The reconciliation option

Jacob Hacker dangles an intriguing legislative prospect in his New York Times op-ed promoting a public option as a cure to Obamacare’s woes.  Specifically, he suggests that Democrats could enact a public option with a bare-majority vote in Congress through the budgetary procedure of reconciliation:

This year, Senate Republicans, providing another lesson, passed legislation that repealed the Affordable Care Act through the budget process, which isn’t subject to a filibuster. (President Obama vetoed it.) If that’s possible under the budget rules, creating a public option should be, too — especially since it could reduce the deficit by tens of billions of dollars a year.

Reconciliation is a tool that allows for expedited consideration of budgetary legislation.  Importantly, it allows legislation to overcome the Senate filibuster and pass with simple majorities in each chamber of Congress.  The filibuster, of course, is the veto power invoked by 41 minority party senators to obstruct the legislative will of the majority.  It’s not part of the Constitution, and as wielded by Senate Republicans, the filibuster has created an unnecessary de facto super-majority requirement for virtually all congressional action.  Reconciliation is a safety valve to let lawmaking go forward in the face of obstructionist filibustering.

What can and cannot be achieved through the reconciliation process depends heavily on precedent and the whims of the Senate parliamentarian.  Most famously, Obamacare was originally heaved over the finish line through reconciliation after the Democrats abruptly and unexpectedly lost their Senate super-majority in 2010.  The main requirement for reconciliation is that it must be budgetary neutral, and may not add to the federal deficit.

During the past year, Paul Ryan and House Republicans have been steadily expanding the bounds of reconciliation.  Congressional Republicans have passed bills repealing Obamacare, including its insurance subsidies, Medicaid expansion, and individual and employer mandates.  They even used reconciliation to de-fund Planned Parenthood.

None of these bills made it past President Obama’s veto.  But they did pass muster as appropriate uses of reconciliation with the Senate parliamentarian.  This helped Ryan create precedent for 2017, when he hoped to have a Republican president to sign off on his bills instead of vetoing them.  Indeed, in early October, Ryan was openly talking about his plans to pass much of his agenda through budget reconciliation next year.

But the last month has turned the tables on Ryan’s reconciliation plan.  After a catastrophic month for Donald Trump, the presidency is Hillary Clinton’s to lose, Democrats have a good chance to retake the Senate, and may even have the House within reach if the agony of Trump sufficiently depresses Republican turnout in November.  Ryan’s hopes to push his “Better Way” agenda through reconciliation have been dashed, and now it’s the Democrats who are looking for creative ways to enact their legislative priorities.

So could a public option really be passed through reconciliation?  There’s good reason to think so.  According to the Center on Budget and Policy Priorities, a good deal of major legislation has relied on reconciliation, including welfare reform in 1996, and the 2001 and 2003 Bush tax cuts (which actually increased the deficit and debt).

Most relevant, Congress has used reconciliation to create major health insurance programs before.  In 1985, it used reconciliation to extend health coverage to workers who have lost their jobs (so-called “COBRA” insurance).  In 1997, it used reconciliation to create the Children’s Health Insurance Program, extending coverage to millions of low income children.  And also in 1997, it used reconciliation to create Medicare Advantage.

Not to mention that Obamacare itself (and repeated efforts to repeal it) relied on reconciliation.  If the original law fit the standards of reconciliation, then so too should  most efforts to tweak and improve it.  If balanced with new revenue sources, then Democrats could conceivably enhance insurance subsidies, lower the Medicare eligibility age, expand Medicaid, and enact a whole host of other health reforms all through reconciliation without regard for the hurdles posed by congressional Republicans.

If Democrats eke out only the slimmest majorities in Congress, it doesn’t have to be a recipe for gridlock and legislation stymied by Republicans relegated to minority status.  Much of the Democrats’ health reform 2.0 agenda could be passed through reconciliation.  For that, no small degree of thanks is owed to the precedent created by Paul Ryan and his fellow repealniks in the GOP congressional caucus.

The problem with Obamacare is (still) politics

This week’s announcement of large premium hikes across the health insurance marketplaces has brought another round of Obamacare hand wringing. The average premium on silver plans on exchanges across the country is set to rise by 25 percent this year. Worse, competition is dwindling on the exchanges, as one in five shoppers will have to choose from plans offered by only a single insurance company.

This has left many once again wondering what the problem is with Obamacare, and whether the law is failing. And once again, the core problem with Obamacare comes down to politics.

