Conservative Principles Now

Senate Majority Leader Harry Reid (D-NV) announced that he would bring to the Senate floor a bill that includes a new “public plan,” but with a provision allowing states to “opt-out.” In response to a reporter’s question, Reid said that states would have until 2014 to opt-out.

Setting aside the debate over the merits of a “public option”,- a new government-run health plan to compete against private health plans- there are a number of additional questions about how such a state opt-out would work. Specifically:

1. What process will a state have to follow if it wants to opt-out of the public plan?
2. Will opting-out require an affirmative vote of the state’s legislature?
3. Will an opt-out resolution approved by a state’s legislature need to also be approved by the state’s governor?
4. In some states the legislature meets in a full-session only every other year. In keeping with the allowances given such states by Congress when it has enacted federal laws that required state action, will those states be given additional time beyond 2014 to decide if they want to opt-out?
5. Can a state decision to opt-out be made through a ballot initiative or referendum?
6. If the start date of the public plan is delayed — say, because of unanticipated implementation problems — will the deadline for state decisions be extended beyond 2014?
7. If, after implementation, the government-run plan does not work well in a particular state — say, it has only limited provider participation or has high, Medicare level, rates of fraud — will the state have a second chance to opt out?
8. If a state opts out, and wants to increase coverage and intensify competition through its own health insurance market reforms that it deems superior, will it be able to do so?
9. What conditions will the federal government impose on a state that decides to opt-out?
10. If a state chooses to opt-out of the public plan, will the federal government require it to establish or participate in an alternative arrangement or program? If so, what alternatives will the state be allowed to choose among?
11. If a state permits the new government-run plan to operate within its boundaries, will the plan be subject to the state’s insurance laws, particularly those governing reserve requirements, solvency standards, rate reviews (to ensure premiums are sufficient to cover expected claims), market conduct (fair sales and marketing practices), or state rules governing coordination of benefits, subrogation of claims, third party liabilities, and Medicaid as payer of last resort?
12. Will states have the authority to require the public plan to participate in state quality and transparency initiatives such as all-payer claims databases, health care price disclosure systems, health plan performance rating methodologies, state health IT standards, etc?
13. Will the specific benefits and limitations of the government plan, including any coverage limitations, drug formularies or prior authorization requirements be finalized before a state must decide whether it wants to opt in or out?
14. If provider participation in the plan is voluntary, will the list of participating providers in each state be publicly available before the state makes its decision?
15. Will a state lose any direct federal funding if it decides to opt-out? If so, how much?
16. Will a state’s residents lose eligibility for federal subsidies or tax benefits if the state opts-out? If so, which ones?
17. What if a state initially opts out but then wants in later (after 2014), will it then be allowed to opt-in?
18. If a state opts out of the public plan, will the citizens of that state still be required to pay the requisite federal taxes that would subsidize the citizens of other states?
19. Why won’t a state be allowed to opt-out after 2014?
20. Besides the public plan, what other provisions of the legislation will a state be able to opt-out of? The Medicaid expansion? The new federal insurance regulations?

Co-authored by Dennis Smith.

Earlier today, the American Medical Association (AMA) released a letter that Politico describes as an endorsement of “Obama-style health reform.” Adding that the White House is sure to use this letter to “undermine the GOP response.” Based on that description, the AMA must have really come out strong in favor of Obamacare, right? Wrong.

The Open Letter to the President from AMA President J. James Rohack MD reminds us of the long-running sitcom Seinfeld, because it is a letter about nothing. It offers no specifics, offers no endorsement and mostly offers rhetoric all sides completely agree with. In honor of football’s return this week, let’s break the letter down John Madden-style:

The Coin Flip: They remind the President he has a historic opportunity and urges him to seek an agreement on reform that includes “critical elements.” So far, a very cordial introduction. This is the obligatory handshake before the game and everyone is smiling.

“Provide Health Insurance Coverage for All Americans”: On the ensuing kickoff, everyone goes to the kitchen to grab snacks because everyone in America has already agreed that the goal is to get more U.S. citizens insured. This team has no opponents.

“Enact insurance market reforms that expand choice of affordable coverage and eliminate denials for pre-existing conditions”: On the opening drive, the AMA fumbles. They are asking the President and lawmakers to expand “choice”, except the President’s current plan only limits it. In fact, under his current plan, millions of Americans would have no choice but to be knocked out of their current private coverage and forced into a government-run plan. That certainly does not represent an expansion of “choice.”

“Assure that health care decisions are made by patients and their physicians, not by insurance companies or government officials”: Conservatives score. This line clearly demonstrates that the AMA is NOT endorsing the President’s plan, since his plan is fundamentally built around government officials making health care decisions. And what is the easiest way to achieve the goal of less government intervention? Pretty easy. Don’t create a government-run health care system to start with. Period. This play was definitely not designed to show support for President Obama’s plan. 

Incentives, reforms, streamlining: The AMA does not advance the ball here. They use vague language to say that reform of the current health care system is necessary, costs must be reduced and administrative burdens should be eliminated. We agree. Does the AMA believe that adding a government bureaucracy will reduce costs or eliminate administrative burdens? Has any government program ever achieved this benchmark? No.

“The [AMA] and our individual members are working hard to improve health care delivery…”: The AMA misses the trade deadline, not noticing that many of their members are vocally opposing President Obama’s health care plans. As Forbes magazine put it best: “If the AMA can’t squelch this grassroots rebellion, it might be less able, in the future, to claim to represent doctors in public policy debates.”

“We reaffirm our commitment to work with each of you…”: And the game is over. The AMA said nothing. They did not endorse Obamacare, nor did they promote the general principles which are rooted in Obamacare.

Medical practitioners and members of the AMA must be upset today, because Dr. Rohack sent them into the game without a cohesive strategy for success and without representing the interests of his membership. Rohack merely offered a laundry list of vague pleasantries. President Obama will undoubtedly brag of this “endorsement,” but what did they actually endorse?  Nothing.