Fact Sheets & Briefs

Trigger Troubles—And Why the Senate Can’t Fix Them

Jacob S. Hacker — Thu, 22 Oct 2009 11:03:25 -0700

Jacob S. Hacker, Ph.D.
Stanley B. Resor Professor of Political Science, Yale University

A persistent bad idea in the debate over the public health insurance option is the so-called trigger. In theory, a trigger would make a public health insurance plan available to Americans receiving coverage through a health insurance exchange if private health plans did not sufficiently hold down costs. In practice, however, a trigger inserted into either of the two Senate bills now being merged (the Senate Finance Committee bill and the Senate HELP bill) would not be able to work.

The motive of the trigger is political—to find a compromise in the Senate that will attract the support of the small number of conservative Democrats who have expressed reservations about the public health insurance option, as well as Republican Olympia Snowe, who has proposed a trigger. This is obviously a crucial goal. But to be a compromise between such skeptics and the majority of Senators who support a public plan, a trigger must have some prospect of working.

A workable trigger would, at a minimum, need to achieve three goals: (1) establish a reasonable and measurable standard for private plan performance that sets out clear affordability and cost-containment goals for a specifically defined package of benefits, (2) assess this standard in a timely fashion with information available to policymakers after reform legislation passes, and (3) if this standard were met, quickly create a public health insurance plan that would effectively remedy the situation.

The modifier “quickly” in the third goal is crucial: Runaway health costs are a grave and growing threat to federal and state budgets and to the health security of workers, their families, and their employers. Waiting longer than absolutely necessary for affordable coverage is certain to cause great harm. Indeed, it might actually compound the current crisis. Without an imminent threat of public plan competition, private insurers are likely to raise premiums in anticipation of the implementation of reform—as suggested by AHIP’s recent prediction of big premium increases if reform passes. Delaying a public plan may also jeopardize the cause of reform itself, because requiring Americans to buy unaffordable coverage has the potential to provoke a political backlash. (Polls show that Americans are more supportive of a mandate when they know they will have the choice of a public plan.)

In short, we cannot wait for a public plan—and one of the biggest problems with a trigger is that it virtually guarantees we will have to.

The problems, however, do not end there. Consider just a few of the other serious difficulties:

None of the trigger proposals that have been floated contains criteria for triggering the creation of a public plan that concern both affordability of coverage and the growth of premiums over time. It is simply not enough for coverage to be defined as “affordable” for a given share of the population. To judge private insurance successful in restraining costs, premium inflation would also need to be restrained—but the triggers on the table do nothing on this score.
The proposals on the table also assess affordability based on the price people pay after receiving assistance from the federal government. This means that efforts to help people afford coverage, perversely, reduce the chance of a public plan that will rein in costs for individuals and taxpayers.
The triggers under discussion assess whether affordability standards are met at an aggregate level, such as within states. Yet local markets vary greatly even within states. If some markets have very high premiums or runaway costs, a trigger might not be pulled if other markets in the state have lower premiums or experience more modest growth. Residents of a high-cost, low-competition area would, in effect, be held hostage by an overly aggregated measure.
The triggers being discussed all focus on the premiums people pay, rather than their total out-of-pocket costs. As problematic, they are vague with regard to what is affordable—that is, what package of benefits is required. Within the exchange, the Senate bills create new rules for coverage that are relatively strict, though still leave too much room for tailoring benefits to shift costs to high-risk patients. But outside the exchange, in the employment-based market from which most Americans will continue to receive coverage, the bills are much more lax. The Finance Committee bill, for example, sets a standard for minimum coverage that is substantially less generous than the typical employment-based plan today. There is every reason to think plans will simply cover less or shift more costs onto patients to meet the affordability standard, since, again, the standard concerns only the individual premium, not total costs.
None of the trigger ideas under discussion envision the creation of a national plan built on Medicare’s infrastructure, the only public plan option that has been shown by the Congressional Budget Office to produce substantial savings.

