very large companies will want to control their own costs, as they have the infrastructure already built out. And for better or worse, there are a number of people on the left who will resist doing away with employer-based health care, like a lot of the unions (I base this on personal conversations and on the fact that the unions vigorously opposed the excise tax on costly plans).

      As to implementation, it’s not necessarily going to go very fast in the red states. Some will slow-walk it any way they can. And/or they’ll loosen the regulations, and try to do a partial Medicaid expansion, and things like that. Medicare and Medicaid got passed in 1965, but Arizona only started its Medicaid program in the early 1980s iirc (they were the last to do so). And if the Republicans ever take the presidency, remember that they can seriously disrupt the functioning of the federal agencies.

      Bottom line, it’s not over yet in the sense that there will be political and technical disruptions. I agree that the overall law is very, very likely permanent – of course, you have to wonder what if the Republicans win big in 2016. Or even in 2014.

    • “if we could have a debate on these points instead of whether the law stays or goes, I’d be a happy man.”

      Agreed. But. Don’t forget that the Republicans are still trying to voucherize Medicare and privatize Social Security. Eternal vigilance is the cost of an effective social safety net.

    • David Frum is one of the sane Republicans, but even he is not really up to the task of solving health care reform.

      Example #1:

      – the subsidies for employer insurance are invisible to the taxpayer, like all tax exemptions and deductions;

      but the subsidies for the ACA will be very large and very visible.

      Just to use a simplified example:

      Employer A now provides health insurance and pays $8,000 in tax free
      premiums on behalf of the worker.

      Employer A now decides to drop health insurance, because their workers can go onto the exchange and get an $8,000 subsidy.

      If Employer A then raises salaries by $8,000 — and most will not — but even if they do, the worker will pay in about $1200 in new taxes.

      The federal government is on the short end by $6800 — times perhaps 20 million workers.

      Example #2 –

      Employer penalties only start at 50 employees, not at $500,000 of payroll.

      Also, he underestimates the stubbornness of low wage employers.
      The retail and restaurant and janitorial and hotel industries have been chugging along for many years not offering health benefits, and they have no shortage of labor! They also offer low salaries.

      The reason of course is that they keep finding new sources of desperate workers. Frum’s ideal world of employers competing for labor only works in a country without illegal immigrants and without jobless minorities.

    • 1. “but the new taxes will surely be applied to larger and larger portions of the American population over time.”

      We don’t know that. And this kind of speculation is certainly not enough of a reason to tinker with the financing. If necessary, that can be looked at after the law has had a chance to take root.

      3.”It will be as if the only cable packages available were those that include all the premium channels.” Without the essential health benefits it would be like selling “rabbit ears” antenna when the person needs BASIC cable to get reception. Without basic essential benefits, people will be underinsured and uncompensated care will be shifted onto paying customers.

      4. I would take issue with the word “smaller” employers. If these employers are not offering benefits to fulltime workers it means they don’t have to in order to attract talent. The question is why do we have a system where full time employees cannot access healthcare through their jobs when that is the system we created for access. Let these employers that rely on low-wage workers to whom they don’t need to give benefits ,raise bloody hell that the employer-based system has out-served its usefulness. I’m sure there was resistance to giving up child labor as well.

    • Last summer, the CMS Office of the Actuary published (Health Affairs) an analysis of the our nation’s healthcare industry over the next 10 years, including the effects of the ACA 2010. They projected an increase in the cost of healthcare expressed as proportion of the GDP to 19.6% by 2021 (17.9% in 2010). Remember, we are now four years into annual $1 trillion deficits and three years into no national budgets. Without a strategy to drastically improve the efficiency of our nation’s healthcare, we are looking at painful rationing OR a national government in default AND multiple hospital closings. With such financial chaos, would physicians really want to do it? Truly, an impending “Tragedy of the Commons.”

      I continue to believe that reform strategies already exist for reducing cost of our nation’s healthcare without rationing: read “Governing the Commons” by Elinor Ostrom (1990). So far, an old addage applies: “The future is open to those who learn new ideas and those who do not will be stuck with the past.:

    • There is no question that publicly funded health insurance is more stable and equitable than employer funding.

      After all, no one expects Walmart or Dunkin Donuts to give each parent-employee a sum of $8000 a year to pay for private school tuition. Instead, thanks to public funding, the child of a Dunkin Donuts employee gets tha same amount of free schooling throiugh high school as the child of a millionarire.

      We only expect Walmart and Dunkin Donuts to pay their property taxes.
      Education is available to all and in most places is financially stable.

      Now this only happens because every household in America pays something in education taxes, including senior citizens who have no current students in their household.

      The challenge is the transition. We can only let General Motors stop paying $8,000 (or more) per employee if we start making every household pay an extra 8-10% in taxes.

      This will not be popular in households who currently get health insurance for next to free, And there are a lot of households in this category — members of strong unions, retired persons with lifetime benefits, for that matter the uninsured.

      The ACA rather tiptoes into this transition. Let’s see if it works.

    • The current healthcare system fails in being about health; rather it is a disease management system, having human and financial costs. I own a small company, 16 employees. The age of my staff peaks with my husband and I, and goes through every decade: 50’s, 40’s, 30’s and 20/s, We have a high deductible HSA plan and we pay 50% of the premiums and 50% of the deductible into the employee’s own HSA acct. It is an imperative that we continue to invest in the health of our staff, not just exploit their skills and needs. This discussion makes employees commodities to be measured on a cost/benefit basis…. These are lives, skills, potential, whole families…and they deserve as much as needed to be healthy…not just to wait until they are sick. Clearly preventative care must show up as a line item. And, until fee-for-service is a bad memory, there is no incentive for paying for preventative care. Even the auto industry realized the 10-minute oil change was the best way to maximize the functionality of the car and the quality of life of the user. When are we going to learn?

    • Thanks for your decency and good writing, Susan.

      But let me bring up my defense of social insurance over employer insurance.

      Many of your employees have children, I am sure –but you do not feel responsible for their private school tuition, or half of it, or any of it outside of paying your property taxes.

      You are not forced to make agonizing decisions as an employer.

      You are not forced to add to salary for ‘tuition insurance.’ You are not forced to worry about whether the school system is doing OK in the early grades. (I mean, you may well care about this, but you do not have to worry about it as an employer, just as a citizen.)

      America has over-privatized health insurance.

      You react in one way, and the president of NY Applebee’s reacts in a much uglier way.

      None of our reactions really moves the system though.

      Bob Hertz, The Health Care Crusade