#1 Obamacare and the Hidden Public Option: Crowding Out Private Coverage11-12-2012, 05:26 PM
By Robert E. Moffit, Ph.D.
January 18, 2011
Under the Patient Protection and Affordable Care Act (PPACA), the federal government, through the Office of Personnel Management (OPM), is legally required to sponsor at least two national health insurance plans beginning in 2014. These OPM-sponsored plans would automatically be eligible to compete against private health insurance offered in the new health insurance exchanges to be established in every state.
Under Section 1334(a), the director of OPM, the agency that runs the federal civil service, is to contract with selected health insurers to offer “multi-State qualified health plans through each Exchange in each State.”
The OPM-sponsored plans must meet the minimum benefits package, the rating and coverage rules as specified elsewhere in Title I, and state licensure and other state health insurance requirements that are “not inconsistent” with PPACA. Otherwise, in contracting with these selected insurers, the director of OPM, with a few qualifications, is to replicate the contractual authority over the multi-state plans that he currently exercises in administering the Federal Employees Health Benefits Program (FEHBP) under chapter 89 of Title V of the U.S. Code. Under Section 1334(a)(4) of the new law, it is clear that the director “shall implement this subsection in a manner similar to the manner in which the Director implements the contracting provisions” with carriers in the FEHBP.
Under Section 1334(a)(4), OPM is required to negotiate certain items with these selected plans: specifically, their medical loss ratio, their profit margins, and the premiums they will offer in the health insurance exchanges in the states. In the conduct of these negotiations, the director of OPM is also authorized to consider “such other terms and conditions of coverage as are in the interests of the enrollees in such plans.”
For purposes of competition in the exchanges, Section 1334(d) provides that the government multi-state plans are “deemed” certified for participation in the health insurance exchanges. The OPM-sponsored health plans would thus not be subject to the same certification or qualification processes that are outlined for private health plans for competition in the health insurance exchanges established under Section 1311. OPM-sponsored plans are thus “qualified” plans, pre-ordained in statute and defined solely by OPM.
Under Section 1334(e), there is another crucial exception to the rules that apply to private health insurance plans: Notwithstanding requirements to meet state licensure and other obligations—such as financial or solvency requirements for health insurance—the director of OPM can enter into a contract with a multi-state plan if the insurer offers the plan in at least 60 percent of all the states in the first year, 70 percent in the second, and 85 percent in the third. This would obviously favor certain large insurance companies, assuming they enter into contract to deliver the OPM product, though it would not necessarily contribute to the Obama Administration’s stated policy goal of securing lower costs. Apparently, OPM-sponsored health plans, depending on their capacity to expand geographically, would be able to bypass state financial and solvency requirements.
The director of OPM has broad authority to contract with health plans competing for the business of federal employees and retirees in the FEHBP. Under PPACA, OPM’s role is expanded to sponsor a new set of health plans that compete against all other private health plans. This is a very different role for OPM, the federal government’s personnel agency. Section 1334 has certain undesirable consequences.
It Creates an Uneven Playing Field. Former OPM Director Kay Cole James notes that “OPM would not merely serve as the umpire overseeing competition among private health plans. It would also become a health-plan sponsor, fielding its own team of players to compete against the existing private plans in every state.”
OPM-sponsored plans would thus have an exclusive franchise: They would be perfectly poised to compete nationwide; they would be subject to OPM-negotiated determinations for medical loss ratios, profit margins, and premiums; they would have their own standards for state certification and solvency requirements. This clearly gives the OPM-sponsored plans special advantages.
It Creates the Foundation for a “Robust Public Option.” In their authoritative taxonomy of PPACA, Kaiser Family Foundation analysts categorize the OPM-sponsored health plans as “the Public Option.” Original proponents of a “robust public option”—a government plan that would base provider payments on Medicare rates—viewed it as an ideal vehicle to undercut private health plans and ensure a rapid evolution toward a single-payer system. With the creation of this “OPM alternative,” advocates of a “robust public option” have a second chance to crowd out private health insurance and secure their original policy goals.