All this is not surprising in light of the history of trigger proposals in health care and other policy areas: As is well recognized, triggers are generally designed to create political cover, not effective policy.

Less well understood is that some of the key difficulties with triggers are intrinsic to central characteristics of the Senate health bills. In particular, the Senate bills, unlike their House counterparts, leave an enormous amount of responsibility for the regulation of private insurance to the states—which for the most part have not had the wherewithal or will to take on large private insurers. The Senate bills also have much weaker regulations of private insurance plans outside of the exchange—the plans on which most Americans will rely after reform. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. Ironically, these characteristics make a public plan without a trigger especially vital in the Senate, where, of course, the public plan has also been more controversial.

Added to the Senate bills, a trigger would represent a backdoor way of killing the public health insurance option that a majority of Americans (and U.S. Senators) support. It is well past time to trigger real competition for private plans that have failed to ensure affordability or cost restraint for decades.

Sources Promoting Conservative Health Policy

OurFuture.org Staff — Fri, 10 Oct 2008 12:59:58 -0700

Reports Promoting Free-Market Health Care:

• Conrad F. Meier. Extending Affordable Health Insurance to the Uninsured. The Heartland Institute. Heartland policy Study Number 91. 27 August 1999.

• Connie Marshner. “The Health Insurance Exchange: Enabling Freedom of Conscience in Health Care.” Heritage Foundation. WebMemo #1377. 1 March 2007.

• Grace-Marie Turner. “Toward Free-Market Health Care.” Heritage Foundation. Heritage Lecture #1019. 4 May 2007.

Websites Promoting Free-Market Health Care:

• The Future of Freedom Foundation

• Free Market Cure

• Free Market Healthcare

• Freedom Works

• The Heartland Institute

• Americans for Tax Reform

"Will We Let Conservatives Do To Health Care...": The Facts

Alex Carter — Thu, 09 Oct 2008 15:22:21 -0700

116 million Americans are now uninsured, or underinsured, or financially vulnerable to unexpected medical costs—now the No. 1 cause of family bankruptcies.

• The Commonwealth Fund in 2007 found that nearly two-thirds of U.S. adults, or an estimated 116 million people, struggled to pay medical bills, went without needed care because of cost, were uninsured for a time, or were underinsured (i.e., were insured but not adequately protected from high medical expenses).

• Forty-one percent of working-age adults, or 72 million people, reported a problem paying their medical bills or had accrued medical debt, up from 34 percent, or 58 million, in 2005. An additional 7 million adults 65 and older also reported bill or debt problems.

Sara R. Collins, Ph.D., Jennifer L. Kriss, Michelle M. Doty, Ph.D., and Sheila D. Rustgi. Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families. The Commonwealth Fund. Volume 99. 20 August 2008.

•In a 2005 survey of 1,771 personal bankruptcy filers in five federal courts, which included in-depth interviews with 931 of them, about half cited medical causes. That indicates that as many as 2.2 million Americans (filers plus dependents) have experienced medical bankruptcy in recent years.

•Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.

David U. Himmelstein, et.al. “MarketWatch: Illness and Injury as Contributors to Bankruptcy.” Health Affairs. 2 February 2005.

Those who have insurance are paying higher costs for policies that often have gaping holes in coverage. And insurance companies flat-out refuse to sell coverage to those already sick.

• Adults with individual market policies, rather than those with employer-based plans, are the most likely to have gaping holes in coverage. For example, about 22 percent of adults with individual insurance lack prescription drug coverage, while only 4 percent with employer coverage do. More than 70 percent of adults with coverage through the individual market go without dental insurance, about four times the rate of adults with employer coverage.

• People with individual policies are also more likely to have high out-of-pocket premium costs compared with people covered through employers, who generally share the costs with workers. More than half of adults with individual market coverage have premium costs of $3,000 a year or more, versus 18 percent of those with insurance through a job. Nearly one-third (32 percent) of those with individual market coverage spend $6,000 or more, compared with 5 percent of those with employer coverage.

