Jerry Jenkins, curator of North American Government Publications, British Library, traces the history of President Obama's healthcare reform
President Barack Obama’s first term has been defined by his efforts the reform the U.S. healthcare system. This is immediately apparent in the way the Patient Protection and Affordable Care Act (PPACA) has become known in common parlance as 'Obamacare'. (1)
This direct connection between the Act and the President’s name has meant the legislation has been used as a barometer of the success, or otherwise, of his Presidency in the run up to the 2012 U.S. Election. To the Republican right, who coined the term 'Obamacare', it offered a focal point to attack not only the administration, but also President Obama himself, and his record as a Liberal reformer who was further enabling the tentacles of ‘big government’ to invade the lives of the private citizen.
The politics of PPACA
PPACA legislation was passed into law on 20 March 2010 by the United States legislature. Since then, it has survived no fewer than 33 attempts by Republican members of Congress to repeal it; most recently in the case brought to the Supreme Court on the 31 July 2012 by the National Federation of Independent Businesses to repeal to it on constitutional grounds.
This begs the question, why would the Republicans consistently raise bills which are doomed to failure? It could be argued that this strategy is not about having Obamacare repealed in the first instance, although its repeal is obviously a goal for the Republican Party and its supporters, but to keep the issue at the top of the political agenda. By doing so, the focus of any Democratic Election Campaign is constantly eclipsed by the contentious issue of Obamacare looming over the agenda.
The purpose of Patient Protection and Affordable Care Act is to overhaul to the healthcare systems of Medicare and Medicaid created by the Social Security Act of 1965 and provide affordable healthcare in addition to reducing overall federal healthcare spending.(2) The United States spends 17% of GDP, around $2.5 trillion dollars, on medical care, more than any other country in the world. Despite this huge expenditure, many Americans are without any healthcare provision.(3)
The fundamental principle of PPACA is to make it mandatory for all Americans to have some from of health cover. This cover is purchased from the private insurance sector and can be acquired individually or through employers. Certain groups can access, subsidies, tax credits, and fees which are available to individuals and businesses in the effort to provide cover for Americans not included in existing private or public healthcare insurance schemes.
And the economics
The cost of healthcare to Americans is clearly illustrated by the Nobel Prize winning economist Paul Krugman. In his New York Times blog, Krugman makes an interesting comparison between the U.S. and Canadian health provision. This clearly illustrates that national costs of healthcare, represented has a proportion of GDP, have risen in both countries. However, the Canadian system of single payer insurance, a scheme operated by the state and also known as 'Medicare', appears to be more cost effective than the U.S. private insurance model.(4)
This disparity, and the continuing rise in expenditure on healthcare, could be attributes to repeated failures to secure a meaningful health reform since 1965. In fact, the opportunity to introduce a Canadian style national health insurance programme had been missed more than half a century earlier, when President Harry Truman’s proposal failed to make it through Congress.(5)
According to the US Statistics Bureau, in 2010 there were 49.9 million Americans without medical insurance, an increase of nearly a million people on the previous year.(6) The Act is designed to reduce the number of those without insurance in a cost effective way. To achieve this, the Act requires insurance companies to offer guaranteed issue and community rating to applicants.
In addition to widening the uptake of health insurance amongst Americans, the PPACA is a mechanism to reduce fiscal spending on health insurance. According to the non-partisan Congressional Budget Office and the Joint Committee on Taxation, the PPACA would lower the future deficit and Medicare spending by circa $138 billon by 2019(7), by increasing the proportion of uninsured Americans talking up policies, and thereby reducing the cost of treatment to the public purse.
Nevertheless, the Congressional Budget Office estimates the overall cost of PPACA would reach $938 billion over ten years.(8) These projections offer an insight into how the Act might affect future federal spending on healthcare by attempting to shift responsibility onto the citizen and business through insurance contributions.
How PPACA works
At its core, PPACA redefines the way health insurance functions with in the U.S. by offering coverage to all applicants regardless of pre-existing conditions (with the notable exception of smokers) or gender. Nor can insurance companies remove coverage from a person should they become sick while being previously covered.
There is a further provision for an individual mandate, which requires any person who is not already covered by one or other of the insurance schemes already in existence, such as an employer scheme, Medicare, or the state-administered Medicaid for eligible groups, such as children and pregnant women, to take out insurance or pay a penalty. There are exemptions available in cases of financial hardship or for certain recognized religious groups.
PPACA will allow policies to be provided through health insurance exchange marketplaces. Marketplaces will operate at state level where insurers’ products and services can be evaluated, compared and purchased. Furthermore, certain groups may be eligible to buy insurance with a government subsidy. Eligibility is linked to, and calculated on, a sliding scale based on the Federal Poverty Level.(9) These federal subsidies are designed to help poorer families and individuals who may find it difficult to meet the obligations of paying insurance premiums. The Federal Poverty Level is calculated annually by the Census Bureau.
Using the mandatory nature of PPACA to get more of the population covered by affordable health insurance is estimated to reduce the cost to the federal authorities of treating uninsured people under The Emergency Medical Treatment and Active Labor Act (EMTALA).(10) The act was passed by the US Congress in 1986 to ensure patients had access to emergency medical care and to prevent “patient dumping”, where uninsured patients were transferred from private to public hospitals solely for financial reasons, without consideration of their medical condition, thereby passing the cost of their care on to the government.(11)
By making healthcare insurance compulsory and providing a guaranteed issue clause, PPACA should theoretically expand the proportion of insured citizens, and, as a result, remove the requirement for federal funds to be used for the treatment of the uninsured under the provisions of the EMTALA. The Congressional Budget Office estimates a net saving in the region of $130 billion by 2019.(12). A further encouragement to purchasing insurance policies through the exchange marketplace is that eligible groups or persons may be able to access subsidies to help cover the costs.