It Concentrates Power in the Executive Branch. Like the Secretary of HHS, the director of OPM reports directly to the President. As with the FEHBP today, the director carries out the President’s health policy agenda. Any actual or potential conflict between the director of OPM and the Secretary of HHS on issues relating to health benefits, premiums, or competition in the exchanges will be resolved by the White House. The President, in other words, will exercise enormous authority over the direction of health policy and the shape of state health insurance markets.
It Threatens Taxpayers with Unknown Liabilities. Section 1334 appropriates “such sums as may be necessary to carry out this section” for OPM. While such language is routinely understood to cover administrative costs incurred in establishing a government program, there is no spending prohibition if OPM runs a deficit. OPM may agree to premiums that allegedly cover the plans’ projected costs, but they could still face shortfalls. A common characteristic of taxpayer-financed health programs is that they do not go out of business. With a set of large government-sponsored plans enrolling millions of Americans nationwide, taxpayers could very well find themselves subsidizing shortfalls of the OPM-sponsored plans—plans literally “too big to fail.”
It Threatens the OPM’s Traditional Role. Section 1334(g) specifies continued support for the administration of the FEHBP. Former OPM Director Linda Springer observes that “administering new plans in a health insurance exchange would require that [OPM personnel] devote at least some measure of their time to that new task. Whatever time they spend on the exchange program, they are not spending on the Federal Employees Health Benefits plan and their existing work today.”
A New Direction
Under Section 1334, OPM-sponsored plans would compete nationwide against private health insurance. In effect, Congress is creating a special set of plans, governed by special rules, in a closed national “market.” Instead of fair competition with private health plans, Congress is sponsoring the equivalent of a national monopoly. That the OPM-sponsored plans are offered by private contractors (like Medicare contractors) is irrelevant. For consumers, it is hard to imagine anything worse than a government-sponsored “private” monopoly.
Instead of giving government-sponsored health plans such an exclusive franchise, Congress, using its authority under the Commerce Clause of the Constitution, should allow a variety of health plans, including individual membership association plans, to market their products and services anywhere in the United States, subject to basic federal rules governing the interstate sale of goods and services. The competing plans should be subject to the anti-fraud and abuse and consumer protection rules of the states in which their policyholders reside.
Robert E. Moffit, Ph.D., is Senior Fellow in the Center for Policy Innovation at The Heritage Foundation. Kathryn Nix, Research Assistant in the Center for Health Policy Studies, contributed to this paper.
I posted this mainly for m00 who constantly insists that Obamacare has nothing to do with socialism.A trojan horse hides its intent and Obama hasn’t we hid our understanding.
11-12-2012, 05:39 PM
- Join Date
- May 2010
That's a good read. Although, I think this kinda proves my point, though...
"These OPM-sponsored plans would automatically be eligible to compete against private health insurance offered in the new health insurance exchanges"
This is what' I've been saying... creating a "new health insurance exchange" isn't socialism. Socialism doesn't force you to buy anything of your own initiative, it taxes you and provides the service. In Canada, I have a Canadian health card. I get it as a resident... everyone gets it. Now, I have private insurance on top of this from my employer, but everyone is entitled to their card.
That's socialism. Everyone gets the same thing, if you want more you can pay for it. This isn't competition... it's a different model. Everyone gets the the coach seats, but you can upgrade to 1st class.
Obamacare is not this. Making you buy something just because you are alive is completely unprecedented. This is how we must attack it. People are used to socialism... saying it's "socialism" isn't going to turn heads.
If we want to defeat Obamacare in the court of public opinion, it has to be demonstrated as not socialism, and something far worse than socialism. Which I believe it is.
Just my opinion.
11-12-2012, 05:51 PM
m00, you can call it a cherry sundae if you like but what it is designed to do is squeeze out private sector providers and replace them with government providers.
