The hope of health reformers, myself included, is that putting the Affordable Care Act into place will resemble the end of “It’s a Wonderful Life.” After a bumpy transition, everything will be just as it was but better. Zuzu’s petals will be in our pockets, and the whole neighborhood will have shown up to help those in need.
This happy ending would be virtually guaranteed if Congress had passed the law Democrats originally introduced. The wild political process that created the law, though, led to the weakening of the supports that help keep the current system in place. So the future is uncertain, and we need to be extremely careful about the decisions we make if we want to fulfill the promise of reform.
In particular, the penalties designed to encourage individuals and employers to retain their health insurance are only a small fraction of the cost of purchasing or providing insurance. So the system is unstable. And by allowing states to opt out of the Medicaid expansion, the U.S. Supreme Court did not deliver a death blow to reform, but it did create an environment in which states are headed in diametrically different directions as they implement the law. This also contributes to instability.
Due to our size and rapid action on reform, the decisions that California makes will help influence the entire nation’s course. One of the biggest questions is whether the result of the Affordable Care Act will be more public or private coverage.
States are taking radically different approaches that would have substantially different outcomes in this regard. Some states have asked the federal government to use money that would otherwise expand their states’ Medicaid programs to pay instead for private coverage for working-class families. California has been considering a number of options that could move the state in the opposite direction.
A bill being debated in the Capitol would create “Medicaid bridge plans” within Covered California, the state’s new marketplace for insurance. The advantage of this proposal is that it would allow people to keep the same insurance plan and health care providers as their income increased above the Medicaid threshold. If it is very narrowly tailored, therefore, this program could be very beneficial for some Californians, such as many farmworkers, who perennially churn in and out of Medi-Cal, our state’s Medicaid program for low-income people.
The disadvantage is that, without reasonable limits on the time one can remain on the Medicaid bridge, it could lock millions of Californians into Medi-Cal. These people would have otherwise moved up into private coverage, which is generally of higher quality than Medi-Cal and provides much better access to a broader set of doctors and hospitals.
This locking effect is created since people’s subsidies from the federal government are reduced if they have access to a cheaper bridge plan. The bridge plan, therefore, could become a “bridge to nowhere” since it would make commercial coverage prohibitively expensive. This would result in a significant expansion of public coverage through the Medi-Cal program.
This isn’t just an issue for people trying to move up into private coverage. Medi-Cal substantially underpays providers. So doctors and hospitals increase rates charged to private insurers. This shifts the burden onto businesses that have continued to struggle with spiraling health care costs. The current “cost shift” amounts to a 30 percent surcharge on the cost of commercial coverage; this contributes to an unhealthy business environment.
There is still hope that the law will usher in a vastly more humane and sane system for health care coverage and access that helps those in need without hurting those who value their current coverage. It will do this if it strengthens the vital safety net provided by Medi-Cal, which cares for those in need while helping most people purchase private coverage.
The future is uncertain, but we are in control of our fate. We have to keep paying attention and making the right choices if we want to end up with the wonderful life that reformers envisioned.
Micah Weinberg, CEO Healthy Systems Project for The Sacramento Bee