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Posts Tagged ‘National Governors Association’

President Obama Endorses Earlier State Opt-Out of PPACA

Posted by Alan on February 28, 2011

The ongoing debate over the Patient Protection and Affordable Care Act is about more than whether this provision or that provision is beneficial or damaging to the nation’s economy and health care system. The debate is also about the appropriate role of the federal government compared to that of state governments and individuals. Health insurance, and consequently much of health care, has long been the purview of the states. The PPACA changes that balance considerably.

Enter Senators Ron Wyden and Scott Brown – the former a Democrat the latter a Republican. They are co-sponsoring a bill allowing states to opt-out of many of the more controversial provisions of President Barack Obama’s health care plan as early as 2014 if they meet certain eligibility requirements. (The health care reform law already provides for this opt-out in 2017, but by then states will have invested heavily in implementing the PPACA).

This legislation, one of the few bi-partisan health care reform-related measures put forward in the past few years, just received a politically important boost. Speaking before the National Governor’s Association meeting in Washington, DC today, President Obama endorsed the Wyden-Brown proposal. Were the bill to pass, states could replace the individual and employer mandate, health insurance exchanges and whatever the federal government comes up with as “essential benefits” all health insurance policies must cover. Yet the states would still receive the insurance subsidies and administrative funding they’d be eligible for under the PPACA.

Gaining this privilege to go their own way, however, is no easy task. As described by Kate Pickert in Time’s the Swampland blog, states would need to show their own health care reform approach would:

  • not increase the federal deficit
  • provide insurance to as many people as would the PPACA
  • provide insurance as least as comprehensive as that called for in the PPACA
  • provide insurance that’s just as affordable

Avik Roy at Forbes’ The Apothecary blog has an excellent presentation of the pros-and-cons of the Wyden-Brown legislation. For example, he sites Ben Domenech as observing that “states would have to prove a greater number of people will purchase a product under their alternate plan than would do so under a law requiring them to purchase that product!” However, this may be easier than Mr. Domenech apparently believes. As I’ve pointed out previously, there are other ways to encourage consumers to obtain coverage than a government imposed mandate. The Waiver for State Innovation, as the Wyden-Brown proposal is referred to, doesn’t allow states to return to the status quo. On the contrary, states would still need to put forward comprehensive health care reform. They can just go about it in a different way than that taken by the Obama Administration in the PPACA.

As President Obama said to the Governors when describing the value of moving the state opt-out opportunity to 2014, “It will give you flexibility more quickly while still guaranteeing the American people reform.”

For example, states could set up a system in which consumers are given health insurance vouchers to purchase coverage. Carriers could be required to issue policies to all who apply. To protect their pools from the adverse selection of people waiting until they’re on their way to the hospital to obtain insurance, carriers could be permitted to exclude coverage for pre-existing conditions for as long as a consumer has been without coverage. This kind of approach would do away with exchanges and the PPACA’s approach to the individual mandate. Of course, so would the single-payer approach being considered in Vermont.

A wise man once told me, “You never solve problems, you just replace old problems with new ones.” President Obama is giving states the opportunity to solve – and create – their own problems. Whether any will be able, or willing, to seize this opportunity remains to be seen.

Posted in Barack Obama, Health Care Reform, Healthcare Reform, Patient Protection and Affordable Care Act, PPACA | Tagged: , , | 10 Comments »