Saturday, July 15, 2017

Examining the defenses of the Affordable Care Act

Four years ago this month, President Obama rather humbly stated of the Affordable Care Act, “And me just making more speeches explaining it in and of itself won’t do it. The test of this is going to be is it working. And if it works, it will be pretty darn popular.”

Is it working? Is it popular?

Even before President Obama left office, there had already been many administrative, legislative, and judicial changes to the Affordable Care Act (P.L. 111-148) with some parts repealed entirely such as the 1099 reporting requirement and the CLASS Act. Congress attempted to repeal the law in whole or in part many times while President Obama was still in office.

After another four years of this law being on the books we have additional indicators of ACA's effectiveness and popularity. One of the most obvious is President Obama was succeeded by President Trump whose election platform included repealing the law. This year, 2017, Congress and the President have been attempting to make good on those promises to repeal the remaining parts of the Affordable Care Act, some of which still remain to go into effect as late as 2020.

What remains of the Affordable Care Act? Defenders of the law would rather not answer that question in detail, and would instead rather discuss the law as a single entity. That way they can tout any “successes” as threatened by efforts to repeal President Obama's “signature domestic achievement.” Parts of it have indeed been popular making single efforts at repeal politically difficult. As long as they get away with treating ACA as a single sacred entity, this strategy can expect continued success.

Truth be told, the 2,000-plus pages of the Affordable Care Act include a lot of moving parts. The name of the law itself is instructive for how to break down the parts of the law. It's the Affordable Care Act. An assumption of ACA proponents was some people found health care affordable, some did not, and the law should correct that. Another assumption was policymakers could determine if people found health care affordable by if they had health insurance or not. Bypassing whether these assumptions have merit, we can still evaluate if the law is working based on its own premises.

Before ACA, in terms of socioeconomic strata, federal health policy divided the population into two segments:
  1. The poor, those up to 100 percent of the federal poverty level (FPL)
  2. Everyone above the federal poverty level.
Medicaid was started in the 1960's to provide health care for the poor.

After ACA, federal health policy divides the population into three segments:
  1. The poor, those up to 133 percent of the federal poverty level.
  2. The middle class, those from 133 to 400 percent of the federal poverty level.
  3. Everyone above 400 percent of the federal poverty level.
For that first group, that higher number from 100 to 133 is what is known as the “Medicaid expansion.” In upholding ACA, the Supreme Court decided states could not be compelled to expand Medicaid and opened the door to a new controversy and dividing line among states.

For that second group, this is what the ACA exchanges or “marketplaces” are all about. ACA provides subsidies on one's federal income taxes to buy private health insurance that were intended to gradually diminish the closer one gets to 400 percent of the federal poverty level. (400 percent is another way of saying four times, and as an example, a family of four making four times the federal poverty level is one making approximately $80,000 per year. The assumption in ACA is a family of four making less than that needs federal assistance to buy health insurance.)

These policies were intended to increase the “insured rate,” the percentage of Americans with health insurance. In terms of a single raw final percentage number, the insured rate is higher after enactment of the ACA than before. How, then, did a president and Congress get elected on repealing the Affordable Care Act? Did the insured rate improve because of these policies? Which of ACA's socioeconomic groups is now finding insurance more affordable?

Public Insurance Up

Most of the increase in the insured rate is a result of increased enrollment in Medicaid. While this is in part due to the expansion, there is also a provision in the law where anyone seeking private insurance on the exchanges is instead automatically enrolled in public insurance through Medicaid if they qualified for Medicaid. This includes any American who did not think of themselves as poor or entitled to free health care but applied for subsidies to comply with ACA's requirement to purchase private health insurance. While they may think their new-found Medicaid coverage is a result of the Medicaid expansion, they may have been covered before ACA anyway because they were technically under 100 percent of the federal poverty level. Important point: If the Affordable Care Act were repealed tomorrow, those under 100 percent FPL would still have health insurance through Medicaid even if they didn't have it before ACA was enacted. This begs the question, Even among ACA's supposed successes, how many people would not lose insurance if ACA was repealed? Has ACA been a really expensive and complicated Medicaid promotion program?

