Flashback 2007: Tim Pawlenty Proposed Establishing A Health Insurance Exchange
Politico’s Kendra Marr and Kate Nocera reviewthe health care records of the GOP presidential candidates and find that Mitt Romney isn’t the only contender who previously supported parts of the Affordable Care Act. Tim Pawlenty, Jon Huntsman, and Newt Gingrich all flirted with various provisions that ultimately ended up in the health law.
ThinkProgress Health reported on Pawlenty’s past support for “universal coverage” here, and his positive assessment of Massachusetts’ individual mandate, but Cal Ludeman, his commissioner of the Minnesota Department of Human Services, recalls that Pawlenty also advocated for establishing an exchange:
Minnesota’s exchange proposal would have required all employers with more than 10 employees to create a “section 125 plan” so workers could buy cheaper insurance with pre-tax dollars. During a 2007 news conference, Pawlenty said launching such a system would only cost employers about $300.
“Remember how new that idea was, even back then,” said Ludeman. “Everybody was talking about how this was a new Orbitz or Travelocity, where you just go shop. It was never talked about in our conversations as a hard mandated only channel where you could go. But that’s where Massachusetts ended up.”
Pawlenty advanced the non-profit Minnesota Insurance Exchange in 2007, arguing that it could “connect employers and workers with more affordable health coverage options.” “If just two of your employees go out and buy insurance through the exchange, the benefits to the employer on a pre-tax basis — because of their payments to Social Security and otherwise into the 125 plan — more than cover the cost of setting up the plan,” Pawlenty explained.
The exchange originated as a Republican idea and was developed in part by the Heritage Foundation’s Stuart Butler. The measure was eventually adopted by Mitt Romney and later became part of the Democrats’ health reform plan. Under the Affordable Care Act, states that don’t establish their own exchanges by 2014, cede control of the new health market places to the federal government. In 2010, while still governor of Minnesota, Pawlenty rejected the ACA’s “insurance exchanges,” dubbing them a federal takeover.
By: Igor Volsky, Think Progress, June 13, 2011
Medicare Saves Money: Ensuring Health Care At A Cost The Nation Can Afford
Every once in a while a politician comes up with an idea that’s so bad, so wrongheaded, that you’re almost grateful. For really bad ideas can help illustrate the extent to which policy discourse has gone off the rails.
And so it was with Senator Joseph Lieberman’s proposal, released last week, to raise the age for Medicare eligibility from 65 to 67.
Like Republicans who want to end Medicare as we know it and replace it with (grossly inadequate) insurance vouchers, Mr. Lieberman describes his proposal as a way to save Medicare. It wouldn’t actually do that. But more to the point, our goal shouldn’t be to “save Medicare,” whatever that means. It should be to ensure that Americans get the health care they need, at a cost the nation can afford.
And here’s what you need to know: Medicare actually saves money — a lot of money — compared with relying on private insurance companies. And this in turn means that pushing people out of Medicare, in addition to depriving many Americans of needed care, would almost surely end up increasing total health care costs.
The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.
But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.
By the way, we have direct evidence about the higher costs of private insurance via the Medicare Advantage program, which allows Medicare beneficiaries to get their coverage through the private sector. This was supposed to save money; in fact, the program costs taxpayers substantially more per beneficiary than traditional Medicare.
And then there’s the international evidence. The United States has the most privatized health care system in the advanced world; it also has, by far, the most expensive care, without gaining any clear advantage in quality for all that spending. Health is one area in which the public sector consistently does a better job than the private sector at controlling costs.
Indeed, as the economist (and former Reagan adviser) Bruce Bartlett points out, high U.S. private spending on health care, compared with spending in other advanced countries, just about wipes out any benefit we might receive from our relatively low tax burden. So where’s the gain from pushing seniors out of an admittedly expensive system, Medicare, into even more expensive private health insurance?
Wait, it gets worse. Not every 65- or 66-year-old denied Medicare would be able to get private coverage — in fact, many would find themselves uninsured. So what would these seniors do?
Well, as the health economists Austin Frakt and Aaron Carroll document, right now Americans in their early 60s without health insurance routinely delay needed care, only to become very expensive Medicare recipients once they reach 65. This pattern would be even stronger and more destructive if Medicare eligibility were delayed. As a result, Mr. Frakt and Mr. Carroll suggest, Medicare spending might actually go up, not down, under Mr. Lieberman’s proposal.
O.K., the obvious question: If Medicare is so much better than private insurance, why didn’t the Affordable Care Act simply extend Medicare to cover everyone? The answer, of course, was interest-group politics: realistically, given the insurance industry’s power, Medicare for all wasn’t going to pass, so advocates of universal coverage, myself included, were willing to settle for half a loaf. But the fact that it seemed politically necessary to accept a second-best solution for younger Americans is no reason to start dismantling the superior system we already have for those 65 and over.
