President Obama's major victory on health reform in March was a defining moment in his presidency. More importantly, the passage of the law stands as a significant victory for the working class and the American people. We join with the labor and people's movements in celebrating this historic milestone.
A number of commentators have described the law as the biggest reversal of inequality in America since LBJ's Great Society program. We agree with that assessment, and below are discussed some of the ways the law attacks inequality to provide healthcare to nearly every American with an improved system. There are some points, however, on the reform that need improvements and should lay the basis for future political struggle. In addition to this, the health reform victory has likely reshaped the terrain of political struggle and puts the labor and people's coalition on an exciting new footing moving forward.
Regulatory reform
Reform under the new law, means, first of all, that key regulations on the insurance companies will be put in place for the first time. Women, for example, will see the elimination of gender discrimination in the insurance market place, for example. According to the National Partnership for Women and Families, insurance companies have consistently denied coverage to women because of incidents of rape, domestic violence, and previous c-sections, labeling them as "preexisting conditions." In addition to eliminating the use of "preexisting conditions" as an excuse to deny coverage to women, insurance companies will now be required by law to provide coverage for maternity, newborn, and pediatric care, including dental and vision care.
Simply put, the health reform law will ban the insurance company practice of "gender rating." These provisions earned the law high praise from National Partnership for Women and Families Vice President Kirsten Sloan, who said in a statement, "Every woman who has been overcharged because of her gender won a victory."
This year, the law puts into place two other insurance company regulations: it will ban the common insurance monopoly practices of canceling the policies of people who contract serious (and expensive) illnesses and make it illegal to deny coverage to children with preexisting conditions. Millions of people who have been locked out of the insurance market because of such issues will receive subsidies to buy into a new insurance program created under the law.
The reforms contained in the law prompted Dr. Mandy Krauthamer Cohen, Executive Director of Doctors for America, an organization of over 16,000 doctors and medical care professionals, to applaud the law. “We are particularly pleased that so many patient protections go into effect immediately – including closing the Medicare part D drug program’s donut hole, eliminating the many excuses health insurance companies use to deny care and increased funding for Community Health Centers and more doctors to care for those who need it most," she said.
By 2014, the lifetime caps insurance companies currently impose on people will be banned.
According the Commonwealth Fund, some 12 million people were denied care in 2007 alone because of these insurance company policies.
Taking on the insurance monopolies
The new law also requires insurance companies to explain and justify their profits. The biggest complaint many people have about the private insurance market is that the profit motive causes insurance companies to deny coverage and care. Insurance companies profit most when they cover healthy people and ignore the people who need coverage most. In addition, much of the high cost of coverage pays for an expensive corporate bureaucracy that administers insurance companies' systematic denial process. The new law requires the insurance monopolies to open their books and show where our premium dollars are spent.
As part of this new corporate transparency, patients will also have a stronger appeals process for claims denied by the insurers.
Under the new law, families will be allowed to keep their adult children, up to the age of 26, on their insurance plans, unlike the current rules that cut children off at 18 or 19.
In addition, the law will help people who lose their employment-based insurance to keep their insurance or find new affordable coverage rather than trying to make the big COBRA payments that most working families cannot afford.
Expanded public programs
Over the next couple of years, the law will expand access to Medicaid to individuals (for the first time) and to families who make about 133 percent of the federal poverty rate. Every individual earning about $15,000 or less and every family of four earning about $30,000 or less will have access to this new program. Key concerns remain about ongoing funding for this part of the law, but the coverage will have to meet the new federal standards enacted in the law, including new requirements that checkups and preventive care will be completely free.
Individuals and families without insurance who earn between 133 percent and 400 percent of poverty will also be eligible for subsidies on premiums through new health insurance exchanges. Depending on income, premiums are capped at between three percent and 9.5 percent of income.
The law also closes the so-called Medicare prescription drug "doughnut hole" enacted under the Republican Medicare privatization scheme in 2005. In 2011, retirees who fall into the doughnut hole will get a 50 percent discount on prescription drugs, and within the decade the hole will be completely closed.
