Obamacare Is Here To Stay, So Let’s Fix It

The good news is that, at long last, a serious adult conversation has begun on how to improve the Affordable Care Act (ACA). The bad news is that conversation will not lead to action until ACA opponents recognize that it is here to stay and join in helping to make it work better.

And the Affordable Care Act-call it Obamacare, if you must – is here to stay. Until he leaves office in 2017, President Obama would surely veto any effort to repeal or significantly weaken the major domestic achievement of his administration. There is no chance that a closely divided Senate would agree to override his veto. By 2017 the Congressional Budget Office estimates that 37 million people will have received health insurance coverage because of the ACA. Even die-hard ACA opponents will at some point conclude that it is better to improve the law than to snatch coverage from so many people. Besides, polls indicate majority support for most of the major elements of the health law.

Unfortunately, immediate prospects for action are nil. Most opponents of the ACA continue to focus on its repeal. Because they control the House, action to improve the ACA is impossible. Meanwhile, however, supporters of the ACA have started to think about ways to amend what even the staunchest advocates acknowledge is a complicated and imperfect law. Here are two changes that merit consideration.

The first is a straightforward fix to a drafting error that excludes many working families from access to the tax credits that help make insurance affordable. The ACA requires people to carry health insurance, but only if premiums cost less than 9.5 percent of income. That condition is satisfied for employed single workers if employers offer coverage and if premiums cost workers less than 9.5 percent of income. In that event, employees can accept their employers’ offers or buy insurance on their own, but they are not eligible for tax credits through the health exchanges. This provision works just fine for single workers, but does not work for families. And then families are also ineligible for tax credits through the exchanges if the premium for coverage of single workers under the same plan costs less than 9.5 percent of income. This is the case even though premiums for family coverage are typically much higher than those for single workers. That provision makes no sense, and fixing it is technically easy. It is, alas, politically impossible as long as one house of Congress keeps insisting on repeal.

The second issue concerns the so-called employer ‘mandate.’ That is the requirement that businesses with 50 or more employees provide offer their employees ‘affordable’ health insurance or pay a tax if they don’t. Law professor Tim Jost, perhaps the nation’s leading legal expert on the workings of Obamacare and a powerful advocate for the law, has argued that it would be desirable on balance to drop this provision.

His reasoning is straightforward. Most employers already provide coverage that meets, or, with small adjustments, could meet federal requirements. Two recent studies present estimates that dropping the financial penalties on businesses that fail to meet the requirements would have a negligible effect on employer behavior. Figuring out how to enforce these penalties is proving so challenging that the federal government delayed implementation until next year. Furthermore, the requirement is backed up by on/off penalties that are hard to administer and may distort behavior. It applies only to workers employed 30 hours per week or more and is imposed only on employers with 50 or more employees. These sharp thresholds may cause some employers not to hire additional employees, or to extend the hours of part-time workers.

David Blumenthal, president of the Commonwealth Fund, and his colleague David Squires warn that abandoning the employer mandate would betray a core principle of the ACA – that everyone shares responsibility for assuring universal coverage. They note estimates that show dropping the mandate would negligibly affect employer behavior could be wrong. Many employers provide health insurance now not because they really want to be bothered with it but because there is a strong norm that ‘good’ employers provide health insurance. Many employers with comparatively low-wage work forces, who could qualify for tax credits through the health exchanges, may conclude that they and their employees could be better off if they dropped coverage. As more and more employers make such a decision, current norms of what good employers do would erode — no small matter as half of all Americans now receive health insurance through work. Go slow, say Blumenthal and Squires. Convert the mandate from a sharp on/off penalty into a one that ramps up gradually. See if the mandate can be made to work, they urge. Then, decide.

The debate between Jost and Blumenthal-Squires is a splendid example of adult discussion about how to make the ACA work better. Alas, the conversation is taking place on the Internet, not in Congress, and primarily among supporters of the ACA, because many opponents of the ACA remain unwilling to help improve a law they initially opposed. It would be helpful if ACA opponents recalled that most Republicans voted not to enact Social Security, but that program became law; and it was a conservative president, Ronald Reagan, who signed legislation to restore that program to financial health. Most Republicans also opposed Medicare, but a Republican president George W. Bush voted to extend Medicare benefits to prescription drugs. Republicans opposed the ACA and they are wholly within their rights to continue that opposition. But the law was passed by Congress, signed by the president, and its constitutionality was affirmed by the Supreme Court. One hopes that the day soon will come when, in the tradition of Reagan and Bush, they will join in helping to improve the operation of a law they once opposed.