Progressive health reform in 2020

Progressives are readying the next era of health reform. Bernie Sanders has introduced a Medicare-for-all bill, with substantial support among prominent Senate Democrats. Other Democratic proposals include letting people buy into Medicare, or letting them buy into Medicaid, or creating a “Medicare X” plan that would let people buy into a new form of Medicare on Obamacare’s marketplaces. The left-of-center terrain is rife with ideas about what comes next in healthcare.

A new symposium hosted by the American Prospect and the Century Foundation adds to this terrain. All six contributions from healthcare experts are worth reading (1, 2, 3, 4, 5, and 6). I’d like to focus on two of these ideas, and what they mean for how health reform thinking is evolving on the left-of-center.

The first comes from Jacob Hacker, a political scientist at Yale. He is also the godfather of the public option—the Affordable Care Act-era proposal to create a government-run insurance plan to compete with private insurers.

In 2007, Hacker proposed a healthcare plan that paired a mandate on employers to provide insurance with a Medicare-like public plan to cover the uninsured. At the time, Hacker’s plan was out of step with mainstream Democratic priorities on healthcare. As I’ve written, Democrats felt burned about being tagged as overreaching statists during Bill Clinton’s 1993 health reform effort. When Barack Obama made another attempt at health reform, Democrats opted for a centrist approach built around government facilitation of competitive private insurance markets.

Within this framework, Hacker’s proposal was whittled down to a public option that would offer plans within Obamacare’s insurance marketplaces. This was the chief liberal imprint on the Affordable Care Act debate. But the public option ultimately proved too much for the Senate Democrats that held the decisive votes on health reform. Hacker’s public option was unceremoniously excised from the bill.

Obamacare went into effect with no alternative to private insurance for most people. The law has made tremendous gains in getting people covered. But most of these gains have come from the law’s expansion of public insurance under Medicaid. Obamacare’s private insurance marketplaces have been wobbly and in flux, constantly under attack by Republican opponents, and prone to price increases and exits by insurers.

Now Hacker is back with a new contribution to the liberal healthcare brainstorm session. He proposes a plan he has called “Medicare Part E”—Medicare for everyone who wants it. “All Americans should be guaranteed good coverage under Medicare if they don’t receive it from their employer or Medicaid,” Hacker writes.

The key features of Hacker’s plan include:

  • Automatic guaranteed coverage for all Americans under a new Medicare Part E.
  • You can opt out of this default Medicare coverage by enrolling in an employer-sponsored plan or other private insurance plan with benefits at least as good as those offered by Medicare.
  • A “pay or play” requirement on employers, who would be responsible for either providing good health insurance to their workers or contributing toward the cost of Medicare Part E.

Hacker’s plan has a lot going for it. It takes the best part of single-payer—guaranteed coverage—while leaving room for consumer choice. Medicare Part E wouldn’t jeopardize the employer-provided coverage that people have and like (as long as those plans meet quality standards). And the experience of Obamacare shows that employers are unlikely to ditch their insurance offerings in droves to dump workers on to a new public plan.

Medicare Part E builds on the public preference for voluntary, rather than coercive, government healthcare programs. The idea for a voluntary public option has been consistently popular, while Obamacare’s now-stricken individual mandate was consistently not. Rather than banning private insurance (as some single-payer plans would), Hacker would supplement private insurance with a Medicare fallback available to all Americans as a right of citizenship. Like the idea of making Medicare the default coverage for kids (which I’ve written about), those who prefer private coverage could still get it.

The second proposal comes from John Holahan and Linda Blumberg of the Urban Institute’s Health Policy Center. They argue that instead of creating a public option, we should cap the payment rates that hospitals and providers can charge to insurers.

The strongest version of a public option would help control healthcare costs by paying providers the same low rates that Medicare pays. But this public option would draw fierce industry opposition from both insurance companies and providers.

Blumberg and Holahan suggest that we can capture the same cost savings of a public option by simply applying the same payment caps to private insurers. Under their proposal, private insurers would pay providers at rates capped at what Medicare pays (or the Medicare rate plus a percentage more). This would achieve cost savings while defusing potential opposition among insurers.

This plan would essentially import the regulatory structure used in Medicare Advantage into the rest of the health insurance system. Medicare Advantage is the program that allows private insurers to compete with traditional single-payer Medicare. It currently enrolls about one-third of all Medicare beneficiaries. Under Medicare Advantage, out-of-network providers cannot charge private insurers more than Medicare rates, which also implicitly caps the rates paid by in-network providers, too.

Blumberg and Holahan would expand these rules beyond the Medicare Advantage market and into the broader health insurance market. In effect, the insurance industry would become more like a public utility—the broader market would functionally be a public option. “This approach would control costs in areas where premiums are high,” Blumberg and Holahan write, “and it would reduce barriers for insurers in markets where monopoly conditions currently exist.”

It’s not clear that this proposal would lure health insurers off the sidelines to sell in the nearly barren areas underserved by Obamacare’s marketplaces, like rural regions. And it wouldn’t provide an alternative to the administrative complexity of the private insurance system.

But Blumberg and Holahan are right that absurd costs are at the root of much of what ails our healthcare system. Rate-setting and price controls should be in the discussion for the next phase of health reform. Healthcare simply isn’t a market where we can let prices fluctuate with supply and demand. “Consumers” aren’t able to easily shop around or walk away from healthcare services that are just too essential to turn down. This removes the downward price pressure that exists in other true markets for goods and services. Government can step in and restore that price pressure by limiting the prices that doctors and hospitals can charge.