Obamacare has achieved remarkable successes. It has driven the uninsurance rate to historic lows. Between the law’s Medicaid expansion, marketplace enrollment, and adult children remaining on their parents’ insurance plans, 20 million people have gained coverage from Obamacare, with another million expected to sign up during the coming enrollment period. The law guarantees a right to purchase insurance for those with preexisting conditions, and outlaws insurer-imposed caps on annual coverage. It has also corresponded with a dramatic slowdown in U.S. healthcare spending.

But there is persistent unease (to put it mildly) on the law’s health exchanges. Big insurers have found it hard to create financially viable exchange products, and the exchanges are quickly turning into marketplaces for Medicaid-type plans and customers. The recent premium spikes just add to the exchanges’ struggles.

Now it should be noted that most Obamacare customers will not pay the full sticker price of these increases. The increases reported are before federal subsidies kick in. These subsidies will insulate most shoppers from major premium shock.  Moreover, enrollees in previous years have proven remarkably willing to change plans in response to price changes, and could do so again this year.

Still, the pre-subsidy premium increases do reveal an ongoing turmoil in the marketplaces. There are four principal reasons for rising premiums:

1) Insurers systematically underpriced premiums during the first years of enrollment. Premiums rose by just 2 percent in 2015 and 7 percent this year. By jacking up premiums this year, insurers are bringing prices in line with earlier expectations. In fact, average premiums for 2017 are now in line with Congressional Budget Office forecasts before the law was enacted.

2) Important insurer protections in the law were allowed to lapse, exposing participating insurers to higher costs and risks. The law’s risk adjustment mechanisms insulated insurers from higher-than-anticipated costs from a sicker population enrolling in their plans. This encouraged insurer participation and kept premiums low. However, Republicans latched on to risk adjustment as an insurer bailout. Senator Marco Rubio, looking to bolster his anti-Obamacare cred, maneuvered a repeal of risk insurance through Congress this year. The lack of risk adjustment is now reverberating into insurers exiting the marketplaces and customers facing higher premiums.  (Good job, Marco!)

3) The mix of customers on the exchanges is older and sicker than expected. The administration originally hoped that young adults would account for 38 percent of all enrollees. Their actual share of enrollment has only would up being just 28 percent. Enrollment in general has been lower than the administration predicted. But a relatively older and less healthy population of enrollees incurs higher costs for insurers, causing premiums to increase.

4) There is less competition on the exchanges than anticipated. Some insurers are finding it hard to turn a profit and exiting the exchanges altogether. More and more parts of the country are being left with fewer and fewer choices. Without competitive pressure, insurers can raise prices without losing enrollment, essentially controlling the market.

There are relatively straightforward solutions to these problems. We should restore risk insurance mechanisms. And to encourage enrollment (particularly among the young and healthy), we could stiffen the individual mandate penalty, while simultaneously sweetening the law’s subsidies and cost-sharing benefits. And to generate competition, we should create a public option, at least in those states with too few private insurance offerings.

Paul Waldman relays several more good ideas for improving the law from Paul Starr of the American Prospect, including:

  • “Require all insurers who want to sell in the individual insurance market to offer their plans through the exchange, so they couldn’t cherry-pick individuals outside the exchange . . .
  • “Reduce the waiting period for those on disability insurance to get Medicare coverage from two years to six months to move some of the very high-cost enrollees out of the individual-market pool.
  • “Require any insurer that wants to offer a Medicare Advantage plan in an area also to offer a plan in the marketplace for under-65 enrollees.
  • “Have the federal exchange adopt the procedures used by California in actively bargaining with plans instead of acting as a passive clearinghouse[ ].
  • “Create a public option for those aged 55-64 clearly identified as an early buy-in to Medicare.
  • “Create a second federally run public option for enrollees from 18 to 54.
  • “Restore the risk corridor and reinsurance provisions that have expired that were intended to protect exchange plans against adverse selection.”

These are all positive solutions to Obamacare’s woes. Expanding Medicare eligibility for near retirees and the newly disabled would help remove some high-cost patients from the exchanges, thereby taming premiums for everyone else. California actively negotiates better prices for consumers as a condition for insurers to list on its exchange. Because of that, premiums in California are rising by just 5 percent this year. Letting the federal exchange negotiate too would put downward pressure on premiums for more customers in more states.

But while these ideas are great in theory, most have little plausible path to becoming law. Hillary Clinton hopes to build on Obamacare by increasing subsidies and creating public options.  Yet Republicans in Congress have little interest in doing anything to shore up the law.  Six years after passage, the conservative anti-health reform fever has yet to break, and massive resistance remains firmly in place.

