Health Exchanges and the Affordable Care Act of 2010
Health care policy, depending on which side of the political idealogical line one falls on, is typically accompanied by a viewpoint of the current system and also how government affects it. Liberals have historically viewed health care as a “right”. Conservatives favor the status quo; health care as a luxury. However both sides do broadly agree the current system needs reform. The question becomes what, if anything, could be the policy solution? Ezra Kline, columnist for the Washington Post notes that the health exchange provisions in the Affordable Care Act “attempt to bridge the gap between the healthcare most want to have, and the healthcare we have now” (Kline, 2009. para 2). Healthcare.gov (2011) describe an exchange as “[...] a mechanism for organizing the health insurance marketplace to help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and quality (para 2).
Using Deborah Stone’s policy solution definitions; a state insurance exchange in essence are new federal “rules” governing (organizing) how states offer an individual health insurance. So the problem health exchanges seek to address are two fold. First, health exchanges provide individuals and small businesses shut out of the market more purchasing power, “represent[ing] the core of the insurance market reforms” (Allison, p. 1). Second, exchanges “are also a lynchpin for the coverage expansions in health reform" which address overhead cost to the nation (Allison, p. 1). What’s the history of health care public policy leading up to health exchanges in the ACA, you ask? Briefly:
After World War II most industrialized nations adopted universal health care systems while the United States opted for a employer-based private insurance market (Clemmit, p. 11). In 1943 the “Wagner-Murray-Dingell bill for compulsory national health insurance is introduced in Congress (Clemmit, p. 11). Around that time [the] “National War Labor Board declares employer contributions to insurance are income-tax free, opening the way for companies to use health insurance packages to attract workers” (Clemmit, p. 11). Still then “members of Congress made unsuccessful attempts to launch discussion of health coverage for all in 1943, 1945, 1947, 1949 and 1957, and Presidents Franklin D. Roosevelt, Harry S. Truman, Richard M. Nixon [...] all proposed guaranteed universal coverage.(Clemmit, p. 11).
Since the late 1950’s Congress has passed laws, though narrowly in most cases, regulating insurance coverage to elderly, and low income children. President Johnson signed the Social Security Act of 1965 establishing the Medicare and Medicaid systems (Clemmit, p. 11). In 1993, First Lady Hillary Clinton failed in her attempt to help pass sweeping healthcare reform (Clemmit, p. 11). Four years later President Clinton signed the State CHIP bill in 1997, extending health insurance through state programs to qualified children of low-income, but insured families (Clemmit, p. 11). Over fifty years, the health care policy debate evolved from just examining the proper role of government in providing health care, to how it can better address the “spill over” effects like rising cost created by the nations current health care system.
CQ Researcher Marcia Clemmit penned a lengthy journal on health care in 2010. She summed up the problem of cost to the nation in chronology of policy on health care. According to Clemmit, in the 1960’s health care spending [totaled] $28 billion, or 5.2 percent of gross domestic product (Clemmit, p.11). By the 1980‘s “health spending [totaled] $255 billion, or 9.1 percent of GDP (Clemmit, p.11). And by the year 2000, “health spending [totaled] $1.4 trillion, or 13.8 percent of GDP (Clemmit, p.11). These figures expose forty years of rising national expense in health care in the United States.
To expose the rising cost to individuals in addition to the nation, advocate groups (HealthCareProblems.org, 2011) began to document “accounts of problems with the U.S. health care system from people involved in every aspect of the system”(HCP.org). Ten years after the failed Clinton attempt, “a Kaiser Family Foundation poll reported 28 percent of middle income families (annual family income between $30,000 and $75,000) stated that they were currently having a serious problem paying for healthcare or health insurance” (HCP.org). Another report states “in 2007, nearly 50 million Americans did not have health insurance, while another 25 million were underinsured”, and that “Healthcare expenditures in the United States exceed $2 trillion a year (HCP.org). “Healthcare is one of the top social and economic problems facing Americans today”; adding “the inability to pay for necessary medical care is no longer a problem affecting only the uninsured, but is increasingly becoming a problem for those with health insurance as well” (HCP.org).
