Instead, Republicans negotiated in secret because they are trapped by the history of the health-care policy debate over the last half-century. Barack Obama and Nancy Pelosi passed the ACA using conservatives’ best health-care idea — individual and employer mandates. Now Republicans are compelled to repeal the ACA even though they are stuck with inferior policy solutions.
Along with federal support for the expansion of Medicaid, the individual and employer mandates are the ACA’s core mechanisms for increasing the number of Americans covered by health insurance. Respectively, they compel uninsured individuals to obtain coverage through the insurance exchanges and require employers of more than 50 people to provide insurance for their workers.
Yet mandates, at their intellectual core, are a fundamentally conservative idea — one designed to preserve the existing system of private insurance provision while making coverage attainable for all Americans.
To make a health insurance market work, two basic options are available: the insurer can either spread the costs of illness across a large number of participants or they can exclude individuals who are likely to get sick and make claims.
The original, nonprofit Blue Cross and Blue Shield plans of the 1930s and 1940s worked by broadening the insurance pool, as does Medicare today. The pre-Obamacare individual insurance market, by contrast, narrowed the pool by barring people with preexisting conditions and withdrawing coverage from those who got sick.
Mandates are another way to broaden the pool. They bring additional customers to private, for-profit insurance companies. Under the ACA, income-based subsidies (at least in theory) make the policies affordable. But the market works through the private sector.
Given these features, the mandate concept emerged among conservatives. President Nixon proposed the first employer mandate in 1971. Stuart Butler of the Heritage Foundation (now at Brookings) developed a model for a family mandate in 1989. Butler presented the idea as a market-based way to achieve near-universal coverage while promoting individual responsibility.
To be clear, Butler’s family mandate was not identical to the ACA’s individual mandate. But the core intellectual architecture was the same: make insurance markets viable by increasing the pool of customers for private health insurance.
Meanwhile, the playing field on which politicians debated health-care policy shifted steadily toward the right beginning in the 1970s.
In 1969, Senator Ted Kennedy worked with United Autoworkers President Walter Reuther to draft a Health Security Plan. The plan offered national health insurance for all Americans. It did not even require cost sharing by recipients (such as co-pays or deductibles). It reformed delivery systems by encouraging prepaid group medical practices (eliminating the fee-for-service system’s financial incentive for doctors and hospitals to provide excessive care). It controlled health-care costs through a national health budget and a cap on health-care spending.
The Health Security Plan, in short, represented a nearly pure vision of a liberal health-care system.
Having already lost one presidential election to the Kennedy family, Nixon felt compelled to offer a counter plan.
He proposed the creation of for-profit Health Maintenance Organizations that would rely on insurers to coordinate — and limit — the care that physicians provided. As domestic policy adviser John D. Ehrlichman explained to Nixon in a February 1971 phone call, “All the incentives are toward less medical care, because the less care they give them, the more money they make…the incentives run the right way.”
The Nixon plan included extensive cost-sharing, as well as the first health-care mandate: a requirement that employers provide coverage for their workers. Yet Nixon’s proposal would be far too liberal for Republicans today, as it waived Medicare premiums for seniors and offered subsidized private insurance for the poor and unemployed.
By 1974, when the health-care debate re-emerged amid the tumult of Watergate, rising health-care costs specifically and inflation generally led Kennedy to offer a national health insurance plan that included cost-sharing for beneficiaries. It also included a role for private insurers in processing claims (as they do in Medicare).
The Democrats had taken their first step to the right.
By 1979, Kennedy himself had moved even further away from the vision of government as sole insurer: his proposal that year offered an employer mandate combined with options for subsidized coverage through private insurers and HMOs, along with expanded public coverage for the poor—not all that dissimilar from his nemesis Nixon’s proposal.
The dream, as Kennedy famously told a spell-bound audience at the Democratic National Convention that year, would never die — but in health care, at least, it would be compromised.
A sign of that compromise: Bill Clinton’s 1993-1994 plan offered a system of “managed competition” under which universal coverage would be extended through competing, regulated private insurance plans — buttressed by both employer and individual mandates.
An early Republican alternative developed by Senator John Chafee of Rhode Island relied on a combination of rigorous individual and employer mandates and aggressive regulation of the benefits offered by private health insurers. Initially, it received the backing of leading Republicans ranging from Senate Majority Leader Bob Dole to (briefly) House Minority Leader Newt Gingrich.
Unfortunately for Chafee, Democrats weren’t the only ones moving to the right. The ascendant Republican right rejected the Chafee proposal from the start. Republican strategist William Kristol authored an influential policy memo arguing that any compromise on health care would deliver a generation-defining political victory to Clinton and the Democrats. Republicans, with the backing of the insurance and small business lobbies, shifted to all-out opposition.
At the state level, the market-based mandate concept retained its appeal for Republicans. While governor of Massachusetts, Mitt Romney worked with Democrats to pass a state-level plan that relied heavily on an individual mandate to achieve near-universal coverage — the model for the ACA.
The ACA debate marked the final stage in Democrats’ embrace of the best conservative thinking on health care for achieving their longstanding dream of universal coverage. Liberals failed in their push for inclusion of a “public option” plan in the insurance exchanges. Instead, Obamacare’s individual mandate required the uninsured to purchase subsidized private coverage on state or federal insurance exchanges.
Republican ideas had won. But Republicans prioritized their opposition to Obama over their implicit victory on technical health care principles. They quickly discovered that stoking anger about the ACA effectively mobilized their core voters.
For all the challenges of making the ACA exchanges work, mandates are actually an elegant policy solution — if the inclusion of private insurers is a pre-condition of the debate. As the more successful state exchanges have shown, there is no reason they cannot work if insurance markets are stable, if lower income people have sufficient subsidies, and if penalties for ignoring the mandate are meaningful.
The individual mandate idea, though, is now off-limits for Republicans. As a result, they are forced to fall back on concepts such as high-risk pools, continuous coverage requirements, and health savings accounts. These would be expensive and would impose regulatory requirements as onerous as the mandate. Coverage would likely fall by tens of millions.
Unlike the House bill, which includes a continuous coverage requirement for individuals using federal health insurance tax credits, the proposed Senate bill does not even include a replacement for the individual mandate. With this step, Republicans have largely abandoned the old, bipartisan goal of universal coverage. They now speak carefully about ensuring “access” to health care, rather than providing actual insurance coverage.
This lurch to the right comes as polling shows that the public now widely accepts the premise that basic health coverage is a right. Ironically, even as conservatives inadvertently won the policy debate by losing on the ACA, they appear to have lost the larger philosophical struggle.
Congressional Republicans may eventually repeal Obamacare. But the long-term trajectory of the debate has left them in a policy bind that not even Mitch McConnell’s gift for ruthless legislative strategizing can resolve.