Small businesses, which now employ about 14 million of the almost 50 million uninsured workers in the US and pay an average of 18 percent more than bigger companies for health benefits, will get a range of tax subsidies to help provide health benefits for their employees.
A new program will encourage businesses to provide early retiree benefits to people over 55.
The health reform law will also add about $10 billion in federal funding for community clinics. This provision alone will allow an additional 20 million patients, mainly immigrants and people living in rural areas, get access to health care, according to the National Association of Community Health Centers. Currently, community clinics get a paltry $2 billion each year from the federal government.
Mandates, taxes and exchanges
What about the insurance mandate? Penalties will be imposed on a sliding scale on individuals who do not buy insurance and who earn taxable incomes. The point is for any health insurance model to work, everyone has to participate. Because it is reasonable to assume everyone will need some kind of health care at some point in their life, it is reasonable to expect everyone to pay to make the system work. Businesses with more than 50 employees who fail to provide coverage will pay a penalty of $2000 per full-time employee.
The law also creates several mechanisms for funding. First, the law phases out the overpayments of taxpayer dollars to the privatized Medicare Advantage program created by the Republicans in 2005. This is the main reason Republicans, who have always hated and tried to privatize or eliminate Medicare, suddenly care about changes to Medicare under this law. No loss of benefits for retirees will result from this change, but taxpayers will save about $20 billion each year.
In addition, the law raises the Medicare poll tax on the richest Americans earning over $200,000 (individuals) and $250,000 (households) annually. So don't be fooled when you hear Republicans claim the bill creates a new tax on the American people. This is their bogus way of implying that all Americans are rich, or that all rich people are "middle class." There also will be a new surcharge on indoor tanning salons, which have been blamed for increasing the risk of skin cancer.
While the newly create regional health insurance exchanges (or marketplaces) will not include a public insurance program, they will provide more affordable choices to people and businesses seeking insurance coverage. Before the law, many states saw one or two insurance companies hold virtual monopolies on the insurance market. For example, a Department of Health and Human Services study last year found that 85 percent of the market in the state of Montana is controlled by just two insurance companies. Similar situations exist in many other states as well. These monopolies allow the insurance companies to collude on prices and practices. With new exchanges in place, however, they will have to compete with many more companies and follow new federal standards and guidelines.
What's missing?
Ideally, these exchanges should be national and include a public insurance program. As the President repeatedly underscored during the fight to win passage of the law, the choice of a public insurance program both would be inexpensive and would create added pressure on the insurance monopolies to follow new federal laws, keep prices down, and provide meaningful coverage. Without the public option, the fight for enforcement of the provisions in the law will be harder.
A Medicare buy-in for older workers would reduce their typically high premiums and help cover one portion of the population that struggles to maintain their coverage.
The fee on larger businesses who fail to provide health benefits, at $2000 per full-time worker, may be too low. One critique of this provision is that while larger firms tend to provide coverage more often, this new fine will likely be lower than what the company currently pays for health benefits for each full-time worker. Such a fee might encourage large companies to opt not to provide coverage. If this happens, one effect may be that companies encourage their employees to seek federal subsidies and purchase insurance individually in the new exchanges.
This could mean the beginning of the end of the employment-based health insurance system. But it may also represent little more than a big cost-shift from large employers to workers for their health insurance costs, especially for workers on the higher end of the scale of eligibility. For example, if your household income is less than but close to $88,000 for a family of four, under the law you will be eligible for a federal subsidy that would keep your annual premiums at around $8400, or $700 per month. If your employer refuses to share this cost, this added financial burden could prove difficult to afford. The fight for an affordable public program and expanded subsidies to cover these costs, then, will be ongoing.
Provisions in the new law regarding the coverage of abortions and immigrants remain serious setbacks. Abortion should be covered on demand. Exclusion of immigrants from many of the laws new programs violates the "equal protection" clause of the Constitution, which reads "no state shall deny to any person within its jurisdiction the equal protection of the laws." This means equal protection is a human right, not a citizenship right. In addition, the potential exclusion of millions of people from affordable coverage plans because of their legal status represents a roadblock to the goal of improving public health under the new law.
