Speaking as someone who covered Congress as a youthful journalist in the 1960s, I thought I’d been present at the creation of the two most momentous pieces of legislation of my lifetime: namely, the Civil Rights Act of 1964 and Medicare in 1965.
But when lawmakers return from their August recess, the pending health-care legislation that awaits them represents a landmark of similar proportions. The House and Senate bills that would mandate health-care coverage for virtually all Americans are just as fraught with controversy now as prohibitions against racial discrimination by employers and places of public accommodation or government provision of health-care for senior citizens was back then.
While the outcome is still in doubt, my hope is that Congress will finally remove the stigma that makes the U.S. the only developed nation in the world that doesn’t assure health coverage for all its citizens. And if it does, my strong guess is that 40 years from now, the public will find just as unthinkable to be without it as it would for a restaurant to refuse to serve a person of color or for our elders to face the infirmities of old age unprotected.
Unlike the national health systems in countries like Canada and the United Kingdom, the pending legislation doesn’t impose government-run or “socialized” medicine on Americans. Rather, it builds upon the base of employer health plans that cover 174 million workers and their families and the private health insurers that cover an additional 17 million individuals. (Another 40 million are covered by Medicare and 38 million by Medicaid and its SCHIP extension for children—all this according to the U.S. Census Bureau.)
Unfortunately, that leaves 46 million Americans uninsured and, in my view, just as much a menace to themselves and society as uninsured motorists. The pending legislation takes the same approach to covering them as most states do for drivers: namely, requiring them to get insured by one means or another.
This individual mandate, as it’s known, is coupled with provisions that remove impediments to their doing so by making health insurance both accessible and affordable to all. No longer could health insurance plans deny coverage, make exclusions, or charge exorbitant premiums based on an individual’s health condition. The only premium differentials allowable would be based on age and tobacco use.
With accessibility established, affordability would be achieved by government premium subsidiaries (paid to insurers) on a sliding scale for people with incomes up to 300 percent or 400 percent of the federal poverty line. While these subsidies have yet to be formulated, a guiding rule of thumb is that 12.5 percent of household income is the most that people can afford. Hence, for an individual for whom the typical cost of health insurance is about $4,000 a year, some premium subsidization up to 300 percent of FPL ($32,000 in this case) would appear justified.
A majority of the uninsured have incomes of less than 200 percent of FPL, and plainly they need help. But, again according to the Census Bureau, 27 percent of the uninsured have incomes in excess of 300 percent of FPL, and its data also shows that a disproportionate share of them are in the 21 to 34 age bracket. Hence, one can conclude that a lot of the people to whom insurance would be extended are well-off (healthwise and otherwise) young adults who’ve opted not to pay for protection against catastrophe along with those whose chronic conditions presently preclude them from getting protection at any price.
Another thrust of the legislation is to get more people insured by group plans at their workplace by requiring all but very small employers to offer coverage. Under the House bill, the threshold for the coverage requirement is a payroll in excess of $500,000 with an 8 percent of payroll penalty for non-compliance. Under the Senate bill, those with more than 25 employees would be subject to a penalty of $750 per worker for failing to offer them coverage.
Individuals who fail to get insured one way or another would also be subject to penalties: $750 a year under the Senate bill and 2.5 percent of taxable income under the House bill.
While some may consider all these requirements coercive, most health insurers and health-care provider groups are in favor—in no small part because they promise to bring them more paying clients. Their bogeyman, and the one that most right-wing opponents of the legislation have seized upon, is the prospect that it will create a government-run health-care plan that would drive private insurers out of business and cut provider reimbursement rates. But the outcry against such a “public” plan has been strong, and I for one believe that regulated competition among private insurance plans can accomplish the desired objective.
The undeniable prospect of a big government bureaucracy to oversee all of this could yet create groundswells of opposition. It would fall to the Secretary of Health and Human Services to set the standards for health plans that qualify and then police adherence to all of the requirements that go with them.
Once again, however, the health insurance lobbying organization has registered no objection to federally-set benefit standards—perhaps in part because existing employer plans would be exempt from then until 2018 under the House bill and open-endedly under the Senate version.
That means, for example, that the state of Tennessee could continue to offer its low-cost Cover Tennessee plan for small employers with its invidious $25,000 cap on annual benefits even though all versions of the legislation prohibit any such benefit limits for non-exempt plans.
Gov. Phil Bredesen, who championed Cover Tennessee when he painfully curtailed TennCare a few years back, has a very legitimate beef with provisions that would expand eligibility for Medicaid, which is what TennCare has become.
The legislation would place anyone with income below the FPL on Medicaid and that encompasses a lot of people—primarily adults with no dependent children—who aren’t presently eligible. Although the entire cost of this expansion would purportedly be borne federally for five years, it’s contemplated that federal-state cost sharing would kick in after that as with other Medicaid costs. Bredesen has aptly labeled this “the mother of all unfunded federal mandates,” and he’s joined by every other governor in opposition. Surely, their collective weight will be sufficient to get rid of any provision that would saddle states with more expenses at a time when they are all facing budgetary crises from which recovery will be slow at best.
That begs the question of whether Washington can afford to assume the cost of a health-care overhaul at a time when the federal deficit is already approaching $2 trillion atop more than $10 trillion is existing debt. The Congressional Budget Office has placed the cost of the pending legislation at about $1 trillion over 10 years, and as much as President Obama wants health-care reform he has vowed to veto it unless the cost is fully covered by some combination of revenue raising and expense-reduction measures.
It takes a leap of faith to believe that this goal can be met without capsizing the legislation, but I for one remain hopeful that what may be a one-time opportunity to redress the grievous deficiencies of our present health-care system will not be lost.