By 2007, most invested politicians, political interest groups, and Americans agreed that there was a problem surrounding rising cost in association with uninsured Americans receiving (in most cases) emergency, triage medical assistance. The problem was how to extend coverage to the uninsured and reduce out-of-pocket expense without a complete revamping of the current system? Barack Obama’s successful candidacy for president in 2008 initiated speculation in the medical community and the American public about the future of healthcare reform proposals. (Boyles, 2008, para 1.). In a webMD article dated November 5th 2008 by Salynn Boyles, she signifies that Obama “ushers in a new administration that is all but certain to include some level of health care reform. Less clear is how extensive that reform [will be]” (Boyles, 2008, para 2). She added that Obama “has proposed sweeping changes in the health care system designed to provide health coverage to millions of uninsured” (Boyles, 2008, para 3). In her webMD piece, Boyles mentions the health insurance exchanges as part of the reforms Obama wants enact. After taking office in January 2009, President Obama called the five Congressional Committees that govern the legislative areas of health care to offer bills (Obama, 2009 para 15.).
By June 2009 Ezra Kline points out that “the most important aspect of [Obama’s] health reform [...] would be the health insurance exchanges” (Kline, 2009 para. 1). “Massachusetts has a variant called the ‘Connector’(Kline, 2009 para 2.) . “Ted Kennedy's bill talked about Gateways. Ron Wyden and Bob Bennett's legislation calls for Health Help Agencies”(Kline, 2009 para 2.). “But the concept itself is [the same] (Kline, 2009. para 2). President Obama push hard for health insurance reform in a special address to a joint session of Congress on September 9th 2009. He began by acknowledging the work Congress has done, saying that four out of the five committees had “finished there work, and the Senate Finance Committee will call a vote next week” (Obama, 2009 para 15.). Signaling that the legislative process had never reach that point before. Mr. Obama began to make the case for why healthcare reform was so important to the nation. “ Simply put”, he said, “our health care problem is are deficit problem; nothing else comes close” (Obama, 2009 para 12.). Adding “we know we must reform this system. The question is how” (Obama, 2009. para 16.). He laid out to the American people the three points he sees as a solution and wants to see in the final bill. His second point was the insurance exchange provision for all uninsured Americans.
A Democratic Policy Committee (2009) bulletin lays out the legislative history of the final bill. Starting “on September 17, 2009, Rep. Rangel introduced H.R. 3590, (para 71). “On October 8, 2009, the House passed H.R. 3590 by a vote of 416-0, and [...] was placed on the Senate Legislative Calendar” (para 71). “H.R. 3590 is the legislative vehicle for consideration of the Patient Protection and Affordable Care Act of 2009” (para 72). “On November 18, 2009, Senators Reid, Baucus, Dodd, and Harkin proposed the Patient Protection and Affordable Care Act as an amendment in the nature of a substitute to H.R. 3590” (para 72). “Senator Reid filed cloture on the motion to proceed to the bill on November 19, 2009 and the Senate began consideration of the motion on November 20, 2009” (para 72). According to the Library of Congress, the Senate voted to pass H.R. 3590 on December 24th 2009 with changes, to the House for final passage (Thomas.loc.gov) On March 21st 2010 the House passed H.R 3590 with Senate changes and on March 23rd 2010 President Obama sign it into law (Thomas.loc.gov). What emerged through the policy process was the Patient Protection and Affordable Care Act. Under Section 1311(b) of the ACA is a provision to require states to establish Health Insurance Exchanges (Healthcare.gov).
Prior to becoming law, heated rhetoric on health care reform was primarily directed at other provisions of the reform bill like the ‘end of life counseling’ proposal - demonized as ‘death panels’ by right-wingers. But especially the individual mandate “which requires all individuals to purchase government-controlled health insurance” (Kibbe para 8). Fox News’ Matt Kibbe, wrote that “Obamacare’s core elements -- the mandates, exchanges, and subsidies (including the massive Medicaid expansion) -- are all interconnected” (Kibbe para 8). The individual mandate, affectionally called ‘The Death Star’ by Kibbe, is the “one critical weakness [of the law]” adding “[R]epeal just this section, and the rest of the law comes apart” (Kibbe para 9). To those who oppose the reform bill the exchanges are ‘guilty by association’. Vested corporate opponents of the ACA, according to Money and Politics, include the following organizations: American Petroleum, Pharmaceutical Research and Manufactures of America, U.S Chamber of Commerce, and National Retail Federation, amongst many others (MAPLight.org). In general they opposed the individual mandate, first, then the exchanges.