Now, none of what I have said should be taken as a reason to be complacent about rising health care costs. Both Medicare and private insurance will be unsustainable unless there are major cost-control efforts — the kind of efforts that are actually in the Affordable Care Act, and which Republicans demagogued with cries of “death panels.”
The point, however, is that privatizing health insurance for seniors, which is what Mr. Lieberman is in effect proposing — and which is the essence of the G.O.P. plan — hurts rather than helps the cause of cost control. If we really want to hold down costs, we should be seeking to offer Medicare-type programs to as many Americans as possible.
By: Paul Krugman, Op-Ed Columnist, The New York Times, June 12, 2011
GOP Supported Individual Mandate To Prevent ‘Government Takeover’ Of Health Care
The Los Angeles Times’ Noam Levey looks at the history of the individual health insurance mandate and discovers that not only was the provision designed by Republicans as an alternative to President Bill Clinton’s health care reform plan in the 1990s, but it was specifically seen as a way to prevent a “government takeover” of health care:
“We were thinking, if you wanted to achieve universal coverage, what was the way to do it if you didn’t do single payer?” said Paul Feldstein, a health economist at UC Irvine, who co-wrote the 1991 plan with Pauly.
Feldstein and Pauly compared mandatory health insurance to requirements to pay for Social Security, auto insurance, or workers’ compensation.
So too did the Heritage Foundation’s Stuart Butler, who in 1989 wrote a health plan that also included an insurance requirement.
“If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate, but society feels no obligation to repair his car,” Butler told a Tennessee health conference that year.
“But healthcare is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance.… A mandate on individuals recognizes this implicit contract,” said Butler, who was the foundation’s director of domestic policy studies.
Levey notes that fully a third of Republicans supported a bill that included a national individual requirement, introduced by then-Senator and current Rhode Island Gov. Lincoln Chafee. Sens. Bob Dole (R-KS), Charles Grassley (R-IA), Orrin Hatch (R-UT), and Richard Lugar (R-IN) all backed that measure. The National Federation of Independent Business, a conservative small-business group, even “praised the bill ‘for its emphasis on individual responsibility.’”
And this wasn’t some fluke of the ’90s either. As recently as 2007, “[t]en Republican senators — including Tennessee’s Lamar Alexander, now a GOP leader — signed on to a bill that year by Bennett and Sen. Ron Wyden (D-Ore.) to achieve universal health coverage.” The legislation penalized individuals who did not purchase insurance coverage.
Listing all of the GOP presidential candidates who have previously supported the mandate (Romney, Gingrich, Huntsman, Pawlenty) would only belabor the point, which is that the GOP’s new-found religion on the mandate and its constitutionality is driven by the political need to unravel the Democrats’ crowning social achievement, not any great concerns about policy, constitutionality, or freedom.
By: Igor Volsky, Think Progress, May 31, 2011
Mr. Obama’s Health Care Challenge-The Ball Is In Your Court GOP
President Obama had a splendid idea this week. He challenged governors who oppose his health care reforms, most of whom are Republicans, to come up with a better alternative. He has agreed to move up the date at which states can offer their own solutions and thus opt out of requirements that they oppose, like the mandate that everyone buy health insurance and that most employers provide it.
Let as many states as possible test innovative approaches to determine which works best.
The president told the nation’s governors on Monday that he supported a bipartisan bill — sponsored by Senators Ron Wyden, Democrat of Oregon, Scott Brown, Republican of Massachusetts, and Mary Landrieu, Democrat of Louisiana — that would allow states to fashion solutions right from the start of full-scale reform in 2014, rather than waiting until 2017, as the law requires.
The catch is that a state’s plan must cover as many people as the federal law does, provide insurance that is as comprehensive and affordable, and not increase the deficit. That won’t be easy for the governors to accomplish, and House Republicans seem unlikely to pass the bill to let them try. They would much rather repeal the reform law — or have it declared unconstitutional by the Supreme Court — than join Mr. Obama in improving it.
The decision to set the date at 2017 was based on a desire to get the reform elements up and coverage greatly expanded before allowing states to start changing the law. There also were concerns that the early start would be more costly. That’s because the states would be given money for alternatives equal to the cost of insuring their citizens under health care reform. Without three years of experience to get firm figures, those block grants would probably be set too high.
Neither rationale still seems compelling. It would be wasteful to require states to set up exchanges and other elements of the reform only to abandon them for an alternative system three years later. The pending bill would wisely allow states to submit proposals in the near future and, if approved, put them into effect in 2014.
Alternative approaches might include replacing the mandate to buy insurance with a system to automatically enroll people in health plans, reformulating tax credits for small businesses and low-income individuals to encourage near-universal coverage, adopting such liberal approaches as a single-payer plan or a public option, and even moving all or part of the enrollees in Medicaid into new health insurance exchanges. These would all have to be done without driving up the federal deficit or reducing benefits, affordability and coverage.