Last edited by Rockntractor; 11-12-2012 at 06:02 PM.A trojan horse hides its intent and Obama hasn’t we hid our understanding.
11-12-2012, 06:59 PM
Very comprehensive list of Obamacare articles
http://www.akdart.com/obama18.htmlA trojan horse hides its intent and Obama hasn’t we hid our understanding.
11-13-2012, 10:37 PM
- Join Date
- May 2010
Socialism is no longer stigmatized. (We can split off a secondary debate on whether it should be or shouldn't be... but that's a different issue.) This ship is sailed. Socialism isn't an automatic boogeyman, for at least half the country.
Calling Obamacare "socialism" and folding your arms like we've just played our Ace card isn't going to win elections. It's not a case for dismantling Obamacare, because Obamacare isn't even socialism.
What will win elections is making the case why, specifically, Obamacare is bad... and making this case to people who don't find socialism to be the greatest moral evil of our time. And not turning this into some proxy war against socialism in general. And not acting like this is the end-times.
So the good news is that Obamacare isn't socialism. And there's plenty of reasons why people who like socialism shouldn't like Obamacare. Obamacare is actually kind of like reverse-socialism. Socialism taxes you and provides a service. Obamacare compels you to buy a service from a 3rd party provider, and penalizes you if you don't. Insurance exchanges? I mean... liberals hate wall-street right (and, lets be honest... with good reason)? If we really want to win, the message should be that Obamacare turns medical service into a wall-street. If we really wanted to win this recent election we should have hammered on Obama's wall-street bailouts. Hammered Obama on Obamacare is a "wall street" solution to a problem. It would have been that easy. Unfortunately, Romney had no credibility on either wall-street or Obamacare.
Here's the deal. You know how Republicans are kind of pissed at these faux-conservatives like Romney and McCain? Welp, the Democrats do the same thing. The only liberal issue Obama really has delivered on is gay rights.
If Republicans want to win, making these 5th grade "obama=liberal=socialist=communist=fascist=Naz i... why are you voting for a Nazi?" arguments isn't going to get us there. Making irrelevant attacks or taking flawed positions or playing gotcha isn't going to get us there either.
What is going to get us there is convincing liberals that the Democrat party fails on the vast majority of their liberal issues. And then Republicans need to put up a conservative, but someone who is honest & authentic and has a lot of common-sense appeal. Because you don't want someone that liberals fear will screw them, or screw the country. You want someone that liberals can say "well, since he's a conservative I don't agree with him on a lot of positions, but he's an honest well-intentioned guy that doesn't insult me." This is basically the Reagan-scenario. It's even better for us if the Democrats put up a garbage candidate that doesn't even champion liberal policies.
Just my analysis.
The truth is, we're all sitting here, as Americans really, wondering what we can do to fix the country. Nobody here has any political power (that I know of) so this is all an intellectual exercise. But the Internet has been known to change minds. :)
Last edited by m00; 11-13-2012 at 10:43 PM.
11-14-2012, 12:48 AM
John Roberts said it was not a forced buying but a tax........ and a product.It's not how old you are, it's how you got here.
It's been a long road and not all of it was paved.
A man is but a product of his thoughts. What he thinks, he becomes. Gandhi
11-14-2012, 02:58 AM
- Join Date
- May 2010
If the government says "Red shoes inspire hard work. Therefore, if you buy shoes any color other than red you have to pay a 5% extra" This is a tax, similar to sales tax.
If the government says "Red shoes inspire hard work. Every year we are going to do an inventory of your closet. For every pair of shoes you have which aren't red, you pay us 5% of it's market value" This is a tax, similar to property tax.
If the government says "Red shoes inspire hard work. Anyone caught not owning at least one pair of red shoes has to pay $50. But don't worry, we'll have a public option so you can buy an affordable pair of red shoes from the government." This is not a tax, it's a fine for not engaging in a specific action. It's completely outrageous.
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