The conceptual foundations of Obamacare are not broken; only its politics are. We know what we need to do to improve the law, but the logjam of health politics in Washington has locked the rushed, imperfect bill passed in 2010 into a stasis that hasn’t been imposed on any other piece of major social legislation in American history. Big laws need tweaking and fixing along the way, but Congress just won’t do that for Obamacare.

Jonathan Chait is right when he argues that Obamacare has been a policy success but a political failure. But it’s more complicated than the law being a substantive triumph with a public relations problem. Obamacare’s PR problem is now actively hindering its substantive real-world success. If the law had broader political support, reasonable reforms could get passed, and its exchanges would be made more functional.

So for all the actuarial and wonkish analysis of what ails Obamacare, its core problem remains political. Republicans have no interest in rectifying the law, and many probably actively hope it crumbles from wont of legislative care and maintenance. Obamacare does not require a fundamental overhaul or a desperate rejiggering. What it needs is a legislative majority interested in its success.

A Nordic cure for American anxiety

Any time liberals try to expand the American social welfare state, conservatives can be counted on to howl in resistance in the name of freedom.  Government helping parents pay for childcare?  An invasive infringement on the freedom of families to make their own childrearing arrangements, according to the conservative National Review.  Guaranteeing paid family leave for all workers?  A job-killing big government burden on free enterprise, according to conservatives like Sen. Marco Rubio.  Providing universal healthcare through the private insurance market?  Government coercion on the freedom to take your chances without health insurance, according to virtually all Republicans.

We’ve become accustomed to this serve-and-volley routine in American politics.  Liberals pitch their policy ideas in terms of fairness, justice, and equity.  Conservatives furiously respond as the guardians of freedom from government overreach.

But this one-sided conception of what American freedom means warps the debate and obscures a richer, fuller understanding of what it means to enjoy the fruits of liberty in the twenty-first century.  Sometimes it takes a voice from outside of the bubble to show us what we’re missing.

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In The Nordic Theory of Everything, Finnish journalist Anu Partanen provides that voice.  Partanen was born in Finland but moved to the United States as an adult.  Upon landing in America, Partanen quickly noticed that for a country that prides itself as the land of opportunity, American life was remarkably laden with anxiety, dependence, and constriction.  With little in the way of public support, Partanen encountered the reality that Americans are largely on their own to obtain basic modern necessities and navigate complex systems that are publicly provided in other countries.  Americans had little sense of just how unfree their lives were.

Partanen’s home country of Finland provides a robust and modern welfare state.  Back home, Partanen had enjoyed a whole host of public benefits: simple and comprehensive universal healthcare, a year’s worth of paid disability leave, nearly a year of paid parental leave (with the option of lesser-paid leave for an additional two years), affordable public daycare, universally high-performing K-12 education, free college, and free graduate school.

In the United States, however, Partanen was struck by the degree to which Americans are on their own to manage the complexities of modern life, and how this fosters strangely backward relationships.  “[T]he Americans I encountered and read about were being forced to depend more and more on one another,” Partanen writes, “in a throwback to the traditional relationships of old.  And in the process, individuals were becoming beholden to their spouses, parents, children, colleagues, and bosses in ways that constrained their own liberty.”

For instance, Partanen grew disturbed by the grotesquerie of financial tax incentives to marry, and using marriage as a solution to poverty to compensate for lack of government support.  “[I]n Finland,” Partanen explains, “a policy like America’s would be considered government meddling in matters of private morality.”  To Partanen, promoting marriage—“one of the most precious of human experiences”—as a poverty fix “sounds like something from the distant past.”

Partanen explains that the Nordic welfare states arise from what she calls the “Nordic theory of love.”  This is the idea that love and fulsome relationships arise between individuals who are equal and autonomous.  Dependency is anathema to love.  This theory, Partanen explains, “has inspired the broad variety of policy choices in the Nordic nations that together ensure a single, predominant goal: independence, freedom, and opportunity for every member of society.”

These are quintessential American values.  But American fear of the welfare state has endangered them as increasingly hollow aspirations.  There is an odd contradiction in American life, Partanen writes: “Today the United States is at once a hypermodern society in its embrace of the contemporary free-market system, but an antiquarian society in leaving it to families and other community institutions to address the problem the system creates.”