(For those earning between 100 and 133 percent of the federal poverty level in states that did not expand Medicaid, they do not qualify for any subsidies, the same as those earning more than 400 percent of the federal poverty level. Though income levels tend to fluctuate for the poor, assuming they want to get health insurance, to the extent that their income is stable they can explore options to either increase their income to qualify for subsidies or reduce their income to qualify for Medicaid. It would be informative to know how many people in that gap were there the year before or would be there the following year.)

The Medicaid expansion is indeed proving popular. When Affordable Care Act proponents declared ACA would be as popular (and intractable) as Social Security, Medicare, and Medicaid, when it comes to the Medicaid expansion, they were correct. The impact of Affordable Care Act repeal on Medicaid is proving to be a potent sticking point, especially for senators from states that expanded it.

Private Insurance Down

How's the Affordable Care Act working out for those between 133 percent and 400 percent of poverty purchasing private insurance? This is where the rubber meets the road with voters. Just because the Supreme Court decided it's constitutional for Congress to mandate Americans make a particular purchase, doesn't mean the idea is popular with the American people. Even so, their insured rate has actually gone down. Private health insurance rates have declined since the Affordable Care was enacted. Enrollment is “at less than half the initial forecast,” according to The Washington Post. Of the things that make the Affordable Care Act politically popular, some are also accelerating its decline: drive up the costs, and the policy will drive people away.

Take the ban on lifetime caps, for instance. If someone gets sick with a life-threatening illness, who wouldn't want unlimited resources to fight to stay alive? The question must be asked in the context of people providing that care. What happens to prices when providers know someone has to pay whatever they charge? What happens to insurers when they're mandated to pay unlimited amounts? Their policies become increasingly expensive, valuable to a few and decreasingly valuable to many. As ACA policy variables put pressure on the diminishing ratio of the insured to the sick, insurance companies abandon what become unsustainable markets.

Eventually a limit will come from somewhere. The laws of supply and demand still apply. We just have to ask ourselves, who do we want making that call? Whoever pays has control. If the limit is not objective such as a monetary-based million-dollar cap, then on what basis will limits be imposed? This is what “population medicine” is all about: subdividing the people into health groups, determining value, success expectations, etc. The same questions asked for an individual have, by nature, very different answers when asked about a population.

Especially egregious among ACA's mandates for private insurance are those that require violations of conscience. Within the scope of the minimum essential benefits as prescribed under ACA, the Obama Administration required all private health insurance policies to cover all forms of what had been deemed “contraception” including some forms that can be considered to cause abortion since they prevent implantation of a fertilized embryo. Is that consent of the governed? This was not an insignificant motivator when it came to mobilizing evangelical voters against the Affordable Care Act.


There are several options for undoing damage of the Affordable Care Act. While pursuing them, some mistakes have been made along the way.

First, it is instructive to note how this law and these policies came to be. There were three steps:
  1. The original ACA law was passed (P.L. 111-148).
  2. A second reconciliation law was passed (P.L. 111-152).
  3. The Obama Administration implemented policies and regulations.
When the Affordable Care Act was passed, it needed and had 60 votes to overcome any filibuster in the Senate. However, Senator Kennedy passed away, thus removing any options in the Senate to make any changes to what they passed on Christmas Eve 2009. The final legislative framework for the policy was put in place with a budget reconciliation bill that only needed a simple majority to pass. From there implementation became a matter of health policy regulation as implemented by the executive branch under President Obama and HHS Secretary Kathleen Sebelius. (Noteworthy in the text of the Affordable Care Act is how much power was transferred directly to the Secretary of Health and Human Services to make determinations about policies. “Secretary” is mentioned 3,267 times in the law. The contraception mandate, for instance, was never passed by Congress, but was entirely the making of the Obama Administration.)

The same three components of enacting the law have been part of the plan for repealing the law, though in a different order.
  1. Reconciliation.
  2. Trump Administration relief.
  3. Full repeal.