• Adults with individual market coverage are also more likely to face high deductibles, on average, than are adults with coverage through a job. Thirty-seven percent of people with individual market coverage have deductibles of $1,000 or more, compared with 8 percent of those with employer-based insurance.

Sara R. Collins, et.al. Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families. The Commonwealth Fund. September 2006.

In today’s financial crisis and economic slowdown, millions more will lose jobs and health coverage, increasing the demand for change.

•The nation's employers continue to cut payrolls, with jobs down by 159,000 in September, the ninth consecutive month of job losses, according to the Bureau of Labor Statistics. So far this year, payrolls are down 760,000 overall and 969,000 in the private sector (the latter loss began in December).

• Unemployment, at 6.1 percent, is up 1.4 points over the past year, and over the past year, the unemployment rolls have expanded by 2.2 million, to 9.5 million, the highest number of unemployed since December of 1992.

Jared Bernstein and Heidi Shierholz. Jobs Picture: Jobs Decline for Ninth Month in A Row as Labor Market Recession Deepens. Economic Policy Institute. 3 October 2008.

But the cure conservatives are selling is worse than the disease: They propose to tax, as income, the health benefits that 160 million people get on the job. This is purposefully designed to destroy the incentive for companies to provide health insurance to their workers. The EPI Policy Center and other experts predict that 20 million Americans would lose good employer-sponsored group health insurance.

• Recently a team of prominent health economists estimated that 20 million people nationwide would lose employer-sponsored insurance if the health care plan proposed by Senator John McCain were to become law. Because the centerpiece of the McCain plan would impose taxes on health insurance benefits—which are now untaxed—employers would be less likely to offer them.

L. Josh Bivens and Elise Gould. McCain Plan Accelerates Loss in Employer-Sponsored Health Insurance: A State-by-State Analysis. Economic Policy Institute Policy Center. Research Bulletin #100. 1 October 2008.

Instead they’d be left on their own—perhaps with a partial tax credit--trying to buy inferior and expensive coverage directly from deregulated insurance companies.

• The conservative Heritage Foundation advocates for a "Tax Equity: A refundable health care tax credit for individuals would level the playing field between what an employer may offer and what an individual can buy for himself. President Bush recently proposed a measure to accomplish this. In the absence of this tax reform, employers could designate the health insurance exchange itself as their "plan" for the purpose of federal and state taxes. An employer's defined contribution on behalf of an employee would then be tax free, just as it would be for conventional employer-based health insurance, and the employee would have the freedom to select a plan of his choice."

Connie Marshner.“The Health Insurance Exchange: Enabling Freedom of Conscience in Health Care.” Heritage Foundation. WebMemo #1377. 1 March 2007.

Anyone already sick will have one hell of a time finding insurance at any price.

•Thirty states operate high-risk pools intended to offer coverage to persons denied coverage in the individual health insurance market. But in most states the high-risk pool mirrors the individual market’s problems: Coverage is expensive, the waiting period for coverage of preexisting conditions is long, and benefits may be limited.

•A few states with high-risk pools have addressed these problems by adequately funding high enrollment and comprehensive benefits; some also require the market to accept more risk. But most discourage enrollment in the high-risk pool in myriad ways and fail to ensure access to the individual market for persons with health problems.

Deborah Chollet. “Expanding Individual Health Insurance Coverage: Are High-Risk Pools the Answer?” Health Affairs. 23 October 2002.

Of course conservatives say this is all for the good--forcing us into “the free market” to shop personally for the cheapest policy. But for most of us it just means life gets harder.

•In 2007, the conservative Heritage Foundation advocated this “free-market" approach in its lecture, “Toward Free-Market Health Care,” ….This move toward more individual control over health care decisions and health care spending is part of the global movement toward health care consumerism. Giving people more power and control over their health care and health insurance creates new incentives for people to be more engaged in managing their health. Incentives work, and competition works. What we need to do is engage the power of consumers to transform our health sector to become more efficient, more responsive to consumer needs, and more affordable….

