On May 20, about a month after UnitedHealthcare, one of the country’s major health insurers, announced that it would pull out of Arizona’s exchanges, Rep. Ann Kirkpatrick wrote a letter asking for help. It was addressed to Health and Human Services Secretary Sylvia Mathews Burwell, and in her note Kirkpatrick, who had lost her seat in the Tea Party putsch of 2010 in no small part because of her vote in favor of health care reform, related her concern about the wobblier parts of Obamacare.
“I represent a sprawling, mostly rural district in Arizona,” wrote Kirkpatrick, the Democratic challenger for Sen. John McCain’s seat this November. “In several counties, United Healthcare is one of only two health insurance carriers selling marketplace plans.” After noting that the Affordable Care Act has “significantly dropped the uninsured rate in Arizona,” she addressed the problems it’s still facing. “[W]hat can we do to incentivize insurers to continue participation in the marketplace?” she asked. “How can we ensure that the people in these rural counties have sufficient choices in health care plans?”
The news in Arizona has only worsened since then. Blue Cross Blue Shield, which had been the only carrier submitting 2017 insurance plans for all of Arizona’s counties—at an average requested premium increase of 64.9 percent—pulled its options for Maricopa County, by far the state’s most populous, and the more rural Pinal County to its south, citing $185 million in losses in the state over two years.
And last Monday, Aetna, another of the country’s largest carriers, withdrew from markets in 11 of 15 states, including Arizona. Aetna, suddenly bearish on the sustainability of the exchanges where it had recently been so bullish, made the announcement not long after the Justice Department had challenged its merger with the carrier Humana. The timing of the move is now under major scrutiny. Whatever hardball tactics Aetna may or may not have been employing don’t change the fact that it was losing hundreds of millions of dollars on the exchanges (on a market cap of some $42 billion) and was seeking consolidation as a remedy. With Aetna and UnitedHealthcare out of the picture and Blue Cross paring back, the competition in much of Arizona, particularly its rural areas, will be sparse or nonexistent in 2017. And unless Blue Cross, sniffing out a monopolistic business opportunity, decides to re-enter, Pinal County will have no insurers offering plans on its exchanges.
Is Obamacare working? The question assumes a single national program. “There are, in some ways, 3,000 different ACAs playing out across the country, because it’s playing out very differently county by county,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. Some carriers, especially in denser areas, are able to broaden their risk pools and participate in flourishing exchanges, and some, usually the less brand-name ones that offer narrow-network plans at cheap cost, are making profits. Some 12.7 million people signed up for coverage through health exchanges in the 2016 open enrollment period, with many millions more covered under the law’s Medicaid expansion.
But it’s becoming clearer that the Affordable Care Act, for all its advances, is due for the sort of legislative maintenance that most major laws require after implementation. Two temporary federal programs, reinsurance and risk corridors, designed to cushion losses for insurers as they determined sustainable premium price points in new markets, expire in 2017 as the exchanges enter their fourth year of operation. Carriers serving sicker-than-expected pools or rural areas find that their options are either to sharply increase premiums or to leave the exchanges altogether. Average premium increase requests from insurers on the individual exchanges are well into the double digits across much of the country. And a Kaiser estimate in May projected the number of counties that could have a single exchange insurer in 2017 to be 664—70 percent of which are mostly rural—up from 225 in 2016. That number will increase following Aetna’s withdrawal and could reach roughly a quarter of all counties in the country. Alabama, Alaska, South Carolina, and Wyoming are set to have just one insurer offering coverage on their exchanges in 2017. Most of North Carolina, except for the Raleigh metropolitan region, will be down to one insurer as well.
One problem with legislative redress for Obamacare is that the legislators who are supposed to do the redressing seem less than eager to return to the front where not long ago they’d declared victory. The second problem is that, once again, the fight will almost certainly involve the public option.
