Introduction
President Obama enacted the Affordable Care Act as a United States Federal statute in 2010. Together with the amendment to the reconciliation bill, it promised to expand health insurance to all citizens at a reasonable cost. PPACA defines the health care as neither the right nor privilege of people but it states that citizens, however, do have a right to “affordable” healthcare, which it tries to achieve through a partnership between the market and the government. The ACA is a result of an evolution of government-funded plans such as Medicare and Medicaid as well as statutes such as HIPAA, ERISA, and COBRA.
How was the ACA Created?
Throughout his election campaign, Barack Obama made universal healthcare a cornerstone of his presidential platform. Since it was Obama’s top domestic priority, he wanted to press forward with it early in his first term. Instead of having the executive draft the bill and introducing it in the Congress, as Clinton had done as part of his failed effort earlier, Obama laid out the broad principles and goals he wanted the bill to achieve and asked the wanted the Senate and House to come up with legislative details. The three Chairpersons of the house committees who had jurisdiction over healthcare, Education and Labor, Energy and Commerce, and Ways and Means, agreed to harmonize their efforts in drafting the legislation. They felt that this would avoid the turf wars that dogged Clinton’s healthcare reform efforts. In June, the Speaker of the House Nancy Pelosi released a discussion draft proposal. It included provisions for health insurance exchanges, public health insurance option, Medicaid cover expansion, the individual mandate, and mandate for employers with some exemptions. After a series of hearings, they introduced the House bill 3200 - America’s Affordable Health Choices Act of 2009. The bill was subsequently referred to a committee that the original three members Education and Labor, Energy and Commerce, and Ways and Means, as well as a committee on Oversight and Government Reform, and the committee on the Budget. The House later discharged these two committees from considering the bill.
Generally, when the Congressional debates and amendments follow a process called markup process it records them. However, the discussions about the Healthcare legislation lacked these as the House adopted a process that was mostly outside the markup process. Therefore, they did not record many amendments and waivers properly. Some of them were consumer protection provisions, waivers for Hawaii’s insurance program, Tricare, temporary hardship waivers for small businesses, and restrictions for abortion procedures, the last of which they curtailed. The Democrats on the Committee on Energy and Commerce were against the size and cost of the bill and after intense bargaining managed to win several changes in return for their votes. This resulted in a reduction in cost thereby limiting the public insurance plan and allowed private insurers could compete easily. The scaled down version of the Bill 2000 contained amendments for promoting good health behaviors, an approval process for generic drugs, and restrictions on premium increases.
The three versions of the House bill 3200 were on the floor of the House but waited for the Senate to produce its own bill. These three bills were kept waiting and a new bill was introduced to carry the House’s healthcare provisions to the next step. However, the legislators continued to work on amalgamating these three bills behind the scenes. The democrats introduced a new bill House bill 3962, the Affordable Health Care for America Act, a culmination of the negotiation between the factions of the democrats, on October 29, 2009. Similar to the earlier bill, it contained a public option, mandates for individuals and employers, Medicaid expansion, a surcharge on high incomes, negotiated Medicaid rates, and a straight 5.4% surcharge on taxpayers earning more than $1,000,000. It contained new sections revoking McCarran-Ferguson Act regarding antitrust exemption to insurance companies, and an excise tax on medical devices while still keeping unresolved the issue about covering abortion services. It was not referred to the committee for any review, not listed on the calendar, but was still called up on the house floor on November 7th just a couple of weeks after it was introduced using many agenda control procedures such as House Rules Committee Resolution, which lets a bills go ahead in the consideration. The rules resolution used here was House resolution 903, with both procedural and substantive components. This set out the procedural roadmap for the bill, waived all points of order, set a good amount of time for debate, and called for a vote once the debate ended. The procedural component restricted the debate and voting to two amendments only, one for prohibiting federal funding for abortion and the second contained Republican health care proposals. The substantive component had two components Part A, consisting of repealing the McCarran-Ferguson Act, and Part B. The House took up bill 3962 and passed it after four hours of debate by voting 220-215. The House sent the bill to the Senate later.