Grace-Marie Turner. “Toward Free-Market Health Care.” Heritage Foundation. Heritage Lecture #1019. 4 May 2007.

•In 2007, former Republican presidential candidate Rudolph Giuliani also advocated for a “free-market” approach to healthcare during a GOP debate, Health insurance should become like homeowners insurance or like car insurance. You don't cover everything on your homeowners’ policy. If you have a slight accident in your house, if you need to refill your oil with your car, you don't cover that with insurance. But that is covered in many of the insurance policies, because they're government-dominated and they're employer-dominated. And the reality is that we need a free market…. Free-market principles are the only things that reduce [healthcare] costs and improve quality.

Rudolph W. Giuliani. “2007 GOP Presidential Candidate Third Debate.” 5 June 2007.

•In the same GOP debate, Mitt Romney supported the “free market” healthcare ideology. Romney stated, As governor, I talked to people, and they say, "If I lose my job, I'm worried I'll lose my insurance, and my insurance premiums are getting higher and higher." And we said: We got to find a way to get everybody insured. And the last thing we want is to have the government take over health care, because anything they take over gets worse. We said: We need to find a way to get everybody in our state insured with private insurance. [We found] a way to get them insured without raising taxes, without a government takeover. It relies on personal responsibility.…We get all of our citizens insured. We have to stand up and say the market works. Personal responsibility works.

Mitt Romney. “2007 GOP Presidential Candidate Third Debate.” 5 June 2007.

That’s why people across the country are joining with Health Care for America Now to demand an alternative: quality, affordable health care for all.

•Health Care for America Now is a national grassroots campaign organizing millions of Americans to win a guarantee of quality, affordable health care for all. HCAN is grounded in organizations that can mobilize people at work, at home, in their neighborhoods, and online; bringing together community organizers, nurses, doctors, small business owners, faith-based groups, organizations of people of color, and seniors who believe it's time they have an American solution that provides quality, affordable health care for everyone.

Health Care for America Now

This debate can’t be left to insurance lobbyists and politicians.

• The U.S. health system is the most expensive in the world, but comparative analyses consistently show the United States underperforms relative to other countries on most dimensions of performance. Among the six nations studied by the Commonwealth Fund—Australia, Canada, Germany, New Zealand, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2006 and 2004.

• Most troubling, the U.S. fails to achieve better health outcomes than the other countries and is last on dimensions of access, patient safety, efficiency, and equity. The most notable way the U.S. differs from other countries is the absence of universal health insurance coverage.

Karen Davis, Ph.D., et. al. Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care. The Commonwealth Fund. Volume 59. 15 May 2007.

• Almost $113 million was spent lobbying Congress on prescription drug issues in just the first half of 2008. Nearly all of that was spent by the leading drug makers. Another $32 million was spent on issues related to health services and HMOs, and almost all the big spenders were insurance companies. The two sectors combined are responsible for $14 million in campaign contributions so far this year.

Open Secrets.org. Lobbying: Health Services/HMOs, Lobbying: Pharmaceuticals/Health Products.

Health Insurance Coverage of Women Ages 18 to 64, by State, 2005- 2006

Melinda Gibson — Fri, 30 Nov 2007 21:00:00 -0800

http://www.kff.org/womenshealth/upload/1613_07.pdf

Trends in Health Care Costs and Spending

Melinda Gibson — Thu, 27 Sep 2007 21:00:00 -0700

http://www.kff.org/insurance/upload/7692.pdf

The Evolution of the Health Care Debate

Roger Hickey — Tue, 07 Nov 2006 09:07:30 -0800

The following are commentaries, blog posts and news releases that show how our "Health Care For America" plan helped shape the debate in 2007. Download this as a pdf document

The Great Risk Shift and Health Care for All
By Christian Norton
December 21, 2006

Health Care forAmerica
By Roger Hickey
January 11, 2007

Health Care for America Posted on Talking Points Memo Café

Activists and Experts Hail Health Care for America Plan
Launch Progressive Debate on Medical Coverage for All
Written by Jacob Hacker and Published by EPI
Campaign for America's Future and other groups that stopped Social Security privatization vow nationwide campaign on health care

AFSCME Supports "Health Care for America" Plan
McEntee: Expansion of employer-based health care offers America its most realistic chance to achieve affordable coverage for all.

