Saturday, January 9, 2010

Faustian Bargain? More challenges for health insurance reform

It now appears fairly certain that the Democrats' health insurance reform * will become law within a month and that it will have the following features:
  • It will mandate nearly everyone to purchase or otherwise procure health insurance.
  • It will restrict the variance of premiums between the "low-risk" policy holders--e.g., healthy young people--and higher risk groups--e.g., the elderly, or those with pre-existing conditions.
  • It will have subsidies for the very poor and will expand medicaid coverage.
  • It will require states to set up "insurance exchanges" at which people can purchase health care
  • It will forbid insurance companies from dropping people or for denying coverage.
As I have said in other posts, I do support the bill, with all its flaws (and there are many). As I have also said in other posts, the reform has several hurdles and challenges to overcome. I have thought of a few more.

First, there's yet another potential constitutional challenge. The requirement that states set up insurance exchanges may violate the 10th amendment to the constitution. (As I have written earlier, when I speak of violations of the constitution, I am not referring to violations of whatever policy I believe accords with the constitution. Rather, I am speaking of the relative likelihood that the Supreme Court would rule the reform unconstitutional.) In a Supreme Court case from 1992, New York v. United States, the Court considered a federal regulation that required states to set up sites for storing radioactive waste. The court ruled that the regulation was unconstitutional on the grounds that the Congress could not order states to enact policies. If this decision is translatable to the health care reform requirement that states set up exchanges (and to a requirement, which I read about in the Baucus bill, but am not sure if it is in the present bill(s) under consideration, that each state set up an ombudsman to oversee consumers' interests), the reform might be struck down.

Second, the politics surrounding passage of the bill right now makes it more likely than it might have been otherwise that the Congress may repeal the reform. The Democrats have resorted to robustly partisan tactics and to unsavory compromises in order to ensure quick passage of the bill:
  • The, perhaps now infamous, deal to relieve Nebraska of the need to finance any further increases in medicare means that taxpayers most states (I believe a few other states have gotten similar exemptions) will have to subsidize Nebraska's care of the indigent.
  • The "ping-pong" approach to reconciling the House and Senate versions of the bill. The usual procedure for enacting a law is that one house passes the bill, the other proposes amendments, and then they meet together in a joint conference to hammer out the differences, after which point each house votes on the bill again, and it passes (or not) as a whole. The Democrats have opted to forgo the joint conference and to meet together to hammer out their own bill. This tactic avoids the long delays, such as votes on procedure and motions to entertain the objections or comments or proposed amendments from the Republicans. Accordingly, it makes it more likely that the bill will be passed quickly. At the same time, this tactic shuts Republicans out of the process.
Neither of these tactics are necessarily beyond the pale. In controversial bills--and perhaps more often in less controversial bills--states or other constituencies get sweetheart deals as a matter of common practice. It's the old pork barrel politics that politicians (including Messrs. Obama and McCain) campaign against and indulge in once they take office. The Nebraska compromise is, in this respect, just another example of such a deal. If news reports speak true, the "ping-pong" tactic of doing legislation is not unheard of either, although I don't know this for a fact.

However, these tactics will give the excuse to opponents of health insurance reform to repeal it. The Democrats have, perhaps out of necessity, resorted to ultra-partisan measures, which will give opponents grist to their mill for repealing the reform. Of course, a few things would have to happen: Republicans would have to gain control of both houses of Congress and Obama would have to lose reelection (or the Republicans' majority would have to be veto-proof). (I could imagine another situation: a budget crisis in which enough opponents of health insurance reform could try to shut down the government unless Obama agrees to a bill that undoes the reform. But I think such an event is unlikely.) Still, the point is, Republicans could, with sincerity, point to the extraordinary measures taken and claim extraordinary measures are thereby jsut as justified for undoing the reform.

Whereas the chance was perhaps 1 in 10 that reform opponents would mount a serious effort to repeal it, provided the circumstances make it possible, I'd say that now it is probably 3 in 10. It's still not likely, but it's more likely now.

I do believe that once the major provisions go into effect--2013 or 2014, if I'm not mistaken--and if constitutional challenges do not undo the reform, it will be much more difficult for opponents to repeal it. Once something becomes policy, it creates "rent seekers" who have a strong, vested interest in the continuance of the policy.

Finally, I should explain why I support the bill, given what cannot be described but as unsavory tactics of the Democrats. Namely, if the bill does what it is supposed to, people will no longer have to fear going into bankruptcy just because they get sick and they won't have to fear going to the doctors on the ground that if they are found to be sick, they will have no recourse to get help paying for their care.

Now, critics of the reform proper--and not just the way the reform is being enacted--have pointed to a lot that is wrong with the bill: it won't contain costs, it is uncertain how effectively the price of premiums can be controlled, it is a huge subsidy to the private insurance industry, it imposes huge "compliance costs" on insurers and doctors who have to deal with the regulations. I'll add to these criticisms and say that the bill might not even do what it's supposed to. What if insurance companies just decide en masse not to obey the law? What if, as a practical matter, people's coverage is dropped anyway when they get sick? Still, I'm betting, perhaps foolishly and perhaps not foolishly, that it will work.

*I have decided to start calling it "health insurance reform" instead of "health care reform" because it is primarily a reform of the health insurance system.

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