With compromise in the air on Capitol Hill during the holiday season, the stage is set for health care reform legislation passing the House and Senate before boardrooms across Corporate America wrestle with any unintended consequences.

The right concessions will greatly enhance the chance that an historic bill will be delivered sometime between the end of 2009 and Valentine’s Day, predicts Helen Darling, president of the National Business Group on Health in Washington, D.C., which represents about 280 large U.S. employers.

But history has shown that political goodwill can be easily squandered.

Henry J. Aaron, a senior fellow with the Brookings Institution’s economic studies program in Washington, D.C., likens the process to an emotional rollercoaster, with the lowest dip appearing to be at the end of August following a series of contentious town hall-style meetings where citizens feared a government takeover.

He notes that the smallest political defections are now considered sufficient enough to block action on health care reform (witness, for instance, independent Connecticut Sen. Joe Lieberman’s stance on a public option). “It is sort of like playing Russian roulette over and over again, praying that the loaded chamber will not be behind the pin,” Aaron observes.

Until recently, the best chance at finding any middle ground was to agree upon circumstances that would trigger a public option. Supporters of this approach have expressed concern about the extent to which a handful of health insurers have a dominant regional presence, with the American Medical Association identifying nine states in which two carriers have cornered 85% or more of the market and the Government Accountability Office saying insurers offering coverage to small businesses sealed 47% of state contracts in 2008, which was up significantly from 33% in 2002.

The scenario has since taken a back seat to the creation of a nonprofit private insurance option run by the U.S. Office of Personnel Management (OPM) that mirrors the Federal Employees Health Benefits Program (FEHBP). Accompanying that idea was a proposal expanding Medicare to people ages 55 to 64 for people who wanted to buy into the program. But Senate Democrats, who know they need 60 votes to pass any legislation, bowed to pressure from Republicans and Lieberman.

Darling believes employers would be comfortable with an FEHBP-type plan because it’s built on managed competition and supports the private sector. Concern about expanding Medicare was shifting costs onto private payers, which she says would have ended up paying the difference for roughly $89 billion in uncompensated care.

Robert Lyshevski, a health care consultant known for provocative blogs on health policy, has compared the OPM-run option to a unicorn.

“The point was that you need a network to be able to actually give people access to care, and if you crate a national plan like this, where are they going to put the network?” explains Ed Howard, executive vice president of the Alliance for Health Reform in Washington, D.C., a nonpartisan, nonprofit health policy education group on whose board of directors Lyshevski once served. “On the other hand, how did the national plans and the FEHBP operation put together a network? They must do it somehow.”

Aaron is adamant that the latest political compromises are mere distractions that do not matter much in the grand scheme of meaningful reform. He says squabbling over an alternative to mandating a public option will be “exceedingly limited” and will not “affect the course of health care spending or the reach of health insurance coverage in any but the most marginal ways.

“The things that really count,” he continues, “are subsidies, the way exchanges are organized, what sort of regulations the bills contain for the exchanges to administer, how much liberty the administration will have to implement successful pilots on a national or at least an extensive basis.”

Guest blogger Bruce Shutan is a former managing editor of Employee Benefit News and a freelance writer based in Los Angeles.

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