Traditionally, the Senate would send the House Bill to the committee for consideration and markup and it would have voted after the debate. If approved, the bill would go to the President for his signature or else the bill would go back to the house for concurrence or conference. While the House was drafting its health care bill, two Senate committees, the Committee on Health, Education, Labor and Pensions (HELP) and the Committee on Finance, were involved in producing its own version of the bill. Both the committees communicated with each other to enable producing a bill that would produce a merged bill and introduce it in the Senate. The first draft of the bill produced by HELP did not have a public option and HELP submitted the bill to the CBO for an estimation, which put the cost as one trillion USD and an increase in insured by 16 million people. Amendments made to the bill scaled back the subsidies included public option community health insurance option run by DHHS through exchanges so that the CBO can make more palatable estimates. In a period between June 17 and July 14, they made approximately 500 amendments during the markup and the Senate voted on it on July 15. However, the Senate did not report it until September 17 as Senate Bill 1679 - Affordable Health Choices Act. The Senate Finance Committee’s report took a long time and involved protracted discussions between Democratic Senators Max Baucus (Finance Committee Chairman), Jeff Bingaman, and Kent Conrad and three Republican senators Mike Enzi, Chuck Grassley, and Olympia Snowe. Baucus also discussed with the pharmaceutical industry on Whitehouse’s request, resulting in a deal between Baucus and Pharmaceutical industry, committing to make drugs more affordable for the elderly and making the reform less expensive, which saved about 80 billion USD. This was in return for a promise not to let the reform regulate the drug prices or importation of drugs from Canada. Similar deals negotiated with the hospitals resulted in a savings of 155 billion USD. After failed consultations between the six negotiators, Baucus ended the discussions and introduced the America’s Healthy Future Act of 2009 on September 9 and an amended version a week later. Committee markup began on September 22 and the members worked on 564 proposed amendments. The committee completed its work and the CBO its analysis and the full committee voted to report out the bill 1796 and its committee report on October 13.
After the Senate Committees introduced both the bills, Senator Majority Leader Harry Reid led the effort to merge both the bills. Senate allows a member to debate for hours without limit, introduce multiple amendments that are not even germane to the issue, and hence it is easy to filibuster a bill in Senate. The rule that has the greatest effect on the Senate proceedings, Rule XXII, governs cloture, which limits the debate to 30 hours, limits the amendments to the bill, and allows only those amendments germane to the legislation. However, to invoke cloture, a supermajority of 60 votes is required. Cloture is required twice for a bill to pass, once for closing the debate on the motion to call up the bill and the other to for closing the debate on the bill itself. Going into the elections 2008 elections, the Senate had 49-49 for Democrats and Republicans, with two independents (Joe Lieberman of Connecticut and Bernie Sanders of Vermont Joe Lieberman of Connecticut and Bernie Sanders of Vermont) caucusing with Democrats. After the elections, Democrats picked up eight more seats leaving them in a majority (57-41). Including the independents and with Pennsylvania Senator Arlen Spector changing parties, they attained the supermajority number 60, which existed for about four months, therefore giving them a safe majority in the House and a filibuster-proof supermajority in Senate. When Ted Kennedy of Massachusettes died, bringing them back to 59, Democrat Paul-Kirk became the interim senator to serve until the elections, bringing them back to the magic figure 60. Considering this situation, the bill had to have many compromises as even a single member could derail the process. It had a tax on Cadillac plans, less restrictive provision regarding abortion, and less punitive to those who did not obtain insurance. It had provisions to charge a fee on elective cosmetic surgeries, fees on insurance companies, medical device makers, and drug companies. It delayed the implementation to 2014 so that it was cheaper at 821 billion USD over what the House bill was supposed to cost (1.3 trillion USD). It would, however, leave more people uninsured but it would have a public option for those states that wanted to opt-out. Through a series of smart moves using the House Bills 3590 and 3962, the legislation was passed.
