Everything Relates to Everything Else: An Interview with Sara Rosenbaum

Sara Rosenbaum: The option that probably has received the most attention is picking up the legislation that the Senate passed and then having the House pass the bill and send it to the President for signature—without any changes, of course.

The positives of this option are that it assures the enactment of legislation that would achieve coverage for some 30 million additional Americans through a mechanism that is, in fact, the same type of mechanism used in both the House and Senate legislation.

That is, an exchange that would modify the individual insurance market to support this change.

The legislation also would provide immediate help to certain people through changes aimed at shoring up both the individual and group markets during of the run-up period to comprehensive reform.

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But the downside of this strategy is that it would lock in several provisions in the Senate bill to which the House objects deeply.

One is the Senate’s affordability provisions. The bill does not help lower- and moderate-income individuals and families as much as the House bill did.

Another is the payment mechanism. The House measure is financed in part through modestly increasing taxes on high-income people, whereas the Senate bill taxes what are known as “Cadillac Plans.”

The plans are commonly thought to be associated with very generous benefits but there’s a lot of evidence that that is not the case at all, that most.

the cost that goes into so-called Cadillac Plans actually is attributable to differences in the underlying healthcare market as well as important differences in who enrolls in plans.

Plans that cater to older, sicker workers cost a lot more money for the same benefits than plans that cater to a younger working population.

The Senate measure also uses 50 state exchanges as opposed to the single federal exchange envisioned.

the House bill and differs on the treatment of abortion services and the ability of undocumented workers to purchase exchange products at full price, barring access to exchange products completely.

One option for dealing with at least some of these differences is to precede the House vote with reconciliation legislation that would require only a simple majority in the Senate and that could include these changes.

But there are a vast array of views about whether the Senate would ever agree to a reconciliation vote that would make these changes, including the federal exchange, the tax treatment of abortion coverage, or the subsidy levels.

Lester Feder: If the House went forward with the understanding that the legislation would be amended through reconciliation, would any of those pieces be changeable?

Sara Rosenbaum: The biggest question perhaps is over abortion. Reconciliation requires that provisions contained in one of these fast-track bills affect federal spending somehow.

They either must cost money or save money or affect revenues. From a technical vantage point, it might be possible to tie abortion standards to the availability of individual subsidies, but this is unclear until ruled on by the Senate parliamentarian.

Lester Feder: One of the other things that has been discussed is moving forward with a pared-down bill, or doing pieces of it.

What would those pieces be, and is that doable from a policy and legislative side?

Sara Rosenbaum: There are several problems with unpacking the bill and breaking it into components. 

Most importantly, it is not possible to re-engineer the individual market to be open to people with pre-existing conditions unless the re-engineering is accompanied by a mandate.

since such a change potentially would attract only people with greater health needs into the insurance pool, while seriously elevating costs for everyone else.

Congress could enact reforms only in the small group market while leaving the individual market alone.

Congress could provide small employer tax credits and enact reforms that make small group insurance more accessible to groups with higher health costs.

But history tells us that small group reforms will attract only very limited numbers of buyers without a mandate because large affordability issues remain. I

n Massachusetts, for example, the individual and small group market reforms have worked nicely, but that’s because people are required to buy coverage.

The state’s small employers have responded to incentives because people are required to be covered. But if you look at states like Indiana, which has also tried to incentivize small employers, the response has been extremely low.

There are a lot of reasons why small employers may be unable or unwilling to buy insurance, which is why we also need a workable individual coverage pathway. 

Medicaid expansions for the poorest Americans are also essential.

The answer to the insurance riddle is a device that acts like a major engine, bringing in millions of young healthy adults and removing barriers for older and sicker persons. 

That is what makes reform work, and it is why the individual mandate, coupled with affordability credits, is so important.

In a major ERISA decision 15 years ago, the United States Supreme Court observed that in the end, everything relates to everything else.

It is a wonderful line and one that captures the interconnectedness of comprehensive health reform.

As large and complex as the bill might be, this is inevitable in legislation aimed at shaping a market rather than simply substituting public insurance for a private system.

And to the extent that building such a reform plan involves a lot of deal-making, it is the fact that all meaningful health reform legislation rests on complex and sobering deals.

In 1965, President Lyndon Johnson—an epic civil rights leader—struck what is perhaps one of the socially ugliest deals in the history of social welfare legislation, agreeing to exempt Medicare-participating physicians.

Title VI of the 1964 Civil Rights Act in exchange for the votes of Southern Democratic Senators.

Deals don’t get grimmer than this. In the end, the Medicare legislation was overwhelmingly worth the tradeoff, but the agreement makes today’s financial deals that help form the basis of reform look like child’s play.

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