You remember the public option, don’t you? It’s exhausting just to recall the debate. Despite the virtues of a government-offered health care plan that, with lower administrative costs, no profit expectations, and the bargaining power of the federal government, would compete aggressively alongside private plans, the debate over it was the scene of much garment-rending and commie-punching last time around. The public option’s ultimate exclusion from the ACA remains, at least in some flawed tellings, the biggest knife President Obama ever stuck in the back of the left. But now both Obama and Hillary Clinton have come out in support of a public option, and the Democratic caucus is not what it was in 2010.
“The book was really closed on health care reform issues since Obamacare passed,” said Adam Green, a co-founder of the Progressive Change Campaign Committee. The progressive pressure group, Green said, is considering a “big campaign on [the public option] very soon” and released a statement following Aetna’s announcement stressing the need for a public option. Obama and Clinton’s support for the issue, he said, reopened the book. “To have the two biggest figures in the Democratic Party calling for it and a clear villain”—Aetna—“the stars are aligned for a big campaign now.” But are the Democrats ready?
The ACA is undoubtedly a mixed bag, and mixed bags always make for terrible political discourse. Republicans wield each and every suboptimal data point about the Affordable Care Act’s implementation as concrete proof that the law has failed and must be repealed in full if the republic is to survive, but they offer no replacement plan that comes anywhere close to meeting the ACA’s coverage figures. In the meantime, they refuse to be party to any legislative improvements that might shore up the program and help their rural constituents.
Many Democrats, meanwhile, are content to hide behind Republican incoherence and nefariousness instead of confronting the shortcomings of their signature legislative achievement. When I spoke with Kirkpatrick in late June and asked what specific policy changes she would propose to prop up the exchanges, she couldn’t name any off the top of her head—though she did point to the letter to demonstrate that she was asking HHS for advisement. Instead she gave me the usual anecdotes about people she’s met whose lives were saved by the coverage they received under the ACA, and how the Republicans want to reverse all of that.
It’s not that she—or any of the other Democratic Senate candidates I reached out to asking about specific policy remedies they favor, to little response—isn’t aware of the problems or doesn’t care. (In a statement following Aetna’s departure, Kirkpatrick, for example, wrote that she would be “increasing pressure on the administration, state agencies and insurance companies to work together to find a solution.”) But they still largely see the public battle as a foundational one of protecting Obamacare’s existence against a Republican Party that hasn’t accepted its legitimacy. This is a reasonable position—as well as an excuse for ignoring both the law’s problems and certain politically inconvenient solutions. To reopen the book, for many of them, is to reinvite the fury of 2010 that helped end Democratic control of the House of Representatives and left Democrats with a bare majority in the Senate. And the law’s approval rating is still underwater.
All eyes now are on the 2017 open enrollment period that begins Nov. 1. The key question is how consumers will navigate the large projected premium increases, coupled, in many areas, with fewer options. “If open enrollment goes well and more people sign up, I expect a lot of these current concerns will fade,” Levitt said. “If enrollment for 2017 stagnates, it’s likely to trigger a debate about how to fix the law. And it’s not at all clear where that debate would go.” Republicans will be ready, as always, with their recommendation to toss the whole act. How will Democrats counter?
There is one Democratic figure who might be in office in 2017 who has treated the law’s shortcomings seriously and put together a bevy of health care proposals—and she happens to be the party’s presidential nominee.
In the beginning of the campaign, Hillary Clinton, too, suffered from the “everything is fine!” bug, going so far as to red-bait Sen. Bernie Sanders over his Medicare-for-all plan. Sanders’ specific proposal suffered from some fuzzy math. But he understood that though the ACA was a vast improvement on an untenable status quo, its flaws really were flaws, and it made little sense to avoid confronting them just because doing so would be a pain. One staple of Sanders’ events during the campaign was to ask members of his crowds to raise their hands if they were facing sharp premium increases, and then to say how large the increase was. There was never a shortage of volunteers.
