Breaking Up Health Care Reform: What Pieces Can Stand Alone?

(photo: Mykl Roventine)

(photo: Mykl Roventine)

Recently, there has been some talking about breaking up health care reform into multiple bills. Others have argued that this is impossible because most of the components of the health care are too interconnected. While it is true that some reforms can’t easily be separated, the reality is that the current health care bill is made up of several effectively independent parts. I’m not advocating for breaking up reform, but I intent to show how this current bill might be broken up. If Democrats did intend to pass health care reform piecemeal, a different strategy for coverage expansion might be smart.

Medicaid Expansion

A big part of the coverage expansion and cost of the health care reform bill is the expansion of Medicaid to everyone below 133% or 150% of the federal poverty line. In the Senate bill, the expansion of Medicaid (and maintaining SCHIP) costs $374 billion and expands coverage to 15 million. This Medicaid expansion is effectively a closed system. For the most part, it is not affected by the other parts of the bill. There is no reason that the expansion of Medicaid with some reforms to the system can’t be done as a stand alone bill that could be passed using reconciliation.

Individual Market Reforms, Coverage Expansion, and Exchanges

This is the other costly part of the bill, which is also responsible for much of the coverage expansion. In the Senate bill, this section is responsible for covering an additional roughly 16 million, and costs $447 billion. The rules, regulations, infrastructure, and tax credits needed to make the reform to the individual market work are very interconnected, and it is difficult to separate them. You can have an individual mandate without guaranteed issue.

You can’t expect people to buy insurance unless they get tax credits. You can’t mandate a high minimum standard for insurance coverage if you are not also going to make that insurance affordable. If you are giving people tax credits, you need an employer mandate to prevent a mass dumping of people onto the exchange. You should not have an exchange unless all the insurance products can be regulated for quality. You don’t want to start giving people making 134% of FPL and above tax credits unless you provide insurance for people at 133% and below.

Insurance Reforms That Can Be Passed as a Stand Alone

Just because the whole individual market system created in the bill will not work without a complex structure of changes does not mean some individual components of reform can’t be pulled out and passed as stand alone measures. Just to name a few:

Medicare Reforms

Medicare like Medicaid is effectively a closed system. The changes made to Medicare can happen completely independent of the rest of the bill. The reforms related to provider payment structure, fixing overpayment to private insurers in the Medicare Advantage program, creation of a super Medpac commission, and closing the donut hole can all be done separate from the rest of the bill. Of course, the goal was to take the savings from these reforms, and use them to pay for other parts of the bill.

Unrelated Reforms That Should Not Have Been Part of the Bill – Pathway for Biosimilars

A few provisions in the bill are basically unrelated to everything else. One example is the pathway for biosimilars. This is a very bad provision which will hurt consumers, and there is no reason for this to be in the health care bill. It does not affect coverage expansion or save government programs much money. This is clearly the type of patent issue that should be dealt with as a stand-alone bill, and not hidden a much larger bill.

Reforms Not in the Bill That Should Be

Democrats promised two important health care reforms not found in the bill: drug re-importation and direct drug price negotiation by Medicare. Both were dropped by Obama as part of the secret deal with PhRMA. There is no reason these two components can’t be part of bills if health care reform is done piecemeal. Also a targeted change or waiver to the ERISA law is something many progressive have long pushed for.

Possible Smaller Bills

If Democrats are moving health care reform in parts, it seems the logical place to start is with the Medicaid expansion. It is easy to explain, it is big but not “too big,” does not produce a fight over abortion, and, importantly, every Democrat who voted for health care reform in either chamber already voted to expand Medicaid to at least 133% of the FPL. Expanding Medicaid to 150% FPL would cover roughly 15 million. It is big enough that Democrats can legitimately spin it as a win, but it has a much smaller price tag than the current bill and people can understand it easily.

There could than be a relatively big bill to deal with the individual and small group market reforms, then one to deal with Medicare reforms, and, finally, several smaller bills to deal with other matters.

The big bill, dealing entirely with the individual and small group market, would still have a big price tag and would be a political mind field. This is where most of the political fighting has taken place so far. This also can’t be dealt with unless you expand Medicaid first.

I suspect if Democrats passed simply a Medicaid/SCHIP expansion bill (through regular order or reconciliation) they would not have much of a stomach for an equally large and much more complex bill dealing more fully with the individual market. Most likely, you would see only a small second bill or a series of smaller bills to deal with some popular stand-alone reforms (like those I outlined above)–with the goal of putting off more comprehensive reform until another Congress. If Medicaid were expanded to 150% of FPL now, it should make future reform efforts much less costly, and probably politically more manageable.

Exit mobile version