When political talk turns to moving people into the health insurance marketplaces set up under the Affordable Care Act, the verb of choice among conservatives is "dump." The Tea Party Patriots even has a name for it: "The Obamacare Dumping Effect."
It's an ironic way to describe an idea that originated with conservatives and free-market disciples, and at one time was promoted heavily by groups like the Heritage Foundation as a way to broaden risk pools and help consumers, all within the private insurance system. Now, some circles are branding the exchanges as the place employers send you when they don't care about you anymore. "Almost every day, workers across the country are waking up to the news that their employers (like Trader Joe's, Walgreens, and Home Depot) are either dropping their health care coverage or dumping them onto the government's exchange. Together, this mass exodus spells disaster for the health care industry," Family Research Council President Tony Perkins warned in a memo last week urging lawmakers to stop Obamacare "before it can inflict more damage than it already has."
Walgreens is actually sending its employees to a private exchange, a rising business practice unrelated to the ACA. As for a mass exodus, health care experts say that's less likely than the continuation of the pre-ACA trend of fewer small companies offering benefits and fewer people getting their insurance in the workplace. About 60 percent of people under 65 now have employer coverage, down from 70 percent in 1999, according to the State Health Access Data Assistance Center. The data show a steep fall in 2008-09 as a result of job losses during the recession — another indication of the need for guaranteed, affordable coverage for the unemployed, the self-employed, entrepreneurs, part-timers, and others.
The connection between employment and health insurance is a historical accident that started slowly in the late 19th century and spread during World War II, when government wage controls forced employers to find another way to attract workers. Union support and tax breaks cemented the practice. The system worked fine when people worked for the same company their whole lives. The more common pattern now is people switching jobs every few years — and who knows if their former employers even exist anymore?
Health experts and politicians across the spectrum say there's no reason to retain the linkage between employment and health insurance, that in the real world of today, it would be better for individuals and the economy to sever that connection. "It makes business more competitive and gives individuals more choices," says Howard Dean, the former physician, Vermont governor, presidential candidate, and Democratic Party chairman.
That was the thinking behind the Healthy Americans Act cosponsored in 2008 by Democratic Sen. Ron Wyden and then-Sen. Robert Bennett, a Republican. Bennett says it bothers him that Obamacare was built on the present system. "Trying to hang on to the present health care system that was based back in the 1950s is a really dumb idea," he says. "Wyden was willing to conspire with me to create an entirely new system based on the way people live today."
Their proposal, which had substantial bipartisan support, would have created state exchanges, required people to buy insurance, and instituted federal premium collections and subsidies to finance the system. The Congressional Budget Office estimated Wyden-Bennett would be "essentially self-financing" in its first year. Employers could continue to offer coverage, but the authors' intent was that nearly every American under 65 would participate in the new system. Dean favored a different kind of break with the status quo: a public option on the exchange that would piggyback on the Medicare infrastructure and offer cheaper rates than private insurers. "My side mostly didn't win," he says, but he sees constructive possibilities under the new law. Exchanges are providing universal coverage in Switzerland, the Netherlands, and elsewhere, he says, so we know "it's buildable. Now we just need to figure out how to make it work."
Moving to an insurance exchange may be disruptive and upsetting. Yet most of those dumpees from Trader Joe's may find they get a better deal on the exchanges, especially since the company is giving them $500 toward premiums, on top of government subsidies they may receive if their household incomes are low. The "compared to what" factor, as White House adviser David Simas calls it, should be even more dramatic for people in the individual market who currently can't afford coverage, can't get coverage because of their health, or can only get temporary and costly COBRA coverage.
Conservatives and Republicans should be trying to claim credit for this. Although they blast Obamacare as a nightmare of government regulation and intervention, exchanges are at their core a private-sector solution to a problem other countries have solved by getting the government far more directly involved. And when these marketplaces finally open for business, we'll find they are the devil we know. As health reform expert Linda Blumberg at the Urban Institute notes, "These are the insurance carriers that everybody, for better or worse, has put their trust in all these years." In other words, consider yourself dumped.