Eventually Clinton put together a series of health care proposals. It wasn’t the overhaul Sanders wanted, but he gave his enthusiastic endorsement anyway. Clinton would add a Medicare “buy-in” option for those 55 and older, and she also committed to doubling the money for community health centers from the funding mark set in the original ACA, an important provision won by Sanders in 2009. She offered further inducement for states that haven’t already accepted the Medicaid expansion to do so and would grant the HHS secretary additional “authority to block or modify unreasonable health insurance premium rate increases,” increase resources for enrollment outreach, and expand existing exchange subsidies.
And yes, she’s also pledged to “pursue efforts to give Americans in every state in the country the choice of a public-option insurance plan.”
It’s unclear how high a public option, and the political fight that will come with it, ranks atop Clinton’s list of priorities. But if 2017 open enrollment goes poorly and more insurers flee the exchanges, the public option—which has always polled well—would be an obvious go-to solution for restoring competition. The idea doesn’t rely on hand-holding private insurers until they feel properly incentivized to perform their societal function. It is a direct delivery of health insurance plans to health insurances exchanges. “Health care markets will inevitably differ from region to region,” Jacob Hacker, the Yale professor and so-called “father of the public option,” wrote in Vox on Thursday, “but there’s no reason every one of the existing marketplaces couldn’t offer a Medicare-like plan—a plan that’s stable; a plan with predictable costs; a plan that gives patients a broad choice of providers just as Medicare does.” It would also save money—$158 billion over 10 years, according to a 2013 Congressional Budget Office estimate.
Progressives never gave up on the idea of the public option, even after efforts to include it in the original ACA fell short due to a combination of insurance industry pressure and red-state Democratic senators who were all afraid of being called communists and losing their seats if they supported it. (They were all called communists and lost their seats anyway.) That’s one version of the story, at least. The rise and fall of the public option is the subject of volumes and volumes of folklore, at least half of which seem to feature Rahm Emanuel (or Obama himself) in the role of the heavy, rapping his brass knuckles against the desk of any Democratic senator who entertained even a fleeting thought about government-sponsored health insurance. The truth, as best it’s been reconciled, is that while President Obama wanted a public option, what he wanted more was to keep industry and his own party’s senators at the table to push a law through. The public option was tradable. “They wanted to keep those stakeholders in the room,” former Sen. Tom Daschle, who played a behind-the-scenes role in the crafting and passage of the ACA, recalled in a 2010 interview, “and this was the price some thought they had to pay.”
Industry pressure manifested itself through a handful of conservative Democratic senators, all of whose votes were needed to break a filibuster. Sens. Ben Nelson, Blanche Lincoln, Mary Landrieu, Evan Bayh, and others all had their own beefs with the public option, along with other state-specific concerns that were addressed through a series of controversial carve-outs. If one senator in particular deserved “credit” for killing the public option, though, it was Joe Lieberman of Connecticut, the home of Yale University, the Bush dynasty, the original hamburger, and the insurance giants Aetna and Cigna.
“The last bargain was with Joe Lieberman,” journalist Steven Brill wrote in his 2015 history of the health care reform battle, America’s Bitter Pill. “The Connecticut senator finally got rid of the public option, including a version that allowed individual states to choose to implement it or not.” (Much is made of the public option in the bill that emerged from the House—perhaps too much. In truth it was a half-a-loaf plan that the Congressional Budget Office reckoned would have premiums “somewhat higher” than those of private insurers, not to mention an unhealthier pool of enrollees.) Lieberman was also responsible for the death of another provision that Hillary Clinton has reintroduced this year in her health care plan: the Medicare buy-in for those ages 55 and older.
Joe Lieberman is no longer a senator. And with the big-ticket exits of UnitedHealthcare, Humana, and now Aetna from so many exchanges, along with the collapse of nonprofit health insurance co-ops across the country, the talk of a nonprofit, government-sponsored health insurance option has been rekindled.
The most prominent endorsement of new efforts to pass a public option came in the academic Journal of the American Medical Association this summer from author “Barack Obama, JD.” “The public plan did not make it into the final legislation,” Obama wrote. “Now, based on experience with the ACA, I think Congress should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited.” It was quite a pivot from the president who could turn snippy when pressed by progressives about the public option’s omission.
