Monthly Archives: January 2013

Running from a Negative Image

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Corporations engage in rebranding for a variety of reasons.  Often they are trying to hide from past shortcomings or wipe away a negative image.  Phillip Morris attempted to change its image by changing its name and logo to Altria in 2003.  More recently after emerging from bankruptcy, General Motors began selling itself as “the New GM” with fewer models, stronger models, and greater efficiencies.  Rebranding is either accompanied by a change in the product being sold or it’s simply an attempt to escape a bad image. 

A January 16, 2013, post on the HealthCare Blog from HHS Secretary Kathleen Sebelius (http://www.healthcare.gov/blog/2013/01/affordable-insurance-countdown.html ) provides a good example of rebranding.  One of the key elements in the legislation is the establishment of “American Health Benefit Exchanges,” that will serve as a mechanism for individuals to purchase qualified insurance plans.  Called “exchanges” from the beginning of the debate, Sebelius has now introduced new language referring to them as the “new Health Insurance Marketplace,” or simply “Marketplace.”  A newly redesigned website (www.Healthcare.gov) has expunged all reference to exchanges and is using the term marketplace exclusively. 

So, what’s the problem with these changes, you ask?  It’s just marketing.  No, it’s not just marketing.  It’s putting lipstick on a pig.  It’s still a pig.  Normally, when private companies reintroduce a product, rebrand it, there is some change.  The product is always marketed as “new, improved, redesigned, or updated.”  There are no such changes in the exchanges.  They’re still the same mechanism as envisioned in the original legislation, except now 25 states have said that they will not create their own exchange.  Instead, they will let the federal government set them up, run them, and spend billions of dollars in the process.  This in my opinion is a pretty smart move. 

Let’s be clear.  These exchanges are not marketplaces.  As established these exchanges are required to undertake activities that are not typically a part of an open marketplace, who can buy, who can sell, what is available, and the price that is charged.  Specifically:

  • The exchanges must screen all applicants to determine if they are eligible to participate.  This requires the exchange administrators to have the prospective participants employment records, including income, insurance status, availability of employer sponsored insurance, number of dependents, and the same information on other members of the household (in particular, the spouse).  Additionally, the exchange must keep track of any changes in employment information in order to determine eligibility for government subsidies. 
  • The exchanges must certify and rate plans according to HHS guidelines to ensure that they are qualified.  This means that to qualify as an insurance option, a plan must meet certain standards as defined by HHS, including a required benefit package and pricing.  If premiums are determined to be too high, the exchange can refuse to include the plan in its offerings.  The freedom to determine the product being sold and its price is determined solely by the government. 
  • The exchange must provide this information to the government and the applicant’s employer. 

No wonder so many states are not eager to join the federal government in setting up these highly regulated insurance pools.  No wonder that Secretary Sebelius is changing the name of one of the centerpieces of ObamaCare.  No more popular now than the day it was signed into law, the Administration is desperately trying to rebrand one of the main components of the legislation, hoping that by changing what it’s called, we will suddenly see the exchanges as marketplaces.  Let’s hope that Americans are smart enough to see this ruse for what it is, putting lipstick on a pig. 

The opinions expressed in this blog post are mine alone, and do not reflect the opinions of Baylor University.   Baylor is not responsible for the accuracy of any of the information provided in this post.

It’s not over, ‘til it’s over

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While that Yogism applies uniquely to baseball, it has it’s applications in health policy as I’ll explain.  Unless you‘ve been stranded on a desert island for the past 6 months, you know that the Supreme Court has spoken on the constitutionality of ObamaCare.  In a creative rewriting of the act, Justice Roberts cast the deciding vote in a 5-4 decision that the Affordable Care Act is constitutional.  It’s not because the forced purchase of health insurance is justifiable under the Commerce Clause.  It’s because the penalty for not complying with the regulation is a tax and Congress has the constitutional authority to levy taxes. 

It’s also clear that the Republican effort to “repeal and replace” the legislation is all but dead in the water since Mitt Romney failed miserably to provide the electorate with a good reason to unseat President Obama and give him the job.  So we just need to accept the fact that ObamaCare is the “law of the land” and get about the business of successfully implementing its provisions. 

Oh, but wait.  What did Yogi say?  It turns out that the Supreme Court did more than pass on the constitutionality of the law, they, in effect, took a flawed piece of legislation and made it functionally unworkable.  And in so doing, have opened the way for new constitutional challenges. 

An important element of the law expected to expand coverage to millions of low-income Americans is the expansion of Medicaid to cover families with incomes below 138% of the federal poverty level (or about $31,800 for a family of four).  The way the law was written states that failed to comply would lose all federal Medicaid funding (amounting to 25% of average state budget).  But the Court didn’t interpret the law that way.  The ruling stated that Congress could not force states to comply with the Medicaid expansion by threatening to defund the existing program.  With the new flexibility 7 states have already announced that they will not expand eligibility.  An equal number will likely follow, creating a serious constitutional problem. 

The Constitution requires that taxes be “uniform throughout the United States” (Article I, Section 8).  This provision keeps states from forming alliances to shift the tax burden to other states.  The result of the Court’s rewriting of the new law is citizens with incomes above the federal poverty level, but eligible for expanded Medicaid are taxed differently depending on where they live.  In expansion states they simply comply with the individual coverage mandate by signing up for Medicaid.  The identical citizen living in a non-expansion state cannot. 

By rewriting the law turning the mandate into a tax, the Court has opened up a challenge to the law on based on the fact that the tax is not uniformly applied across states.  The challenge will not come until someone is actually required to pay the tax.  So for now we wait, until April 16, 2014, that is.

ObamaCare was poorly written from the beginning.  A patchwork quilt constructed from a wish list of liberal policies waiting for a Democrat super-majority in the Congress.  That super-majority only lasted about 5 months from the seating of Al Franken (D, MN) in the summer of 2009 to the to the special election of Scott Brown (R, MA) in January of 2010.  But that was enough time for Democrats to pass this sweeping domestic legislation (without a single Republican voting with the majority).  And we will live with the consequences of that moment in history for quite some time. 

The opinions expressed in this blog post are mine alone, and do not reflect the opinions of Baylor University.   Baylor is not responsible for the accuracy of any of the information provided in this post.