I mentioned in a previous diary the importance of the insurance exchange as a tool for enacting real health care reform. Without access to the health insurance exchange, there is no access to the public option and no access to portable health insurance. The House and Senate approaches both restrict access to the insurance exchange through a process called "firewalling", forcing everyone who has employer-based health insurance to keep that insurance. Firewalling is an impediment to real reform and must be stopped!
Jonathan Cohn and Ezra Klein are now reporting that Ron Wyden has come out with a "Free Choice Proposal" that would not only eliminate firewalls; it would force employers to contribute to the cost of health care on the insurance exchange. Wyden, who sits on the Senate Finance Committee, seems to have drawn major ideas from his Healthy Americans Act in order to achieve a happy medium that balances letting people keep what they have with reorganizing the health care system.
More after the break.
Employers would be required to make a hefty minimum contribution for employees to buy health insurance on the exchange. This contribution would not change based on the premium size selected, reducing the perverse incentive to be almost completely insensitive to premium size.
There will be significant political backlash against Wyden's proposal. It gives EVERYONE access to the public option, sure to be a major sticking point for Republicans and insurance companies. In addition, the CBO will show people choosing to buy insurance through the insurance exchange as no longer having "employer-based health insurance", and Republicans are already attacking Democrats for coming up with plans in which consumers "lose their employer health insurance" because they buy BETTER insurance through the exchange, which is one reason Democrats have introduced firewalls in the first place.
However, it has one really strong factor going for it: CBO cost scoring. A bill with enforced access to health insurance exchanges where families buy health care on a market without distorted incentives found in employer insurance markets could reduce the cost of the bill. In addition, CBO director Elmendorf has stated that breaking up the employer-based health care system is the best way to bend the cost curve downward, a major criticism of the Republicans during current markups in the House tri-committee bill. A large part of the savings associated with Wyden's Healthy Americans Act were due to the manner in which insurance was subsidized: with a single credit instead of a percentage of the premium, a sharp contrast from the usual practice of employer-run health insurance.
To be sure, as Cohn and Klein mention, there are also some economic and policy problems such as adverse selection that still need to be addressed, and could be legitimate arguments against Wyden's proposal. Klein claims that in private correspondence, Wyden confirmed that his proposal would use some form of risk adjustment to help fight adverse selection. But as a general proposal, this is an amazingly good idea.
In a dash of irony, if Wyden has his way, it may be the conservative Senate Finance Committee that ends up creating universal access to the public option and portable insurance. Personally, I think it's a pipe dream, but hey, we can all dream, right?