The main problem with Clinton’s plans for a public option, or any other legislative patches to the ACA, or any other legislative patches to anything—the problem with passing legislation, is the point—would be congressional gridlock. But it won’t even get to the point of gridlock and crushed dreams if there’s not enough of an appetite within the Democratic caucus even to try. In a piece last week, Bloomberg’s Jonathan Bernstein surveyed 11 candidates “most likely to become new Democratic senators in 2017.” Only six of the 11 “had a ‘health care’ section on their websites.” Only one, Chris Van Hollen of Maryland, “mentions support for a public option on the issues section of his campaign website.”
“This is the major option I’m pursuing,” Van Hollen told Slate when asked for legislative remedies to the lack of competition. He supported the public option in the original Obamacare fight, and he supports it now. “The whole purpose of having the public option in the first place was to, number one, create competition in the exchanges and, two, to ensure that there were insurance providers in every market.”
Van Hollen, from deep-blue Maryland, is as close to a lock in his Senate race as any Democrat this year. He has some room to stretch out his arms. The enthusiasm for a public option among those in closer races in purple states, though, is far more muted.
When I asked the campaign of Deborah Ross, the North Carolina Democratic Senate candidate seeking to unseat Sen. Richard Burr, whether she would support a public option in light of the limited insurance options in her state, she changed the subject. “I am not for a single payer system, but I do want to improve the ACA by giving consumers more options,” she said in a statement. I am not a communist. I believe it would be bad to move from a private health insurance market to a Medicare-like system. “Moreover,” she continued, “the willingness of Aetna and other insurance companies to abandon folks who need health insurance coverage is just another reason it's a bad idea to give Medicare away to the insurance companies like Senator Burr has proposed.” But I also believe it would be bad to move Medicare to a private health insurance market. The Democratic Senate campaigns of Katie McGinty in Pennsylvania and Kirkpatrick in Arizona did not respond to inquiries about support for the public option. And the Florida Senate campaign of Rep. Patrick Murphy was unwilling to commit to a position on the public option now, even though he did support one during his first House race in 2012.
A lot of politicians are just getting reacquainted with the issue and will have to properly “digest” it now as it’s re-emerging, Adam Green said. “Since 2010, whenever somebody tried to bring up the public option in D.C. Democratic circles,” he said, “the answer was, ‘Yeah, we support that, but first we’ve got to defend Obamacare.’ And now we’ve done that, and now we’re ready to move on.”
The best argument against pursuing a public option is that it would be a waste of legislative time and capital, since there’s no way it would pass Speaker Paul Ryan’s House of Representatives (assuming that Republicans are able to hold the chamber this fall). “The public option was a good idea in 2009, and it’s a still a good idea today. [But] I don’t know that the politics have changed at all on it,” Sen. Chris Murphy of Connecticut—who replaced Lieberman in 2013—told the Hill last week.
It’s true that passage of a public plan, at least in the near future, would be almost impossible. It’s hard enough to pass anything, and especially hard to pass something on which even the faintest traces of socialism can be detected.
But even a strong push for a public option can be useful. If fixing the Affordable Care Act reaches the congressional docket with some urgency, it can serve as a central piece of Democrats’ opening offer that eventually gives way to other compromise solutions. Republicans en masse won’t abandon their desire to eliminate the act. But with a new Democratic president beginning a term, it might be possible to peel off some Republican members of Congress who recognize that the law isn’t going anywhere, so why not improve on it in the meantime for their rural constituents? That may come in the form of increased exchange subsidies for families, doubled subsidies for community health centers, or a reauthorization of the reinsurance program.
For Republicans, the health care wars never paused. Whether Democrats like it or not, and for all the good the Affordable Care Act has done for the sizable majority of its enrollees, Obamacare’s holes are being exposed, and Republicans are more than ready to fill them with the narrative that the law is beyond repair. If Democrats don’t rally around any ideas for a fix out of a craven wish not to summon the ghosts of 2010, the GOP will have succeeded in weaponizing its opponents’ political fear against their greatest accomplishment.