The House never referred the Bill 3962 to the Senate committee. The House bill 3590 was obsolete by the time Senator was blending the bills and the tax credits proposed by it were already part of another bill (Worker, Homeownership, and Business Assistance Act of 2009) passed and signed by the President two weeks earlier. Reid replaced the original text of the Bill 3590 and replaced it with the Reid Healthcare proposal, Senate Amendment 2786. On November 21, Reid invoked cloture successfully to move for a debate on Bill 3590. This bill proceeded on two tracks, one involving the traditional track involving floor debates and voting and processing 506 amendments and several universal consent agreements that govern the debate. This track completely unraveled when Republican Senator Tom Coburn resorted to delaying tactics. A second track consisting of negotiations between Senator Reid, the Whitehouse, and a group of ten senators (five liberals and five moderates) was going on separately. These included making some amendments to satisfy the moderates, which included dropping the public option to favor John Lieberman and Ben Nelson, rejecting a proposal to allow persons within the ages 55 and 64 to buy Medicare to favor John Lieberman, changing the elective cosmetic surgery to indoor tanning, limiting abortion coverage and others. Ultimately, Reid introduced the Amendment 3276 on December 19. Reid used three cloture motions to, one to close the discussion about Amendment 2786, one to close debate on the 3276 amendment and one on the amended 3590 bill itself. After the cloture, Reid presented amendment 3280 for committing in two days by Finance Committee, amendment 3281 to change the deadline to one day, 3282 to change it to immediately just to fill the amendment tree thereby limiting any further amendments, though it had no substantive value. The Senate Amendment 3276 passed on December 22, the amendment 2786 passed on 23, and the bill 3590 finally passed on December 24 and the bill was renamed Patient Protection and Affordable Care Act. The traditional route would be to call a conference committee but that needed to overcome contra-majoritarian rules and overcome attempts for filibustering. It was during this time that the election Republican Senator Scott Brown won the Massachusetts seat causing the Democrats to lose their filibuster-proof status in the senate.
The easiest solution available now was for the House to pass the Senate bill, but the House was not comfortable with some of the provisions or pass individual components of the bill separately. Since the Democrats considered that backing out now would be more expensive, went ahead with a complicated step of reconciliation, an optional deficit control step. Under reconciliation, the Senate debate is limited to 24 hours, it limits the type of amendments that the members can introduce, a simple majority is enough to pass, and the closing of the reconciliation bill is not a debatable motion. It is a most often used procedure with both the parties using it. Since the same bill has to go through both the Senate and the House as part of the reconciliation process, the Democrats negotiated a separate bill amending the 3590. The process was as follows. The House would receive the Senate Bill 3590 as passed would pass it, making the PPACA eligible for signature by the President. The House would then pass the reconciliation legislation amending the PPACA and send it to the Senate for a majority vote. Once signed, it would also go to the President for signature. Thus, the House created the amendment 4872, voted on it, and sent to the Senate, which passed it on March 25. However, there were two minor provisions related to a student loan that required being struck down and hence the bill reached the House again for approval, which was still in session for this contingency. After a 10 minutes debate, the bill was sent to the President. The President signed the Amendment bill into law.
The PPACA held provisions related to funding for abortions, which some of the democrats were not sure would be consistent with the Hyde Amendment, which banned federal funding for abortions. To dispel ambiguity, Obama issued an executive order. The ACA had one more step to clear, the judicial review. Vehement opposition to the act meant there were immediate challenges to the provisions of the act under constitutional grounds. Due to various decisions that the appellate and federal trial courts gave, it was inevitable that the Supreme Court make a decision. The court heard five and a half hours argument over three days discussing three issues, one issue per day. The issues heard were, whether the pre-enforcement action is possible under Anti-Injunction Act, whether the individual mandate was constitutional, and whether the individual mandate was severable from the rest of the law. The justices seemed to avoid discussing the procedural actions of the passage of the law and only concentrated on the aforementioned issues. The court reached its decision in June 2012, upholding the individual mandate but striking down the Medicaid expansion.
