Welcome to Fixes.
This is a series about solutions, or potential solutions, to real world problems. It focuses on the line between failure and success, drawing on the stories of people who have crossed it.
Most of us tend to be better informed about problems than solutions. This presents two challenges: if we rarely hear about success when it occurs, it’s hard to believe that problems can, in fact, be solved. Also, knowledge about how to solve problems ends up being concentrated in too few hands. It needs to circulate more broadly so that it can be applied where needed.
Last week’s post highlighted encouraging initiatives in several states to implement a single payer system within a single state.
This was always a daunting challenge even before health reform. The Patient Protection and Affordable Care Act has raised the bar even higher.
ERISA and its preemption
Before PPACA a legal hurdle called the ERISA preemption severely hamstrung state health reform efforts. For those of us in the employee benefits profession, ERISA, including its preemption clause, is our bible or at least our Deuteronomy.
ERISA was passed by Congress in 1974 to regulate employee benefit plans. The preemption clause precludes states from regulating employee benefit plans. There were two exceptions to that preemption and both are instructive.
Insurance and not insurance
Under the McCarran Ferguson Act of 1945 states have the authority to regulate insurance plans. Under ERISA states still retain the right to regulate insured health plans.
After the law was passed, Congress figured out that the state of Hawaii had already established a law requiring employers to provide health insurance to their employees. I guess news travels slowly from Hawaii. Congress passed the first of many subsequent amendments to ERISA making an exception to the general preemption for Hawaii.
One reason for the preemption clause was the belief that Congress would tackle national health care reform soon and they wanted to protect that right at the national level, a theme that would reappear in PPACA.
The consequence of allowing states to only regulate “insured” health plans was the movement by many larger employers to “self-insured” plans. By taking on the risk of health insurance themselves, employers escaped the mandates imposed by state insurance departments. Companies operated in multiple states could establish uniform benefit designs for all of their employees. At least one source estimates about 43% or 53 million people with health care coverage are regulated by ERISA and not by state insurance departments.
When Congress exempted Hawaii from the preemption clause they only exempted the Hawaii law as it existed in 1974. Employers have since discovered the loopholes in Hawaii law for part time employees and contract employees. Now, even though Hawaii has always had the lowest rate of uninsured in the country, that number is increasing as more and more employers exploit that loophole.
The ERISA preemption prevents efforts by state to expand coverage by requiring employers to offer health insurance. Instead they are confined to a hodgepodge of confusing and complicated programs to expand state Medicaid insurance programs or offer subsidies to small employers.
Obama blocks states?
The PPACA does not make it easier for state single payer advocates. The Obama Administration vigorously opposed bipartisan efforts in the House Education and Labor Committee to give states more latitude as laboratories for reform.
Photo Credit: Maui-Tropica
Well, six hours anyway. I wouldn’t miss tomorrow’s health care political extravaganza. I’m planning to crack open a brewski and a bag of Cheet-Os, and splay out in front of the boob tube for the full six excruciating hours. C-Span on steroids.
What’s wrong with me? Don’t I know health reform is dead? Don’t I know the Obama administration was dumped into the dustbin of history following election to the Senate of Massachusetts Republican Scott Brown, which overturned what all viewed as a permanent Democrat/Kennedy lock on the ultimate safe seat?
Oops, there I go, getting wonkish. Well, that’s what it is with me. I used to cover health policy – wrote, edited and published a newsletter called “Health Policy Week,” for God’s sake – and I can’t get it out of my blood. The issues I covered during 1982-86 are, basically, the same issues as today. They weren’t resolved then – indeed, the solutions of the ‘80s and ‘90s (managed care, prospective payment) may have made things worse – and there’s a fair chance they won’t be resolved this time.
But that doesn’t have anything to do with my plans for tomorrow. Sure, I believe passionately that health reform must pass or this great nation will go bankrupt. And yes, in my opinion the current compromise pretty much stinks, may not work, needs the public option or something like it, yada yada yada. Health policy does indeed matter to me. But the reason I’ll be glued to the TV tomorrow has more to do with spectator sports. What NFL football and NBA basketball are to others, health reform is to me. Even if I had a full schedule, I’d cancel all engagements.
Now, as it happens, I don’t have any engagements tomorrow. The decks are clear for stultifying TV. I’ve been home from the hospital since last Friday, recovering from total knee replacement.
I have often made the point that a major flaw in the health care status quo – I balk at using the word “system” – is that no single entity accepts full responsibility. With very few exceptions, everyone is trying to find someone else to pay the bill or the rest of the bill.
And too often the consumer is the rope in this tug of war.
Instead of focusing on Joe the Plumber and his tax phobia’s, perhaps the presidential candidates should talk to Jesse the Artist and ask him or her about health insurance. On Sunday, October 19th, I visited the Bethesda Row Arts Festival in Bethesda, Maryland. I did just that. In a very unscientific survey, I talked to a number of the artists about their health insurance.
Why should anyone else be interested in artists? Because they are small business people. They are also very creative. It is this creative entrepreneurship of small businesses that candidates like to support because it is the economic engine that drives the American economy.
Artists as Small Businesses
I was curious whether health insurance was a barrier to entry for these artists. Two of the artist referred to a study (but could not name the source) that 83% of artists had health insurance. That was consistent with my own unscientific study. I talked to close to 20 people. Only three had no health insurance. But, on the other hand, only three paid for their own health insurance.
Perhaps they asked the wrong question.