Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.
In contemplating the one-year delay in the Affordable Care Act’s employer penalty, I was reminded that the health care law is an awfully complicated piece of work.
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I’m a supporter of the bill, and someone who was working for the administration when health legislation was designed, so let’s be clear: the fact that it’s complex doesn’t mean its implementation is anything like the train wreck that conservative Republicans (and Max Baucus) like to call it.
In fact, as I read the recent report from the Government Accountability Office on setting up the state exchanges — the most complex part of the bill’s implementation — I’d say it’s proceeding apace despite train wreckers trying to derail it. I suspect most state exchanges will be up and running on Oct. 1 (the federal government is setting up and will operate most of them), and when you consider the magnitude of this challenge amid the blowback and underfunding of the effort, if I’m even close to correct, that will be a very impressive outcome.
But when the White House announced the delay in the employer penalty, a lot of people pointed out that had the United States gone with a single-payer, Medicare-for-all style system, it wouldn’t have had to futz around with Rube Goldberg policy structures like that in the illustration below from the Congressional Research Service on the employer penalty.
It’s a fair point, and one that took me back to my days of selling the bill out on Pebble Beach, that little strip of land next to the White House where television cameras film administration officials. A typical interview back then (2009-10) would usually involve a reporter asking me to defend the proposed reform and explain why the people should be for it. I cringe to think that I often started out by suggesting that it had the potential to “bend the cost curve” — i.e., slow the unsustainable growth of health costs.
Why cringe? Not because I was wrong — that was a major motivator and the law may already be showing some promise in that critical regard. The cringe is because very few listeners knew what to make of that assertion, and it certainly didn’t answer what they really wanted to know, which was, “How is this thing going to affect me and my family?”
That’s why being able to say the other line I recall using out there — “If you’re happy with your current coverage, this law won’t affect you at all” — was so important. And that’s also why we’re stuck with a lot more complexity than we’d like.
To understand why we are where we are with the Affordable Care Act, it’s useful to think about the concept of path dependency, meaning that where you end up is often a function of where you start out. And in the United States, we start out with an employer-based system. Though employers have been shedding coverage, about 58 percent Americans and their families are still covered through their job, down from 68 percent a decade ago (not counting older Americans). Perhaps more importantly, among those with private coverage, a group that the opposition was and is trying to scare about the impact of the law, about 90 percent are covered through their employer.
That’s the path we started on, and our judgment was that straying from that path would doom the bill. I suspect we were right. I can assure you that being able to hammer home that line about keeping what you have was very important and comforting for people to hear. Passing the law was in no small part about convincing a majority of passengers on an already rickety boat that they’d be better off if they threw a life preserver to the minority floundering in the water.
That doesn’t mean that what we ended up with is optimal. Certainly, the addition of a public, Medicarelike option within the health care exchanges would have been a good compromise, a way to stay on the path but branch off in a more progressive direction. But even without that, objective analysts score the bill as eventually covering millions of people and saving billions of dollars.
Could we have bucked path dependency? Must we continue to accommodate the employer-based system, not to mention the powerful insurance industry deeply embedded in America’s uniquely inefficient health care delivery system? Do we really need a bunch of separate health care exchanges?
Well, private insurers supported the law only when it looked as though they’d get to cover a lot more people, with many getting subsidized coverage. Though the coverage offered in the exchanges has to meet national standards, states will continue to regulate the insurers within their borders. (The state accommodations are particularly ironic, because deference to states run by arch conservatives is turning out to be a tough implementation barrier; according to G.A.O., 11 states say they lack “the authority to enforce or are not otherwise enforcing” the insurance market provisions of the Affordable Care Act. It’s starting to look like the euro zone out there.)
Perhaps my former colleagues and I lacked imagination, but in the case of health care, with large, risk-averse majorities worried about keeping what they had, powerful industries lining the existent path and a largely reactionary House of Representatives, it’s hard to imagine that we could have deviated from path dependency.
So as the implementation season proceeds and new delays and complications pop up, remember the rocky path we started on. I firmly believe that if we can fully carry out the Affordable Care Act — and I think we will — the path will become smoother. And that means the next round of reform will start from a better place.