“Medicare-for-all” is a good campaign slogan for progressives to run on. But it’s also a bull-in-a-china-shop approach that would upend the existing system. There are other ideas on the table that more gingerly navigate the political headwinds that Health Reform Phase 2 will inevitably face. Coupling national price controls while making Medicare available to everyone may just be the way forward.

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The CHIP crisis shows that we must Republican-proof government

The Children’s Health Insurance Program has been running on fumes for more than one hundred days. The program provides health insurance for 9 million children in low-income families. But millions of those children stand on the brink of losing coverage because the Republican-controlled Congress hasn’t bothered to renew long-term funding for the program. It’s a needless crisis—and a stark reminder that when progressives are in power, they must fortify government to withstand neglect and ruin at the hands of the right.

Since its inception twenty years ago, CHIP has been an uncontroversial program with bipartisan support. But funding for the program ran out at the end of September. Two leading senators had struck a bipartisan agreement to extend CHIP’s funding earlier that month, but the GOP’s last-ditch push to repeal Obamacare swallowed up their deal. After Obamacare repeal failed again, Senate Republican leadership leaped straight into tax reform, and the CHIP deal faded away.

Meanwhile, state CHIP programs are quickly running out of money to keep kids insured. Congress kicked the crisis a few months down the road before breaking for the holidays, passing short-term funding meant to keep CHIP afloat until March. But that funding actually may not even be enough to sustain CHIP through the end of January in some states, according to the Centers for Medicare & Medicaid Services. Congressional recklessness has already exacted a psychic toll on families frantic at the prospect of their children losing access to health care, with some states sending letters to families warning that they will be forced to terminate coverage without action by Congress, and others readying emergency plans to wind down their CHIP programs entirely.

In the midst of this crisis, Republicans in the House played politics with the issue. At the end of October, they proposed to fund CHIP in part by shortening the grace period for Obamacare enrollees who miss a premium payment. This would pay for CHIP using money saved on Obamacare subsidies after throwing people off of their insurance faster. It was a poison pill bill—Republicans knew Democrats wouldn’t support any move to weaken Obamacare—but the House passed it along party lines anyway.

Since then, Republicans enacted a tax bill that could leave up to 13 million fewer people with health insurance—meaning there now may be fewer bounced premiums to draw on to fund CHIP. That tax bill sucked up all of the oxygen in Washington, along with most of the revenue. Even Sen. Orrin Hatch—one of CHIP’s original sponsors—bemoaned that renewing CHIP is difficult “because we don’t have money anymore.” Yet he and his GOP colleagues had no trouble finding the money—plus stomaching $1 trillion in new federal debt—for the sake of cutting taxes primarily on the wealthy and corporations.

This isn’t a surprise—conservatives have long pledged fealty to Tax Cut Exceptionalism. Many believe there’s no need to pay for tax cuts at all, while social insurance programs should be paid for by robbing one to pay for another. It’s part of a larger strategy to shrink the size of government by starving it of funds—one that inevitably targets programs that serve the poor and vulnerable.

CHIP serves a relatively narrow subset of American children whose parents earn too much to qualify for Medicaid but too little to afford private coverage. It’s usually temporary coverage that children weave in and out of as their parents’ incomes rise and fall—a safety net that families can fall back on in hard times.

CHIP may have been a bipartisan priority once upon a time. But progressives must reckon with the modern GOP, which is no longer a reliable partner in support of any social welfare program. It is now a nihilistic party that rejects any role of government to do things like expand healthcare coverage. This puts a program like CHIP squarely in the crosshairs when Republicans are in power.

So when the political pendulum swings back to the left, progressives must tailor their agenda with an eye toward Republican-proofing government. That means making important public programs too big to cut. For instance, Democrats could transform children’s health insurance into a commitment to provide automatic Medicare coverage for all American children starting at birth. As progressives from Lyndon Johnson’s administration on through Sen. Bernie Sanders have proposed, American children should receive a Medicare card when they are born, covering their healthcare needs up until early adulthood.

By enlisting all American children into one healthcare program, Medicare-for-Kids would become another third rail too politically painful for conservatives to attack. Moreover, because Medicare is funded through payroll taxes, children’s coverage would no longer be subject to the gamesmanship of congressional deal-making.

Conservatives recognize that expanding social insurance programs makes these programs stronger, and therefore resist expansion attempts accordingly. Over a decade ago, a bipartisan coalition in Congress passed a bill that would have expanded CHIP and covered more children. President George W. Bush vetoed the CHIP expansion twice, saying that it “moves our country’s health care system in the wrong direction” by supposedly threatening private insurance. The CHIP expansion became law shortly after President Barack Obama took office in 2009.

The bill that Obama signed had notably less Republican support than the bills passed out of Congress under Bush—an early sign of the hardening anti-healthcare direction of the GOP. That shift is now complete. Congress may still avert total disaster and pass meaningful CHIP funding. But this calamitous episode should remind progressives of the need to ratchet up the welfare state so that it can survive shifts in the political winds. Health insurance for children and similar programs must be bolstered to weather the cold during periods of conservative rule.