Our great Daily Kos front pager Meteor Blades yesterday asked me to write a health care diary listing lines in the sand for progressives. I told him I would. The rest of this diary explains the core of the bill, what shouldn't be elevated to litmus test status, and what should be elevated to litmus test status.
The heart of the bill remains the regulations on insurers so they don't cherry-pick the healthy and the subsidies so that all Americans can afford health insurance. That is the value judgement we Democrats have made for the last 60 years -- that every American should have some basic form of health care coverage regardless of income, health status, etc. This policy embodies the Democratic party's values of a more fair and just society.
All the other provisions in the bill are there to make this value judgement work. Individual mandates are a way to prevent gaming of the system by people who don't sign up until they are sick. Employer mandates hold down the on-budget costs by preventing a rush of employers to drop coverage. The public option is a way to create effective competition, and further hold down costs.
As people on this blog know, while I favor the public option, I don't believe the public option should be elevated to a litmus test issue. After all, John Kerry's health care plan didn't have a public option, and Democrats were fine with his plan. Dick Gephardt and Howard Dean's plans didn't have a public option, and we Democrats were fine with their plans, too. Bill Clinton's health care plan didn't have a public option, and we Democrats mourned its demise.
In both the House and HELP bills, the public option isn't even available to everyone -- not even close. Only the unemployed, the self-employed, and small businesses will have access to the public option. The CBO estimates this figure to be about 27.5 million Americans. That's it. Everyone else is imprisoned to their current employer-provided health care coverage -- even if they hate it. Working as an actuary for a mid-size company, I won't have access to the public option even if I wanted it.
In other words, if you want more people to have access to the public option sooner, you're going to have to encourage more employers to drop coverage. How would you do this? Sen. Wyden's proposal replaces the employer exclusion -- it taxes all employer-provided health benefits -- with a tax subsidy to purchase health insurance on the Exchange, which is where the public option would live. Sen. Wyden also requires during the first two years when the legislation goes into effect employers who drop coverage to raise their employees' wages by their contributions to their employees health insurance.
Anyhow, what should be elevated to litmus test level? Here are my answers:
Allowing insurers to operate across state lines. This is the worst idea in the world and a definite no-no. This would allow insurers to cherry-pick healthy people in states that have strong community ratings such as New York and Massachusetts (where I live now), and leave the sicker people in a pool among themselves, which would make health insurance unaffordable for these people. [As someone who is 29 years old and lives in Massachusetts where my health insurance premiums are twice what they are in neighboring Connecticut and my native state of Virginia, I accept the sacrifice of having higher premiums through a community rating for the greater good of lower premiums for sicker people.] Even worse, allowing insurers to operate across state lines would demolish consumer protections of minimum benefit packages, reserving requirements, etc.
Unfortunately, Finance Committee negotiator Mike Enzi has a long history of advocating this position; however, the Senate Finance Committee bill does not contain this. Nor does the HELP or the House bill contain this provision.
Completely phasing out subsidies at 300 percent of the federal poverty level (FPL). This means a recent college grad earning $40,000/yr. in NYC will pay the entire cost of health insurance if her employer does not offer health insurance; it means families living in surburban DC earning $75,000/yr. will pay for the entire cost of health insurance if their employer does not provide it. The House and HELP Committee bills subsize some of the cost of health insurance on the Exchange (and the public option) for recent college grads and families earning between 300 and 400 percent FPL. [Personally, I'd like the subsidies to go up to 500 percent FPL, which was the HELP Committee's original proposal, but I realize there aren't the votes for that.] Unfortunately, the Senate Finance Committee bill requires recent college grads and families earning between 300 and 400 percent FPL to bear the entire cost of purchasing health insurance on the Exchange if their employer does not provide them with health insurance. This must be changed.
Having a minimum benefits package that is below 70 percent actuarial value. Actuarial value estimates the percentage of medical bills a policy will cover for the average person. This provides a crude, imperfect estimate for the kind of financial protection a policy offers, and his how reform bills set a standard for coverage. The Senate HELP Committee bill sets minimum actuarial value at 75 percent. Standard Federal Employee plans have around 80 percent actuarial value. The House bill sets its minimum actuarial value at around 70 percent actuarial value -- which is what the level is in Massachusetts. The cheapest plans on the Massachusetts Connector (bronze option) saddle families with $3,500-$4,000 deductibles and $10,000 out-of-pocket caps. The Senate Finance Committee bill sets the minimum benefit package at 65 percent actuarial value. This could mean families could face $5,000 deductibles and $12,000 out-of-pocket expenses caps. That's a $hit taco, and must be changed.
Allowing insurance companies to charge older American adults more than three times as much as younger Americans. The House, HELP, and Finance Committee bills prohibit insurers from rejecting, refusing to cover, or charging extra to people who have pre-existing conditions. The bills also prohibit insurers from varying premiums by health status, claims experience, medical history, etc. Insurers can only use geographic region, family structure, and age -- by a limited amount -- to charge premiums.
The House and HELP bills allow insurers to charge older adults at most twice as much as younger Americans living in the same geographic region and having the same family structure. This means that if, for example, an insurance company charges a 22-year-old $350/mo., then the insurance company can charge a 63-year-old at most $700/mo. for the same coverage. The Finance Committee wants to insurers to charge older seniors as much as five times as much as younger Americans. In other words, insurers could charge a 22-year-old $200/mo. and a 63-year-old up to $1,000/mo. for the same coverage. This would eviscerate much of the economic effects forbidding insurers from charging people more for having pre-existing conditions. [After all, older people are more likely than younger people like myself to have pre-existing conditions.] That's a $hit taco, and must be changed!
So there we go -- there are our progressive lines in the sand. I think some lines in the sand vary by circumstance; for example, I think under the current bills where so few people have access to the Exchange, a federal Exchange is necessary to forbid companies who self-insure from circumventing more strict consumer protections. I think if you did something like the Wyden bill, where virtually everyone got their health insurance through the Exchange, you could have state-based Exchanges, although federal Exchanges are far, far preferable.
Folks, remember, any universal health insurance bill will be progressive. Just as there's no such thing as a progressive missile defense bill or a progressive Social Security privatization bill, there's no such thing as a conservative universal health insurance bill. Universal health insurance simply contradicts conservative free-market values. If either the House or the HELP bill are passed, even without a public option, the bill will be transformative and progressive, and should bring the smell of roses to us.