Statement of SEIU President Andy Stern regarding the Health Care For America proposal

Health Care For America: Blog Roundup
By Bill Scher, January 16, 2007

Edwards Gives a Nod Toward “Health Care For America”
By Bill Scher, February 6, 2007

The Universal Health Care Debate is Over
By Bill Scher, February 7, 2007

Blog Reaction to Edwards Health Care Plan
By Bill Scher, February 8, 2007

More Links on Hacker and Hickey on Edwards Plan:
http://www.dailykos.com/story/2007/2/6/142556/8612
http://www.mydd.com/story/2007/2/6/135021/6412
http://www.tpmcafe.com/blog/billscherforourfuture/2007/feb/06/jacob_hacker_roger_hickey_on_edwards_health_care_plan

Health Care Advocates Praise Edwards Health Plan

Where the Health Care Debate is Going
By Bill Scher, February 20, 2007

Health Care for All Information Project listserve
This is an example of the Health Care for All Information Project listserve. News and action opportunities are sent to 8,000 health care activists weekly.

The Health Care Answers We Need
By Roger Hickey, March 23, 2007

Universal Care: Getting the Right Mix
By Roger Hickey, March 26, 2007

Adviser Describes Obama Health Plan
By David Cutler, June 1, 2007

Hacker: Obama’s Health Plan’s Actually Pretty Good
By Isaiah J. Poole, June 4, 2007

Obamacare: Clearing Away The Fog
By Jacob S. Hacker, June 4, 2007

Hillary Confirms Commitment to Health Care for All
By Roger Hickey, September 21, 2007

Hillary’s Turn
By Jacob S. Hacker, September 24, 2007

Download this as a pdf document to understand the facts and perspectives behind the health plans offered by the 2008 presidential candidates. You will find each of the above commentaries, blog posts and news releases that show how our "Health Care For America" plan helped shape the debate in 2007.

Health Insurance Facts At A Glance

Roger Hickey — Sat, 30 Sep 2006 14:50:51 -0700

Since 2000, premiums for employer-sponsored health insurance for families have increased by 87% (compared to 12% increase in inflation and 19% increase in annual wages.)
As of 2005, nearly 45 million Americans were totally uninsured of whom 8.3 million were children.
At least $286 billion, enough to cover all of the uninsured and to provide full health care coverage for everyone in the United States, is annually spent on paperwork by competing insurance companies.
In the first 6 months of 2005, HMOs banked profits of $6.98 billion. This was a 21.2% increase in profits over the same period a year earlier.5 The health services/HMO sector spent $32 million on lobbying between 2000 and 2006.
According to a June, 2006 article in the New England Journal of Medicine, seniors hit with a coverage gap like the Part D donut hole are 22% more likely to die than seniors who aren't forced to pay thousands in out-of-pocket expenses.
Allowing Medicare to negotiate drug prices would save $332 billion over 7 years, enough money to eliminate the donut hole entirely with no extra cost to taxpayers.

The Bush Medicare Deal: Bad Deal for Americans, Great Deal for Drug Companies

Terrance Heath — Thu, 25 Mar 2004 08:28:05 -0800

On December 8, 2003, President Bush signed a new law he claims will help seniors with their
prescription drug bills. But a close look at the stage that day showed who really stands to
benefit – drug companies and HMOs. Standing with the president weren’t seniors, but
politicians who had taken in some $14 million in contributions from the health and insurance
corporations, and the audience was chock full of lobbyists and drug and HMO industry faces.

The drug deal is a $534 billion example of what is wrong with politics today.