PPACA divides public opinion
In November of 2011, the Los Angeles Times reported a majority of Americans polled by Gallup wanted to scrap PPACA. The survey found that 47% of Americans wanted to get rid of President Obama’s healthcare overhaul, while 42% wanted to keep it. Naturally enough, these differing views were divided roughly along partisan lines, with 80% of Republicans wanting to have the legislation repealed. compared with 64% of Democrats who wanted to retain it. Interestingly this poll also showed a slight preference among independent voters for repealing the Act, 48% against 42% in favour of retaining it, according to analysis in the Boston Globe.(13).
Leaving party affiliation aside, the poll illustrates what a contentious piece of legislation the PPACA is. As many U.S. Presidents have found to their detriment, majorities in Congress do not necessarily mean that the White House agenda will be adopted. Congress men and women find themselves juggling the divergent views and needs of their states to ensure the security of their own seat. As a result the U.S. legislators display weaker party loyalty than in other parliamentary democracies.(14)
Nevertheless, no issue more clearly demonstrates the deeply partisan nature of U.S politics. It is difficult for a consensus to be formed in the House of Representatives, Senate and the numerous committees to move the health reform debate on to a vote and legislation. A further barrier to health reform is the tradition of well organised and politically influential interest groups who meet any plan which threatens the flow of money to their industries with staunch resistance.(15)
A large amount of the public debate about PPACA revolves around whether it is unconstitutional. Fundamentally, the case brought before The Supreme Court by the National Federation of Independent Business et al revolved around the issue of the individual mandate provision. The National Federation argued that the individual mandate could be considered a tax raising power on intra-state commerce and as such a tax on intra state business which would be unconstitutional. The Federal Government has no power to tax intra-state commerce. In July 2012, the Supreme Court ruled that PPACA was constitutional by 5 votes to four.(16) The decision ensured that President Obama’s central reform of healthcare remains, for the time being.
The future of PPACA
Since President Obama prevailed in November 2012 Presidential Elections, and the balance of power did not shift away from the Democratic Party in the Congress (although the Republicans held on to their majority in the House of Representatives), it appears that President Obama’s healthcare reforms can continue. Any attempt to repeal the Act in the future would most likely be met by a presidential veto. As a response the Republicans may attempt to undermine the bill at the state level. States have a responsibility to enact certain provisions such as the health care insurance exchanges.
A lot has been written about the Mitt Romney’s position on healthcare reform and how his views have changed about the feasibility of implanting such a programme in its current form. However it is clear is that PPACA was in many ways based on the legislative reform of Massachusetts health care systems introduced by Romney as Governor.(17) This legislation is not modelled on a state administered national insurance scheme. It is merely legislation to extend private insurance coverage. PPACA fundamentally serves the same purpose, albeit with regulation to ensure the inclusion of groups who previously found it difficult to get coverage because of pre-existing conditions through the guaranteed issue provision.
Despite a reduction in the number of uninsured Americans, the Congressional Budget Office estimates that 23 million Americans will remain uninsured(18), and the aim of the legislation is to significantly reduce this number. Furthermore, by enshrining guaranteed issue provision and individual mandate in law, PPACA has gone further than any previous legislation to offer wider health insurance cover to the American people. Despite this the Patient Protection and Affordable Care Act remains an expansion of private insurance coverage rather than a national health insurance programme.
1) The Patient Protection and Affordable Care Act Public Law 111 - 148 - Patient Protection and Affordable Care Act. Accessed: 31 August 2012
2) Act of July 30, 1965 (Social Security Amendments of 1965 - “Medicare”), Public Law 89-97, 79 Stat 286. Accessed: 31 August 2012
3) Marmor, Theodor , Oberlander, Jonathan, The patchwork: Heath reform, American style, Social Sciences & Medicine 72 (2011) p.125.
4) 'Health Systems and Health Costs', New York Times. Accessed: 31 August 2012
5) Marmor, Theodor, Oberlander, Jonathan, The patchwork: Heath reform, American style, Social Sciences & Medicine 72 (2011) p.125
8) 'Health Care Reform', New York Times. Accessed: 26 September 2012
9) U.S. Census Bureau, Poverty thresholds. Assessed: 11 September 2012
10) The Emergency Medical Treatment and Active Labor Act (EMTALA). Accessed: 11 September 2012
11) Zibulewsky, J. “The Emergency Medical Treatment and Active Labor Act (EMTALA): what it is and what it means for physicians” Proc (Bayl Univ Med Cent). 2001 October; 14(4) p339. Accessed : 16 October 2012
13) 47% of Americans want Obama's healthcare overhaul repealed: poll. Accessed: 25 September 2012
14) Marmor, Theodor, Oberlander, Jonathan, “The patchwork: Heath reform, American style”, Social Sciences & Medicine 72 (2011) p.125.
15) Ibid p.126
16) National Federation of Independent Business et al. v. Sebelius Secretary of Health and Human Services, et al. Accessed 29 November 2012
17) Commonwealth of Massachusetts , An Act Providing Access to Affordable, Quality, Accountable Health Care, 2006. Accessed: 10 September 2012
18) CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010 before the Subcommittee on Health Committee on Energy and Commerce, U.S. House of Representatives March 30, 2011 “Estimated Effects of PPACA and the Reconciliation Act on Insurance Coverage:" Table 3, p.18. Accessed: 22 October 2012