Republicans Deserve Some Credit For Health Exchanges

They bemoan the companies “dumping” employees onto the exchanges. But until the health law passed, that’s what they said they wanted.

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National Journal
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Jill Lawrence
Sept. 26, 2013, 4:10 p.m.

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.


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