The Role of Public Opinion and Lobbying Groups
More than a 1750 companies and organizations hired 4525 lobbyists to influence the health care reform act, ACA. The organizations include giant corporations, small businesses, advocacy groups to corporations, religious groups, universities, and special interest groups. More than 200 hospitals, 100 insurance companies, and 85 manufacturing companies lobbied. Seeing the provisions of the final bill that lacked a robust government-run insurance program and reducing the effect of cost-cutting measures on health care companies means they have been very successful. Similarly, the public opinion was generally against the ACA according to some surveys, but that because most people did not understand all the provisions of the act and most did not like government dictating them to take a health insurance policy compulsorily. Due to this, there was a reduction in the penalties for noncompliance against individual mandate.
A Few Statistics about ACA Status
The following presents a few relevant statistics related to the ACA status currently as a comparison between 2016 and 2017.
Figure 1: Distribution of exchange enrolment by number of insurers in 2016 and potential distribution in 2017
Source: Kaiser Family Foundation
Figure 2: Number of insurers available for to enrollers in 2016 and potentially for 2017
Source: Kaiser Family Foundation
The Iron Triangle: Cost, Quality, and Access
The Efficacy of PPACA, according to the opponents of the act, is constrained by the iron triangle of health care: cost, access, and quality. For any given cost, the access and quality are inversely related. However, this depends on what one defines as quality if PPACA has to achieve a Pareto improvement of quality and access at a lower cost. By taking a closer look at the interventions that offer marginal benefit, no benefit, or sometimes are even harmful and reducing them, both cost reduction, as well as quality improvements, can be gained. The PPACA tries to do this by incentivizing the creation of infrastructure for evidence-based medicine, rewarding fewer interventions than more interventions, and improving knowledge sharing to reduce duplication of diagnosis and therapies.
In 2010, the projections made by the CBO stated that the enrolments over 2014 would be eight million with about seven million being eligible for subsidies. Others predicted differently, but CBO predictions were the closest to actuals, which was less than the estimated due to the slow ramp up. The enrolment reached eight million by the end of open enrolment period, only six million were through the marketplaces and about five million, or 87 percent, received subsidies. The Medicaid enrolment and the uninsured metrics are given in Figure 3.
Note: average enrollment calendar year in millions
Figure 3: Medicaid Enrolment and Uninsured in 2014
Source:
As on April 28, 2015, compared to 2010, there are still 35 million without insurance, 15 million fewer without insurance, 12 million more Medicaid enrollees, 11 million insured through the state or federal exchange, and 7.7 million are receiving subsidies. Figure 4 shows the improvement in access, which is reflected in the decrease in uninsured.
Figure 4: Uninsured rate before and after ACA implementation
Source:
Without an improvement in the infrastructure, since the ACA increases the total number of insured, the quality is bound to take a hit in the short term. Not only has it increased the number of patients seeking care, but it has also increased the administrative burden of the providers while providing care. This has led to delays in care and increased out-of-pocket expenditures (Figure 5). Since the bill does not provide for ways in which to increase the number of available physician workforce and might hasten the retirement of many physicians due to the drastic controls it enforces, this gap could increase more. More people might opt for lower tiered plans, thereby reducing the quality of health care.
Figure 5: Cost to plan holders
Source:
Impact of ACA on Medicaid and Medicare
The net expected Medicare savings for the fiscal years 2010-2019 are 541 billion USD. Productivity improvements, eliminate Medicare Improvement Fund, reduce disproportionate share, reduce Medicare advantage payments, freeze income thresholds for Medicare part B income-related premiums for nine years, strict Medicare expenditure growth rates implemented by the Independent Payment Advisory Boards, increase high-income payroll taxes, increasing part-D payments for high-income beneficiaries and other measures.
The expected total savings on Medicaid and CHIP provisions are 27 billion USD for the period 2010-2019 due to rebates for prescription drugs, an extension of statutory rebates to drugs, and reductions in Medicaid DSH expenditures, savings due to lower Medicare Part B premiums. The Medicaid community first option, however, will increase the costs.
Abbreviations Used
PPACA – Patient Protection and Affordable Care Act
HIPAA – Health Insurance Portability and Accountability Act
ERISA - Employee Retirement Income Security Act of 1974
COBRA - Consolidated Omnibus Budget Reconciliation Act of 1985
CBO – Congressional Budget Office
References
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