Reconciliation has one big advantage, and two disadvantages. The advantage is it only needs a simple majority to pass as it is not subject to a filibuster. The disadvantages are it is limited to budgetary changes and there's only one budget bill per year. No matter how it's variables are fine-tuned, it's a useful tool, and it's not a legislative vehicle for repeal. It's results can feel like repeal, though. For instance, Congress cannot use reconciliation to repeal the individual mandate penalties, but it can use reconciliation to set those penalties to $0.00. It is useful for neutering or defanging a particular piece of legislation. That lasts as long as no other budget reconciliation bill changes those numbers again. Don't call it “repeal” as that could lead to over-promising and under-delivering. It's an appropriate tool for rolling back legislative overreach until a more convincing electoral argument can be made for full repeal.

vote on full repeal could be valuable no matter how it turns out. Falling short of the 60 votes needed in the Senate could help build the necessary political capital to push through separate legislative efforts.

The Democrats have so far succeeded in staying united in defense of ACA as a whole while dividing its opposition with nothing more than a single question: “With what will you replace the Affordable Care Act?” The question is asked on the assumption that if something works better, they'd be in favor of it. President Obama has said as much.

This is where it helps to divide the question by ACA's own groupings. If the goal is to make coverage more affordable, is it working for its various groups as intended? If that question is not asked separately for each grouping, the law remains intact as a single unit with one part of it rhetorically and politically coming to the rescue of another.


Regarding the Medicaid expansion, it's hard to argue with “free” money, particularly in this political environment, though there is a case to be made.

What about those earning from 133 to 400 percent of poverty? In general, for whom is coverage more affordable? The assumption is those making more money. Go a step further. Who do higher earners tend to be? Older people. Now ask, For whom is coverage more necessary? Generally, older people. If wealth tends to accrue in old age as do health problems, are these redistribution efforts really accomplishing anything? The Affordable Care Act is intended to funnel more income from the those with established careers and higher incomes into the insurance system than from the poor. ACA is funneling away even more income from older people with more vulnerable health than from younger people.

The Affordable Care Act includes a provision intended to address the age disparity factor, supposedly to limit how much more the older get charged. Through its age band rating or community rating policy ACA specifically mandates that premiums for those approaching Medicare years cannot exceed any more than three times the premiums for a young person. And young people don't have to pay much, right? The problem is, this policy does nothing to reduce the cost of care for older policyholders. If those costs stay about the same, then then the net result is a policy working in reverse, mandating a higher minimum premium from younger people. Mathematically its the same thing: If Z is no more than 3 times X, then X is also no less than one third of Z. That's basic algebra. The net result is the cost of premiums for young people is unnaturally high. A more natural ratio for younger to older care is one to five and maybe even as wide as one to seven. Given the numerical nature of that policy difference, it could be a candidate for passage in a reconciliation bill. For those young people that are able to overcome the increased costs, they put additional unnecessary strain on limited health care resources since they want to use it if they've “paid more for it,” even if they don't need it.

The individual mandate was intended to help overcome these barriers, but it's ineffective. One thing Congress could do to help make the case for its repeal—and to mitigate harmful effects listed in a budget forecast—is to introduce and score separate legislation that does nothing but repeal the individual mandate. That way, when a CBO score on a reconciliation bill says X million will lose insurance, then when it says dropping the individual mandate means Y million will lose insurance, Congress can say “Well, so many Y of the X number is from the individual mandate,” and the numbers become less concerning. It helps isolate that point that some of the people “losing” health insurance are doing so by choice.


For as many problems as ACA has, Congress' attempts to tackle them all at once is not yet meeting success commensurate with its electoral mandate. Attempting to repeal the whole law all at once is difficult so long as any popular provision of the law can be used to come to the defense of any other part of the law being repealed. A more effective course of action may be to repeal by continuing previous success of dismantling in pieces. Could that be seen as abandoning a huge political promise to repeal the bill outright? Of course. So vote on repeal. Let the Democrats filibuster that. Yes, with a willing President in the White House, Congress is now taking aim at the Affordable Care Act with live fire. Whatever it passes could become law. That is correctly motivating additional careful consideration. Republicans fearing a Medicaid expansion repeal under those circumstances are fearing a paper tiger because there's no way the Democrats would let a full repeal bill pass.

