Health care reform: A functional and humane marketplace

The Affordable Care Act not only drastically changes how health care is delivered but sharply alters the underpinnings of California’s economy. To get a deeper sense of health care reform’s impact on the Golden State, Capitol Weekly talked to Micah Weinberg, PhD, a senior policy advisor at the Bay Area Council and CEO of Healthy Systems Project, a health care consulting firm based in Sacramento.

CW: If everything breaks right, what do we get with the ACA?

MW: We get affordable insurance for everybody that provides access to high quality health care. The promise of the Affordable Care Act is much more than that, though: It’s moving us toward a system of more effective health care at much lower cost.

CW: That’s a very big deal.

MW: Indeed.  It’s really important, however, for people to understand this is going to be a process of at least a decade to get it set up and humming the way we want it to. We should all be maximally humble about how this is going to go and maximally straightforward about what exactly is going on. Set the right level of expectations and deliver to the best extent that we can.

CW: What’s the biggest impact of the act?

MW: The biggest change is that the Affordable Care Act now creates a functional and humane individual market for health insurance where people can get coverage — regardless of whether they have pre-existing conditions — and where they can get subsidies from the government if they need them. The way we do health insurance right now, one-third of Americans wouldn’t be able to get health insurance on the individual market because of some pre-existing health condition. Their choices are maybe getting an extraordinarily expensive “high risk” policy or getting coverage through their employer.

CW: Why all of the stories about employers cutting back on health insurance?

MW: The reality is sort of the reverse of the story being told. Many articles say employers are responding negatively to the Affordable Care Act because of the negative implications of it. Actually, employers are often responding rationally because of the positive implications of the act.

We hear, for example, about companies dropping spousal coverage. That sounds like a bad story. But there are a lot of people for whom it’s actually going to be more in their financial interest for this to happen. Now their spouse is going to be able to get a subsidy to purchase insurance in the new “exchanges” set up by federal reform, when in the past many employers weren’t paying for spousal coverage.

CW: So it’ll help some people for sure. What will it do to the economy as a whole?

MW: We did an economic analysis of the impact of health reform that predicted that the Affordable Care Act would create 100,000 new jobs in California.  One of the biggest reasons is that we currently have an inefficient economy with less upward mobility as a result of people not being able to leave their jobs because they can’t get insurance on the individual market. We like to think of this country as a nation of entrepreneurs and small business people but the way that we’ve been doing health care up until January first of the coming year makes it much more difficult to be an entrepreneur.

CW: California is generally described as being ahead of other states in implementation. Is it?

MW: We’ve certainly put more hours in but we’re also trying to do many more things than most other states are doing. Some of it is necessity; a lot of it is ambition. We started out wanting our exchange to solve everybody’s problems all at once.  In the course of the last couple years we’ve had to step back and say, “look we’re going to wait awhile on our more ambitious designs.” A lot of other states have a more modest approach in terms of what they think can be achieved in the immediate term.

CW: What’s an example of more modest?

MW: California decided to be an “active purchaser,” to tell the health plans you’re going to have to negotiate with us and we’re going to figure out what your rates are. Beyond that, California determined the only type of benefits that plans can sell on the exchange. States don’t have to do that. If they don’t, it may be better; it may be worse. But it’s certainly simpler not to do it. If you’re creating an open market for health insurance that’s appropriately regulated but not directed by the government that takes a lot less effort than what we’re doing here in California.

CW: What’s the advantage of California’s approach?

MW:  It’s easier for consumers to make comparisons among products if there are fewer products. Health insurance gets very complicated when you get into things like deductibles, co-pays, and co-insurance. The current individual market can seem like a labyrinth of doom.  Having some level of standardization makes sense. I personally think the Affordable Care Act does enough to standardize the marketplace but I also understand why you would want it to be even simpler for consumers.

The problem is that California has done a bunch of things to interfere with the market, most notably the creation of what are called “Medicaid Bridge Plans.” So on the one hand we’re trying to create a standardized market and on the other hand we’re taking a third to a half of the people out of that market and keeping them in their existing Medicaid plans, which I think is a bad idea. And the Bay Area Council thinks it’s a bad idea.

CW: Because it undercuts a standardized market if a third of the people aren’t in it?

MW: Exactly. Health care reform has a Republican blueprint but Democrat engineers. Many of the people implementing this law would prefer to be doing something else, and the people who spent 50 years promoting this as a policy solution have now disowned it as Peter disowned Jesus. So we’re trying to set up a marketplace but we’re doing it with a safety net mentality. It’s been an interesting process, to say the least.

CW: Well, the bill is longer than War and Peace.

MW:  It’s long because it’s conservative. You could write a single-payer bill that’s 10 pages long. But what the Affordable Care Act said is we’re going to keep Medicaid, we’re going to keep Medicare, we’re going to keep employer- sponsored insurance, we’re going to keep individual insurance but we’re going to try to keep all of them and tweak them slightly to make them work out better.  That’s a very conservative approach to health care reform.  And because they’re building on an enormously complex system, they end up with an enormously complex law.

What (U.S. Senator) John McCain proposed in the 2008 campaign – doing away with the employer tax for insurance – that’s radical. What Obama did is conservative. The reason the law is so complicated is it’s conservative and incremental.

CW: The delay in the employer mandate?

MW: Doesn’t mean a thing. The way it’s structured, it’s not going to significantly change whether or not employers offer health insurance.  It was watered down to just a fee on businesses.  All it does is raise revenue for the government. And create headaches for employers who are attempting to comply with a regulation that’s extraordinarily complicated.

CW: Business’ Number One worry?

MW: Businesses main focus is controlling health care costs.  Federal health care reform didn’t create that problem but it didn’t solve it either.  The biggest concern expressed by businesses about health reform itself is the level of uncertainty. All the players in the political system are contributing to this uncertainty. When the Supreme Court said states can participate in the Medicaid expansion or not, that created uncertainty. When the Republicans say we’re not going to go to sleep at night until we repeal this bill that creates uncertainty. When the Democrats come in and issue regulations to implement the law that don’t seem to be consistent with the way that we crafted the law that creates uncertainty. The business community is willing to live with whatever it is the rules are but we’d very much like to know what the rules are going to be. Businesses want a healthy productive work force and they know that health care coverage is essential to that. They get nervous when they see a lot of changes being made

CW: What happens in January?

MW: The rollout will be rocky.

CW: Going way out on a limb there.

MW:  I 100 percent guarantee the rollout will be rocky, but look at Medicare Part D. The rollout for that was a public relations disaster, but five or six years later Part D became sort of a cherished program and entitlement that’s untouchable. The Affordable Care Act is much more societally significant and more complex by an order of magnitude. But it’ll become cherished too — if we can get through the next year.

—

Ed’s Note: Greg Lucas, the editor of California’s Capitol (www.californiascapitol.com), is a contributing editor of Capitol Weekly.