Leaving it to families and others to fill in the gaping holes in our safety net can dampen relationships that ought to be sacred.  The dependency of the elderly on their children to act as caretakers, for instance, breeds resentment and exhaustion.  That’s why Nordic countries provide public eldercare centers.  Nordics, Partanen writes, “want their love for the elderly to remain untainted by the sort of resentments that can arise when aging parents are stuck in relationships of dependency with their own children—relationships that destroy the autonomy, independence, and freedom of everyone involved.”

This is true at the opposite end of life, too.  New parents must solve logistical puzzles to take time off from work to be home with their new child, and to coordinate childcare while staying in the labor force.  Those who are lucky have paid leave as a fringe benefit from their employers, but far from all have this luxury.  The Nordic theory, however, is that “parents should be able to focus on welcoming new life into the world and loving their newborn, rather than being overwhelmed by the logistical challenges involved,” Partanen writes.  That’s why Nordic countries each provide at least nine months of paid leave for new parents to stay home with their children.  And Nordic countries provide public daycare for working parents, sparing them the exhausted mental bandwidth that American parents expend figuring out how to juggle work and childcare.

The Nordic brand of freedom means the absence of burden.  Children don’t bear the burden of their parents’ income status—kids of all classes can access high-quality education and are entitled to a basic child allowance.  Workers aren’t stuck at a job for fear of losing health insurance—and employers aren’t burdened with running complicated social insurance schemes, either.  Entrepreneurs can put business ideas in practice, knowing that there’s a safety net to catch them if they fail, and that their startup won’t be tasked with paying for costly employee benefits.

Skeptics might argue that this freedom is merely replacing one dependency with another—making citizens dependent on government instead of on family, neighbors, civil society, and themselves.  Indeed, the prospect of government dependency has long been the bogeyman in American politics.  Why should Nordic dependency on the state be preferable to American informal dependency elsewhere?

Henrik Herggren, a Swedish public intellectual, has one answer.  In The Myth of the Nearly Perfect People, author Michael Booth deals with similar themes of Nordic freedom and personal independence, and poses the question of government dependency to Herggren.  According to Herggren:

“[Swedes] are not arguing that people are totally independent, because they are dependent on the state. [. . .] [But] [y]ou can get an awful lot of autonomy by accepting a democratic state is actually furnishing you with the means to be autonomous in this way, and reach a certain self-realization.  [. . .]  [T]he point here is not that the state is saying this is how you should live your life, but it is providing you with the support structure.  Society is unequal and people don’t have the same opportunities, but we are trying to lift everybody to the same level so they can achieve the same kind of freedom and self-realization, which only a small group could do previously.”

In Herggren’s view, the state can provide a support structure and a set of guideposts to create equal opportunity in a way that no other actor or institution can.  Any other arrangement of dependency—on families, on employers, on charities—will create varying and unpredictable levels of support.  Only the state can guarantee a basic level of opportunity to all, setting everyone on a path of self-exploration and meaningful freedom.

So what is to be done for the stressed-out and stretched-thin United States?  Partanen has a clear vision for what the country needs.  “What Americans need,” she writes, “so that they can stop struggling so hard to be superachievers, is simple: affordable high-quality health care, day care, education, living wages, and paid vacations.”  In short, real freedom requires government to step in to provide the goods needed to loosen the squeeze on everyday Americans.

Of course, Nordic citizens pay handsomely for these types of generous public services.  But as Partanen explains, when you tally up all of the United States’s public and private expenditures on items like health care, pensions, unemployment benefits, and childcare, it winds up spending as much as Sweden does as a share of its GDP.  Given the bounty that her tax bill bought, Partanen says, “it was a bargain.”

The United States is stuck in an outmoded, negative view of freedom.  This brand of freedom is negative in that it focuses solely on freedom from government infringement on personal liberty.  But modern society calls for a more positive understanding of freedom—a freedom from knowing that certain basic goods and services are accessible to fall back on in order to meaningfully actualize personal liberty.

“Today nations that have progressed into the twenty-first century see freedom as something much richer,” Partanen writes.  “They see freedom as the assurance that all individuals get real opportunity, so they’re free to pursue the good life for themselves, and real protection from the lottery of bad luck, so they’re free from unnecessary fear and anxiety.”

Let’s hope we join these nations soon.  Our incomplete idea of freedom is obscuring all of the ways that we are already unfree and dependent, constrained and burdened.  A modern and comprehensive welfare state is necessary to replace mounting American anxiety with real American freedom.