Tina Simpson, JD, MSPH
Principal
A few months back we began our series on the Affordable Care Act (ACA), opening with a celebration of the 3rd anniversary of the failure of “Skinny Repeal.” At the time, the impetus for this series was to examine the pending Supreme Court Case, Texas v. California, which threatens to upend the ten-year-old statute in its entirety. As may be expected in an election year in the midst of a pandemic (and following the recent death of Justice Ruth Bader Ginsburg and the precipitate nomination of Judge Amy Coney Barrett to the Supreme Court) health care reform remains front and center in the public debate.
This past Tuesday the two Presidential candidates engaged in the first of three debates. As could be expected, health policy was a consistent reference point throughout, a narrative north star for one candidate and the (persistent) ghost at the feast for another.
It is not surprising that health care occupies such prominence in our national discourse. To crib from President Reagan, the first duty of government, after all, is the security of its citizens; and there is little these days that makes one feel less secure than the absence of health insurance. What is surprising (particularly if you happened to be a time traveler from 1935, 1947, 1974, or any of the years in-between) is that we are still debating the same questions. Questions which, as reflected in the various Presidential and Congressional Committees and task forces from 1935, 1947, or 1974, we know (at least some of) the answers to.
President Nixon summarized it thus in a special message to Congress launching his Health Care Reform initiative, noting “our present system of health care insurance suffers from two major flaws”: First, by relying on the private market, there is always going to be a (significant) portion of the population who are unable to obtain affordable insurance. Secondly, lack of regulation of health insurance means that the insurance available is often insufficient and the absence of baseline benefits across plans impedes the ability of beneficiaries to be informed consumers, further inhibiting the efficiencies of a competitive marketplace.
Addressing those two flaws in the system, namely, was the focus of President Nixon’s Health Reform Plan. If it sounds familiar, that’s because it is also the point-by-point blueprint for the ACA. In fact, professors at the University of Michigan (among others) reflected that “‘Obamacare’ is substantially less ‘radical’ than the plan put forward by President Nixon in his 1974 appeal to Congress (which, among other reforms, proposed the creation of a national public option).”
It is for this reason that the controversy (and vehemence) associated with the ACA has always bemused me; because you see, the ACA is so, well…. market-oriented. By which I mean that it is founded on the existing private insurance infrastructure and predicated on course corrections to make the private marketplace more competitive. Although the ACA may be described as “Nixon-care Lite”–and 30+ years late–both focus on creating a more competitive marketplace primarily served by the private insurance industry.
The ACA should, first and foremost, be understood as creating a regulatory framework for an industry (the individual marketplace) that was previously notoriously unstandardized and unregulated. This includes:
- Requiring (most) insurance companies to spend at least 80% of revenues generated from premiums on claims and/or clinical quality improvement benefiting beneficiaries.
- Requiring publication of financial data and available rebate information.
- Standardization of the medical loss ratio (in line with the 80% threshold reference above)–where that threshold is not met, beneficiaries are entitled to refunds.
- Standardizing health insurance coverage by the creation of essential health benefits across plans and categorizing plans into a 5-tiered system (bronze, silver, gold, platinum, and catastrophic) to facilitate consumer choice.
- Prohibiting assessing premium rates (or denying coverage) on the basis of medical history or gender. Individual marketplace premiums may only be calculated on the basis of age; tobacco use, location; family enrollment, and plan category (i.e.: bronze, silver, gold…)
Consistent with Nixon’s analysis and proposal, the ACA is therefore all about making private insurance more efficient, accessible, and transparent (and, thus, more competitive). There are two principles that form the thematic framework for these regulations. The first is to correct the (inevitable) market distortion and inefficiencies created by the private management of what is fundamentally a public (or at least shared) good. The intended function of insurance is pooling collective risk to protect against the uncertain individual loss, not simply the prepayment for services as reflected (almost exclusively) by your individual risk profile. The second is to ensure that consumers are able to utilize their purchasing power in an informed way, first by requiring transparency and imposing standardization across plans, enabling consumers to compare costs and coverage across plans to find what is best suited to their needs and priorities. (If you think selecting insurance is hard, it is nothing compared to the individual marketplace in 2009, where it wasn’t a question of apples to oranges, but apples to ducks…). These are principles that have private enterprise and market efficiency at the center-point, and which have traditionally checked the boxes for past conservative reform initiatives, including but not restricted to, that of President Nixon.
The ACA is an expansive, complex, and sometimes confusing statute. It was also long anticipated: being workshopped by successive administration, Congressional Committees, and other leaders, dating back to (at least) 1927 and the Committee on the Costs of Medical Care. Understood thus, in the context of a long political trail with repeated switchbacks and returns, the ACA is the culmination of a uniquely American solution to a shared social problem: one that prioritizes private enterprise, market forces, and consumer choice as the best guarantor of efficient (economic) outcomes.
In our next segment, we will examine that “long political trail” leading up to the passage of the ACA. In addition to indulging our inner history nerd, an examination of the past political wrangles provides important insight into this persistent political, social, and security question.