However as noted in a NY Times article the idea of an insurance exchange as a public policy solution is not new and carries bi-partisan support in Congress (Pear 2010. para 11). NY Times writer Robert Pear cites agreement about exchanges among “liberals and conservatives [...] as a way to concentrate the purchasing power of individuals and small businesses (Pear 2010. para 12). President Obama characterized the exchanges as a “a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices.”(Obama 2009. para 19). The real battle over health exchanges did not come from Congressional Republicans, it’s coming from GOP Governors.
In a letter from twenty one conservative governors to the Obama administration they write “we believe the system proposed by the PPACA is seriously flawed, favors dependency over personal responsibility, and will ultimately destroy the private insurance market (Bentley et al., 2011). The letter lists several changes they would like to see to the exchange provisions. They include more authority for states to choose benefits that meet there citizens needs, waive[r] provisions that discriminate against health insurance arrangements that include health savings accounts or reimbursement, a plan for verifying incomes and subsidy for exchange participants, [and] calls for neutral third-party research organization to conduct a study to asses how many people will “offload” into the exchanges (Bentley et al., 2011) “The governors are warning that [they] will give HHS full responsibility for setting up and running the exchanges in their states”(Postal 2010 para 2).
How would insurance exchanges affect the market place and look in operation? In Massachusetts and Utah their are functioning models with different approaches. In an October 2010 NY Times column by Robert Pear, comparing them he wrote “In Utah, employees of small businesses can go to a state Web site and sign up for insurance over the Internet, almost as easily as they download music from iTunes”(Pear 2010. para 7). “In the Massachusetts exchange [... ] the state serves as an active purchaser, soliciting bids from insurance companies and negotiating prices and benefits in an effort to secure the best value for state residents (Pear 2010. para 10). “The Utah Health Exchange organizes the market, allowing consumers to compare a wide variety of health plans sold by any insurers that want to participate (Pear 2010. para 9). According to Robert Pear, “health plans cannot be sold through the Connector unless they receive its seal of approval (Pear 2010. para 8); adding “Massachusetts and Utah provide a glimpse of the future, and they offer radically different models for other states (Pear 2010 para 4).
So what, exactly, is a health insurance exchange? To help state health officials in Kansas in the coming years, Andrew Allison, executive director of the Kansas Health Policy Authority, wrote about how states will be affected by the new law. “A Health Insurance Exchange are structured web-based markets for health insurance, and the core purpose of the entity that runs the exchange will be to manage these markets” (Allison, 2009 para 7). “The exchange is to rate plans according to quality and cost, must group plans into four tiers’ (Allison, 2009 para 7) and be “required to facilitate web-based determinations of eligibility for premium subsidies, as well as web-based selection and enrollment in health plans” (Allison, 2009 para 7) ”The exchange will qualify health plans for participation based on minimum standards to be set by the HHS, but states will be free to add criteria as well” (Allison, 2009 para 7). The exchange will need to enforce new and existing insurance regulations, including side-payments across plans that are intended to ensure that health risks are borne fairly by all competitors” (Allison, 2009 para 7).
How would the exchanges directly increase coverage to millions of American citizens? The Affordable Care Act articulates in Section 1413 and 2201, requirements to ensure [...] integration in eligibility and enrollment between Medicaid and the exchange (Allison 2009 para 11). “States must make available a common web-based application for Medicaid, CHIP and the subsidies and cost-sharing protections available in the exchange”(Allison 2009 para 12). “State exchanges must screen applicants for Medicaid and CHIP eligibility, and state Medicaid and CHIP programs must accept these referrals and enroll these individuals in the appropriate program without further review of eligibility” (Allison 2009 para 12). “State Medicaid programs must ensure that ineligible applicants are screened for eligibility for subsidies in state exchanges, and that those found eligible are enrolled in a plan through the exchange” (Allison 2009 para 12). These are examples of how the insurance exchanges will increase access to America’s uninsured.
How will the health insurance exchanges help reduce cost overall? According to The Congressional Budget Office, the estimated budgetary impact of the ACA combined with the reconciliation act - “would produce a net reduction in federal deficits of $138 billion over the 2010–2019 period as result of changes in direct spending and revenue” (CBO 2010 para 7). Devising “that figure comprises $85 billion of the total reduction would be on- budget [...]”(CBO 2010 para 7). While these figures are widely viewed as accurate by public policy analyst, their are critics. In a Health Affairs piece, Douglas Holtz-Eakin and Michael J. Ramlet (2010) wrote “a more comprehensive and realistic projection suggests that the new reform law will raise the deficit by more than $500 billion during the first ten years and by nearly $1.5 trillion in the following decade”.