Reaction among Republican governors has been mixed. The vast majority are focused on their immediate need to reduce Medicaid spending to help close their budget gaps, not on fashioning alternatives for 2014. For the near-term budget problems, the administration is already advising states on ways to reduce Medicaid costs and the president asked the governors to form a bipartisan group to work on further cost-reduction.
The president’s new olive branch is not apt to change the legal arguments over whether the mandate in the reform law is constitutional. But it can’t hurt to bring forcefully to everyone’s attention that there are alternatives to the mandate if states want to pursue them. Republicans ought to rise to the challenge.
By: The New York Times-Editorial, Published March 1, 2011
Mark Pauly, Father of the Individual Mandate: “Either We Have To Have A Mandate Or Make Insurance Free For Everyone”
In 1991, economist Mark Pauly was the lead author of a Health Affairs paper attempting to persuade President George H.W. Bush and his administration to adopt a universal health-care proposal that would keep the government from eventually taking over the sector. “Our view is that excessive government intervention will make matters worse,” wrote Pauly and his co-authors. “Our strategy, therefore, is to design a scheme that limits governmental rules and incentives to the extent necessary to achieve the objectives.”At the heart of that strategy was the individual mandate, which would go on to be promoted by congressional Republicans, the Heritage Foundation, and Massachusetts Gov. Mitt Romney before being adopted by Democrats and becoming a bete noire of conservatives. I spoke to Pauly earlier this afternoon, and an edited transcript of our conversation follows.
Tell me about your involvement in the development of the individual mandate.
I was involved in developing a plan for the George H.W. Bush administration. I wasn’t a member of the administration, but part of a team of academics who believe the administration needed good proposals to look at. We did it because we were concerned about the specter of single payer insurance, which isn’t market-oriented, and we didn’t think was a good idea. One feature was the individual mandate. The purpose of it was to round up the stragglers who wouldn’t be brought in by subsidies. We weren’t focused on bringing in high risks, which is what they’re focused on now. We published the plan in Health Affairs in 1991. The Heritage Foundation was working on something similar at the time.
What was the reaction like after you released it?
There was some interest from Republicans. I don’t recall whether they formally wrote a bill or just floated it as an idea [It did make it into a bill — Ezra], but Democrats in Congress said it was “dead on arrival.” So that was the end of my 15 minutes.
Was the constitutionality of the provision a question, either in your deliberations or after it was released?
I don’t remember that being raised at all. The way it was viewed by the Congressional Budget Office in 1994 was, effectively, as a tax. You either paid the tax and got insurance that way or went and got it another way. So I’ve been surprised at that argument. But I’m not an expert on the Constitution. My fix would be to simply say raise everyone’s taxes by what a health insurance policy would cost — Congress definitely has the power to do that — and then tell people that if they obtain insurance, they’ll get a tax break of the same amount. So instead of a penalty, it’s a perfectly legal tax break. But this seems to me to angelic pinhead density arguments about whether it’s a payment to do something or not to do something.
That gets to one of the central questions in this argument, which is whether the individual mandate is a penalty for economic inactivity or whether it’s part of a broader system of regulations affecting a market for health care that we’re all participating in, whether we’re buying insurance that day or not.
I see it in the latter way. We thought it was a good idea to do everything possible to encourage people to get insurance. Subsidies will probably pick up the great bulk of the population. But the point of the mandate was that there are a few Evil Knievals who won’t buy it and this would bring them into the system. In our version, the penalty was effectively equal to the premium of a policy. You paid the penalty and you got the insurance. That’s one of my puzzlements here: In the new law, the actual level of the penalty is quite small compared to the price of a policy. It’s only about 20 percent of the cost of a policy.
Do you think the mandate is severable from the larger bill?
I think you could do that. I’d want to take some other things out of the bill, too. But the main part I favor and the part that deals with the uninsured are these subsidies for lower-middle-income people. The great bulk of them would take insurance with those breaks. That won’t go away. The mandate props up community rating, which I’m not a fan of. So I’d throw overboard both the mandate and the community rating. Then I’d add high-risk pools.
You say the mandate was developed as a way to avoid single-payer health care. As I see the evolution of this issue, Richard Nixon countered single-payer with an employer mandate, then Clinton co-opted the employer mandate and Republicans moved to an individual mandate, and then Obama co-opted the individual mandate. But there’s nowhere else to go, as far as I can tell. If the individual mandate dies, it seems to me that the eventual universal coverage solution will rely heavily on government programs — we’ll have single payer in fact even if we don’t have it in name.
I think there’s a slippery slope in that direction. I have mixed feelings about the mechanics of the current bill. Our idea was to have tax credits and very little additional government control over insurance markets, and the legislation has an awful lot of that. I believe you could achieve almost the same reduction of the uninsured with the subsidies and without the mandate. But CBO says that you leave about 40 percent of the uninsured population without coverage in that scenario. If we want to close that gap, then either we have to have a mandate or make insurance free for everyone and run by the government.
Interview By: Ezra Klein and posted in The Washington Post, February 1, 2011
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