Overall, the law is expected to add 32 million uninsured people to the insurance rolls, making coverage nearly universal.
Health reform and the economy
In a recent summary of two academic studies of the effects of rising health insurance premiums on job creation, health economists David Cutler (Harvard) and Neeraj Sood (University of Southern California) concluded that controlling the growth of health insurance costs will lead to job creation. In fact, in the next decade with a healthcare system like that created under this law, the US economy could create as many as 250,000 to 400,000 additional jobs per year, they found.
The report found "that every 10 percent reduction in excess health care cost growth – a decrease in cost growth from 2.2 percentage points above GDP to 1.98 percentage points – leads to about 120,000 more jobs." And by contrast to the impact of healthcare costs on the US economy, job creation in Canada, which has a publicly financed healthcare system, is "not influenced by health insurance costs."
As costs grow, employers who provide insurance are less inclined to add workers to their payrolls. For their part, workers tend to accept lower wages in exchange for better health benefits. The study concluded that with lower costs of insurance premiums, employers would be more inclined to create new positions, and workers will see the benefits of higher wages.
As to the number of jobs directly resulting from the passage of the health reform law, the Cutler-Sood report predicted the creation of 200,000 new jobs in manufacturing and 900,000 jobs in services – all in the private sector – by 2016. (The report did not include a study of the growth of jobs in the public sector caused by health reform.) Workers in industries ranging form agriculture, mining, construction, transportation to information technologies, professions, financial services, and hospitality will likely see new opportunities in the next few years as a result of the passage of this law, the study showed.
Political implications
The monumental nature of this political victory, most political observers have noted, has shifted political momentum back to President Obama and his allies in Congress, especially as the popularity of the law has grown steadily since its passage.
What most pundits have failed to notice, however, is the role of the labor and the people's coalition in refusing to give up on this fight, even when the corporate media talking heads declared health reform to be dead or dying.
The President now has a real opportunity to press forward on an aggressive finance regulatory reform package, follow-ups to the jobs bill already passed in Congress earlier in March, immigration reform that provides millions of undocumented workers with a path to legality and citizenship while protecting their rights as workers, climate change legislation, and, who knows, maybe even a turn around on proposed labor law reforms that make unionization easier for workers.
This seems like an ambitious agenda, but with the steadfast activism of the labor and people's coalition and some (admittedly surprising) gumption most congressional Democrats showed during this health care fight, the sky might just be the limit.
It also seems to us that the victory and the growing public support for the health care law's provisions signal that Republican hopes to use this national issue to impact congressional elections this fall may be dashed. In fact, Republicans seem entrenched in the "party of no" position and the seething anger and nastiness of the tea-bagger movement. This extremist stance won't appeal to centrist voters – Republicans, Democrats or Independents.
But some Republicans will try to have their cake and eat it too. Just as with the President's economic recovery act, we're going to see Republican lawmakers hypocritically try to take credit for some of the provisions in the health reform law. Already, Sen. Chuck Grassley, R-Iowa, is reportedly touting his role in crafting the legislation, despite his repeated votes against the bill and his description of it as a "big government takeover."
The history of US elections shows that a new President's ruling party typically loses seats in Congress during the subsequent midterm elections. This year may be no different, but the healthcare law won't be the cause.
The biggest factor in the November election will be the economy. If the President's economic policies come to be viewed as creating new job growth for the first time since the recession began back in December of 2007, voters will minimalize Democratic Party losses. This makes the working-class struggle for economic recovery of signal importance, and it highlights the bad spot Republicans have trapped themselves into. They cannot seem to be blocking legislation that helps workers or aids in economic recovery. But at the same time, they can't appeal to the zealots in the teabagger movement with pro-Obama/pro-worker votes. For example, they appear to be divided over the political viability of blocking unemployment insurance extensions.
In addition to a turn-around on the economic question, more legislative victories for Democratic supporters will energize that base to the same levels of activism and energy with which they fought for President Obama's election victory in 2008. More victories will makes us fired up and ready to go!
(Photo by ProgressOhio, courtesy Flickr, cc by 2.0)
