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The Downside of Flexibility

A lot of people are dismissing President Obama’s big announcement about the Affordable Care Act as a political stunt. Yes, he offered to let states implement alternative coverage schemes starting in 2014, rather than 2017. But, these critics say, Obama hasn’t changed the requirements states must satisfy in order to get permission. They’d still have to provide universal coverage, or something close to it, at no net cost to the federal government. Since that’s not what conservatives want to do, the argument goes, nothing will come of this proposal--and Obama knows it.

Those skeptics may be right. And I, for one, don’t really mind if they are. Ever since the summer of 2009, Republicans have been claiming they have better answers to our nation’s health care problems. Obama's gambit (assuming it is just a gambit) makes clear that these Republican alternatives don’t actually involve giving most Americans affordable health care. That's worth pointing out.

But it's possible something will come of this proposal anyway. It didn’t originate with Obama, after all. It originated with Ron Wyden, the Democratic Senator from Oregon. Wyden is among the wonkiest members of Congress. He is famous--or infamous, depending on your perspective--for promoting his ideas relentlessly, even if means saying inconvenient things at inopportune times. It’s safe to assume Wyden isn't about to give up on this idea just because everybody else has. And he might just succeed.

So would that be a good thing? To be honest, I have very mixed feelings.

The idea certainly sounds appealing. During the debate over the Affordable Care Act, I was a strong proponent of having the federal government, rather than the states, manage the new insurance system. But I always thought there should be room for states to try different models. I’m far more enthusiastic about giving Gov. Peter Shumlin a chance to try single-payer in Vermont than I am about letting Gov. Rick Perry think up something for Texas. But I’m humble enough to admit that liberals (myself included) don’t have all the answers and that some genuine experimentation might yield lessons that will benefit us all.

The problem is moving from theory to practice. I’ve talked to several veteran reform advocate about this. All of them have serious qualms, starting with the political: Doesn’t mere discussion of this idea add to the uncertainty about the law's future, further emboldening conservative state lawmakers trying their best to undermine it? Doesn’t this end up focusing news coverage on the Act’s flaws, thus reinforcing public skepticism? (With headlines that talk about Obama throwing his plan a "lifeline," I think these concerns have a lot of merit.)

But the bigger worry these people have conveyed is about policy.

Remember what states must do if they want permission to try out their own coverage schemes: They must show they’d accomplish the same basic goals that the Affordable Care Act would. It sounds simple, but what’s the baseline by which states will be judged?

The Affordable Care Act takes full effect in 2014; if states can’t introduce their alternatives until 2017, they’ll be forced to match the actual results the Act has produced. But if Wyden and now Obama get their way, and states can introduce alternatives starting in 2014, the federal government will have to judge state proposals based on predictions--and it’s not clear whose predictions would count. 

For example, would it be up to CBO to make projections of each state plan, and the compare those results to what CBO expects would happen in each state if the Affordable Care Act had gone into effect? Or would states have the right to submit their own estimates--which, in a state like Texas, might well come from the likes of conservative policy entrepreneur John Goodman?

And how specific would the benchmarks be? Even those of us who cover and write about the Affordable Care Act usually describe it in general terms: Number of insured, net impact on the deficit, etc. But if you really care about providing people with affordable medical care, you have to focus on the details: What are the protections against out-of-pocket costs at every income level? How comprehensive are the benefit packages? And so on.

Are there ways to avoid these problems? Maybe. But it would require lawmakers to be cautious, and fairly specific, when they craft the actual legislation. That’s a subject to which I hope to return next week.