Editors's Note: Timothy Jost is a professor at Washington and Lee University School of Law. He posts regularly on the Politico health reform arena and on Georgetown University’s Legal Issues in Health Reform blog.
I agree with most of Jonathan Cohn’s concerns about the Finance Committee bill and would add to his list a couple of concerns of my own. First, the amended Finance Committee Chairman’s mark includes a “failsafe” mechanism that requires the director of OMB to certify annually that the provisions of the law will not increase the deficit in the following year. If the OMB determines that deficits will rise because of the law, OMB will notify Congress and the aggregate amount of premium affordability subsidies will be automatically reduced in the following year, commensurate with the deficit increase. The CBO report on the amended Baucus bill noted that this is likely to be the case for the years 2015 through 2018; in those years, subsidies would come down by an average of 15 percent. The subsidies under the Finance bill are already inadequate and this would make premiums dangerously less affordable.
Second, as I read the amended Chairman’s Mark at pages 14 and 15, states could be granted a waiver to opt out of any part of the health reform program if they meet certain requirements of comprehensiveness, access, and budget neutrality. While this provision could allow a state to implement a public plan, or even a single payer system, it could also permit a state, under a sympathetic administration, to implement a high cost-sharing “consumer-directed” system that could bankrupt lower income insureds.
The provision is intended to mirror the Medicaid 1115 waiver process, which many advocates believe was applied to disastrous effect to diminish the Medicaid entitlement by the Bush and even Clinton administrations. Given the fact that a number of states are already threatening to “nullify” health reform on their soil if it is enacted into law, I am nervous about giving the states yet more discretion to opt out of a national reform plan. Remember that the legislation will only be implemented in 2013. We have no guarantee as to who will be in the White House at that point.
Finally, although cooperatives remain in the final Finance Committee bill, it is hard to believe that they will appear in the final Senate bill, much less survive conference committee. Not only did CBO score them as offering no cost savings. It also predicted that relatively few states would opt to create them, ultimately spending less than half of the seed money set aside for that purpose.