Once Congress is ready to continue repeal of the Affordable Care Act in pieces, tackle the more vulnerable parts. It's already been repealed in part. Keep going. Keep at it. That's harder to defend against when problematic provisions are under the microscope in isolation.

Given that we're currently on the reconciliation step in the repeal plan with its unique limitations and advantages, there's still some possibility of combining repeal of some provisions that are more vulnerable than others. Get as much as you can with that, and then move on. If it's necessary to jettison Medicaid expansion repeal for the time being, that may be a tough but necessary pill to swallow. Not all of the rise in Medicaid enrollment is from the expansion anyway. Another option may be to trade lowering the top subsidy threshold from 133 to 100 percent of the federal poverty level for full Medicaid expansion repeal. There are a lot of options if one is committed to making and accepting incremental progress in some form.

Some in Congress, like Rand Paul, seem to be confusing the reconciliation step with the full repeal step. He has said this reconciliation bill “does not repeal” the Affordable Care Act. If this is indeed the first of several steps toward full repeal, then his concern is misplaced. If Congress is indeed treating this as the only attempt at full repeal, and afterwards moves on to “bipartisan” efforts to fix the Affordable Care Act, then his concern is more justified. How well he reads his colleague from Kentucky, the Senate majority leader, remains to be seen.

Whether these changes to the law are portrayed as repeal of, or fixes to, the Affordable Care Act is largely a political question and a question of pride for both sides. Until various provisions of the Affordable Care Act are repealed, their actuarial headwinds remain unavoidable. Our resources are limited. It's not just about the money, though. On a deeper level, we still need to ask ourselves deeper questions. Which values are we pursuing? Is my access to someone else's resources limited? How are government intervention and tax policy maneuvers working out in our health care system? Do we consider if government action could be making things worse? How would we check for that?

Trump Administration

As already mentioned, ACA gives substantial power to the Secretary of Health and Human Services to set policy. Technically, there's nothing stopping the Trump Administration and Secretary Price from pursuing these options right now. (Some steps have already been taken, and no doubt further drafting is already taking place behind the scenes.) The President seems motivated, too. The Administration is waiting, though, because it wants to get as much as it can from Congress first in a more permanent statutory manner, before implementing more temporary policies that can be changed from one Administration to the next. If Congress fails to act altogether on repeal, there's still plenty the Trump Administration can do to change the law.

One of the better ways to handle this power is not to put in place a conservative counterpart to liberal policies, but to zero out the use of these powers as much as possible. That would better make the case for repeal and why the power is unnecessary and should be removed. The Senate minority has already settled on the idea of calling this “sabotage,” but it's fully 100 percent within the scope of power this law gives to any Administration.

Full Repeal

There are some in the health freedom movement who would prefer the Senate go full nuclear and abolish the filibuster altogether so we can repeal it now. As attractive as that result would be in some respects, that also raises questions.

Is it really time for that? Is the Republic that endangered by the Affordable Care Act? Maybe. The conditions are ripening to where that question could be convincingly answered in the affirmative. That's not the only thing that would change, though.

Further, would that really ensure enduring repeal? What if that just made it easier to pass another Affordable Care Act the next time the Democrats controlled both legislative and executive branches of the federal government? What else would the Senate pass with less restraint than it has now? Bad policy has been stopped because one senator was allowed to stand up and say, “No.” The Democrats liked to claim it took them 100 years to pass this health care law. Do we really want to reduce that barrier to 10?

It would be better to either get the super-majority needed to repeal ACA, or convince enough senators of whichever party that the law needs to go. In the meantime, there are actions worth taking for both Congress and the Trump Administration.

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