Putting Off Health Care
Conservative blogs have transformed into a hit parade of reasons why the House Affordable Health Care for America Act will kill jobs and the unborn, stifle economic recovery, and destroy...education. Of course, the need to unsheathe so many harbingers of doom is mostly proof of the good that the health care bill promises to accomplish.
Admittedly, questions still remain. The legislation's effect on premiums for upper middle-income households with employer-sponsored coverage is uncertain. Cuts to Medicare will require serious backbone from a week-kneed Congress. Reform of the fee-for-service system blamed for our high health care costs is not really accomplished. And the public option's capacity to create competition among insurers is limited by its small size: the Congressional Budget Office estimates that only 6 million individuals will enroll.
However, one of the bill's most significant defects is its delayed implementation. In 2010, very limited reforms, such as a ban on rescissions and improvements to cost-sharing in Medicare and Medicaid, come into effect. 2011 and 2012 are essentially down years. It is not until 2013 that the most important and substantive provisions become effective: a complete ban on denials of health care for preexisting conditions, a ban on pricing according to health status, the opening of the Health Insurance Exchange with affordability credits.
The political consequences of these delays have been well publicized: Politico has reported that Democratic Representatives and Senators are pressuring their party leadership for real results from reform that they can point out to constituents in the 2010 midterm elections.
But the economic consequences of the delays have not been addressed.
In many ways, the situation is similar to the circumstances surrounding the Credit Card Accountability, Responsibility, and Disclosure Act, which banned abusive and unfair credit card practices. As I described several weeks ago, Congress delayed implementation of these protections until next year, allowing card companies to raise interest rates and fees in the interim. Just this week, the House passed an emergency measure designed to speed up implementation of the provisions, arguing that the card companies' rate and fee hikes were harming consumers at a time of great economic stress.
The House should apply this lesson to health care. Delaying implementation only allows the relentlessly increasing unemployment rate to push up the relentlessly increasing rate of the uninsured. An immediate expansion of health care, particularly of Medicaid eligibility, would help break this causal chain.
Indeed, a recent Kaiser report on health coverage in the early months of the recession finds that the number of uninsured adults increased between 2007 and 2008 by 1.5 million people primarily because public coverage was unable to offset the decline in employer-sponsored insurance. Those who lost coverage were primarily low-income (and, for reasons also related to income, white), but not eligible for public programs. In contrast, an expansion of Medicaid and SCHIP, which offer benefits to children with much laxer eligibility requirements, ensured that a drop in the percentage of children covered by employer-sponsored insurance did not result in an increase in the number of uninsured children. In fact, the number of uninsured children declined.
Health care reform that expanded coverage to low-income adults now could keep many low-income individuals insured, not only improving health outcomes but also preventing the mutually reinforcing spiral of high medical costs and debt at a time when the economy needs financially secure consumers who are willing to spend. The House bill does just this, expanding Medicaid coverage to individuals at 150% of the poverty line. But it waits until 2013 to do so, when - hopefully - the downturn will be well behind us.
Hastening implementation of this provision would be a significant benefit to struggling households. Committing the federal government to funding the entire expansion for the duration of the economic downturn would ensure that reform does not exacerbate states' fiscal woes. And moving up the effective date would prevent Congress from having to return to the issue several months down the road after an already overlong debate about health care.