SPECIFIC POLICY POSITIONS
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.
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.
SPECIFIC POLICY POSITIONS
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.
As governor of Massachusetts, Romney signed a law that penalizes individuals for not having health insurance and certain employers for not offering insurance coverage, just like the federal law will do in 2014 (if the Supreme Court upholds the mandate). Presidential candidate Romney has said, time and again, that the individual mandate doesn’t work on the federal level and that such a decision should be left to the states. But he also wants to allow individuals to buy insurance across state lines, meaning that many state laws governing insurance would end up being irrelevant.
Massachusetts already had a rule requiring insurance companies to offer people insurance regardless of preexisting conditions when Romney signed the state’s health reform law in 2006. As president, he says, he will protect people with preexisting conditions from insurance discrimination, but only if they have had consistent insurance coverage.
Very few details of Romney proposals are available, making it difficult to determine how much his ideas would cost or save. The Congressional Budget Office estimates that capping medical-malpractice awards could reduce the deficit by $40 billion over 10 years, but offering tax deductions to individuals purchasing health insurance could be costly, depending on how the policy is enacted. Repealing the health care law isn’t free, either. A Romney White House would need to come up with hundreds of billions of dollars to cover the cost of reversing payment cuts to Medicare hospitals and doctors.
“Romneycare” worked, in that 98 percent of Massachusetts residents have health insurance, the highest rate of any state in the country. But Romney’s proposals in the presidential campaign are unlikely to result in anywhere near the level of coverage that Obama’s health reform law is expected to achieve.
The campaign has refused to say where Romney obtains his health care coverage. But it confirmed that he would not be signing up for Medicare when he turned 65 on the campaign trail earlier this year.
Bringing Down Costs
His reforms didn’t succeed in lowering health care costs in Massachusetts, but that wasn’t a main goal. Romney said in 2009 that the federal government could help bring down costs by reforming how we pay for health care, but he has not made any campaign proposals. Massachusetts legislators are just now gearing up to tackle health care costs in the state.
Tevi Troy: He carries considerable clout from his time with the George W. Bush administration. Troyo served as the deputy secretary at Health and Human Services, overseeing Medicare, Medicaid, and the full menu of government health programs.
Scott Gottlieb: A fellow at the American Enterprise Institute, Gottlieb is a practicing physician with experience at the Food and Drug Administration and the Centers for Medicare and Medicaid Services.
Tom Barker: A former George W. Bush administration official, Barker was the acting general counsel of the Health and Human Services Department in 2008. He is a member of Romney’s health care policy advisory group and works at Foley Hoag law firm advising clients on health care issues.
Paul Howard: He has a Ph.D. in political science but has focused on Food and Drug Administration policy through his role running the Manhattan Institute’s blog on drug and medical-device innovations. Howard is a senior fellow at the institute and a member of Romney’s health care advisory group.
This article appears in the May 12, 2012, edition of National Journal Magazine.