Since the 1960‘s health care for the average-income American citizen has been largely a privilege for those who can afford it. The employer-based system provided for some time, the needed scope of insurance to the general public. However, times have changed. In America, health care as a function of what government should be doing for it’s citizens is still debated. But from a public policy standpoint, the new federally required health insurance exchange programs give (state) government, a web-based infrastructure that expands coverage, increases access, and reduces cost for the individual, business, and nation
Thanks for reading. Any comments are appreciated :)
Cheers,
CW Hardy
References
Allison, Andrew. (2010) Health Insurance Exchanges: States Role In Health Care Reform [Electronic Version]. Policy and Practice, October 2010, p. 20-24
Bentley et al., (2011). Open Letter to HHS from 21 GOP Governors on Affordable Care Act. Retrieved Feb 24 2011 from http://www.scribd.com/doc/48604494/GOP-Governors-
Letter-To-Sebelius-%E2%80%98Flexibility-On-Exchanges%E2%80%99
Boyles, Salynn. (2008, November 5). Obama Wins: What It Means for Health Care. WebMD Retrieved February 8 2011 from http://www.webmd.com/healthy-aging/news/20081104/
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Clemmit, Marcia. (2010) Health Care Reform: Is The Landmark New Plan A Good Idea?, p 1-24. Retrieved on February 14, 2011, from Academic Premiere database.
Elmendorf, Douglas W. Congressional Budget Office and Joint Committee on Taxation Preliminary Estimate of H.R. 3590 and H.R. 4872. Retrieved February 15 2011 from http://www.cbo.gov/doc.cfm?index=11379&zzz=40823
Healthcareproblems.org. (2011) Health Care Statistics. & Terms of Use. Retrieved February 15, 2011, from http://www.healthcareproblems.org/health-care-statistics.htm.
Holtz-Eakin, Douglas., Ramlet, Michael J. (2010) Health Reform Likely To Widen Federal Budget Deficits, Not Reduce Them. Retrieved February 20 2011 from Academic Premier database.
Kibbe, Matt. (2010, December 22). 5 Reasons Why We Can Repeal Obamacare in 2011. Fox News. Retrieved February 18 2011 from http://www.freedomworks.org/news/5-reasons-
why-we-can-repeal-obamacare-in-2011
Kline, Ezra. (2009, June 16). Health Insurance Exchanges: The Most Important, Under-noticed Part of Health Reform . Washington Post on the web, p. 1. Retrieved February 18 2011 from http://voices.washingtonpost.com/ezra-klein/2009/06/ health_insurance_exchanges_the.html
Lampert, Jacqueline Garry. (2009, November 21). H.R 3590, The Legislative Vehicle for the Patient Protection and Affordable Care Act of 2009. Retrieved on February 11 2011 from http://dpc.senate.gov/dpcdoc.cfm?doc_name=lb-111-1-151
Library of Congress. THOMAS. (2011) Bill Summary and Status 111th Congress (2009-2010) H.R.3590 Major Congressional Actions. Retrieved February 10 2011 from http:// thomas.loc.gov/cgi-bin/bdquery/D?d111:3:./temp/~bdqPjR:@@@R|/home/ LegislativeData.php?n=BSS;c=111
Pear, Robert. (2010, October 23th) Health Care Overhaul Depends on States’ Insurance Exchanges. NY Times on the web. Retrieved February 12 2011 from http:// www.nytimes.com/2010/10/24/health/policy/24exchange.html? _r=1&scp=6&sq=Insurance%20Exchanges&st=Search
Postal, Arthur D. (2011, February 8th). PPACA: GOP Governors Blast Exchange Procedures. Retrieved February 20 2011 from http://schealthbenefits.net/content/ppaca-gop- governors-blast-exchange-procedures
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U.S Department of Health and Human Services (2011, February). Implementation Center Regulations. Initial Guidance to States on Exchanges. Retrieved February 10 2011 from http://www.healthcare.gov/center/regulations/guidance_to_states_on_exchanges.html
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