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Past Imperfect: Graphic





Obama’s health care law doesn’t tinker with the employer-sponsored health insurance tax exclusion. Instead, it tries to entice uninsured people to sign up for coverage by offering generous federal subsidies to lower-income Americans who buy plans on state and federal exchanges, which will be operational by 2014. Obama also included several taxes in the health reform law to help cover its cost, including a tax on tanning salons and on generous health insurance plans, also known as “Cadillac” plans.


The requirement that everyone must buy health insurance or pay a fine might just be the Achilles’ heel of the president’s signature domestic-policy bill. The Supreme Court is expected to rule in June whether it is constitutional for the federal government to mandate that individuals buy insurance. The administration has argued that the law’s insurance reforms don’t work without the mandate.



The insurance industry will experience a huge shift in 2014 when companies can no longer deny coverage to people with a preexisting condition, thanks to Obama’s health care law. In the interim, the federal government set up high-risk pools for people who have been uninsured for more than six months. But enrollment has been lower than expected, in part because states and the federal government must charge high premiums to cover costs.


Obama’s health reform is expensive, costing nearly $800 billion over 10 years to expand coverage to about 30 million Americans. Democrats are covering that cost by cutting Medicare Advantage plans, lowering payment rates to hospitals and doctors, and getting pharmaceutical companies to reduce the cost of drugs in some federal programs. In a second term, Obama will try to bring down the overall cost of health care, with hopes that a series of Medicare pilot programs, passed in the reform law, succeed.




Bringing Down Costs
One of Republicans’ favorite criticisms is that the law will not lower health care costs. While total health care spending has continued to grow during Obama’s first term, 2010 was the first year that Medicare spending per beneficiary grew at a much slower rate than the norm.

The Health and Human Services Department is prodding states to set up their own health insurance exchanges by 2013, when the federal government has to approve them for operation in 2014. Although HHS has given out billions in start-up grants, many states have moved at a glacial pace or not at all to get these complex operations off the ground.

Insurance Regulations
Under Obama, HHS has been churning out regulations that overhaul how the insurance industry operates at a record speed. The Centers for Medicare and Medicaid Services is now the federal regulator-in-chief of insurance companies.



Jonathan Gruber: He is responsible for the individual mandate in both the federal and the Massachusetts laws. An MIT economics professor, Gruber is the guru when it comes to modeling the likely outcomes of insurance policies. He is advising Obama’s campaign on health policy.

Neera Tanden: As head of domestic policy on Obama’s 2008 campaign, Tanden knows her health policy. She is the CEO of the Center for American Progress, helping to develop ideas for Obama’s second term.

Nancy-Anne DeParle: She was head of the White House Office of Health Reform. DeParle is a former Clinton administration official who has experience running Medicare and Medicaid, and has budget chops from her time at the Office of Management and Budget.

Jean Lambrew: Another staffer who stuck around from the White House Office of Health Reform, Lambrew is an academic with a Ph.D. in health policy from the University of North Carolina (Chapel Hill). Her current position is deputy assistant to the president for health policy.





Romney has adopted the well-worn Republican policy proposal of “equalizing” the tax treatment of health care. Under current law, employers and their employees get an exclusion for health insurance premiums. Romney wants to expand that deduction to people who buy insurance individually, but many details of his proposal are undeveloped. In 2008, Sen. John McCain, R-Ariz., proposed in his presidential campaign getting rid of the exclusion altogether and replacing it with a tax credit. President Bush in 2007 proposed getting rid of the exclusion and replacing it with a standard deduction.

This article appears in the May 12, 2012 edition of National Journal Magazine.

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