First published 3/8/11 on Kaiser Health News
There is one certainty in the era of the new federal health law — nothing in U.S. health policy will ever be the same.
Every week events take place — regulations are issued, grants are awarded and provisions, such as the 1099 reporting requirement that raised revenue to pay for the measure, face congressional challenges. Each development marks one more step in the continuing transformation of the health system — changes now put in motion by the sweeping overhaul. In this vein, President Barack Obama’s surprise signal last week to governors that he was willing to give states some extra flexibility in implementing the law is particularly noteworthy because it offers a useful window into the health law’s evolving politics and the future bargaining that will likely take place.
Specifically, Obama announced his support for legislation introduced by Sen. Ron Wyden, D-Ore., and Sen. Scott Brown, R-Mass., to allow states to devise their own insurance coverage systems as early as 2014, instead of the 2017 date specified in the law. The president’s endorsement elevated a previously obscure side issue and opened a door for negotiations with Republicans when the time becomes ripe.
The “waiver for state innovation” provision permits states to seek a federal waiver from the individual mandate and other key requirements as long as the state’s replacement plan meets four conditions. States must provide “coverage that is at least as comprehensive,” “cost sharing protections … that are least as affordable,” and “coverage to at least a comparable number of residents” as would have occurred under the Affordable Care Act. In addition, a state waiver must “not increase the federal deficit.”
But why 2017 in the first place?
It all started in late 2009 when Wyden and Sen. Bernie Sanders, I-Vt., were the Senate’s main advocates for these waivers. They wanted a 2014 start date. The Congressional Budget Office told Senate staff that it could not provide a realistic spending projection for any such dispensations in the 2014-2016 years because financial benchmarks didn’t exist to make sure states were not overpaid. In political terms, had the Senate set 2014 as the date, the CBO would have marked that section as adding to the bill’s total cost at a time when senators were under pressure to keep its price tag down.
In January 2010, when Senate and House Democrats were negotiating a final health reform bill, and right before the Massachusetts special election for the Senate seat held by the late Sen. Edward Kennedy, the CBO had agreed that allowing early waivers for two states each year through 2017 would have minimal adverse budget impact. That scheme fell off the table when (guess who?) Scott Brown won the Senate race. So 2017 kept its place in the final legislation.
When the Wyden-Brown legislation was first introduced last November, the reaction was muted. Since then, only Sen. Mary Landrieu, D-La., has joined Wyden as a Democratic co-sponsor, and Brown has attracted zero of his Republican colleagues. Sanders, who also supports moving up the date to 2014 to help Vermont set up its own single-payer plan, has filed a bill to accomplish the same objective. Now they have President Obama on board. What’s behind the bipartisan reticence of the rest?
Democrats tend to dislike giving states too much discretion because they fear that Republican governors would use flexibility to reduce the number of people eligible for coverage and scale back their benefits. This worry grows when a Republican president occupies the White House. Further, Wyden did not endear himself to his Democratic Senate colleagues during the health reform debate when he kept pushing his own alternative universal coverage legislation co-sponsored by the recently defeated Sen. Bob Bennett, R-Utah.
Republicans are more respectful of state flexibility, though the Wyden-Brown bill does not provide the kind they most appreciate — thinner benefits, higher cost sharing, fewer covered lives. Further, Republicans are not likely to support a provision that makes the health law more acceptable when their base is expecting and demanding a clean repeal. Also, it can’t help motivate them that the state most likely to claim a waiver would be Vermont, which would use it to create the Republicans’ worst health care nightmare — a single-payer health-financing scheme.
The bipartisan unease makes it unlikely Brown-Wyden will move in this session of Congress despite the president’s embrace. The time and place of the president’s endorsement — the annual winter meeting of the National Governors Association — shows a chief executive more focused on states than on Congress. His endorsement also shows a president thinking longer term about the measure’s prospects than the current congressional session.
So if the U.S. Supreme Court decides one day to toss out the individual mandate; if tensions do not cool down with the governors and states; or if Congress gets nostalgic for the kind of bipartisan deal making they did in 1997 leading to that year’s Balanced Budget Act, then Wyden-Brown in its current or altered form will be in play. Just not before 2013 — when a new Congress comes to town.
John E. McDonough is a professor at the Harvard School of Public Health and a former staff member of the U.S. Senate Committee on Health, Education, Labor and Pensions.