President Obama has thrown his support behind a bill to let states opt out of key features of the healthcare reform law before they take effect, including the controversial requirement that virtually all adult Americans buy insurance. The caveat, though, is that states must offer alternatives that provide comparable coverage to at least as many of the uninsured as the new law would, at no greater cost to federal taxpayers. It's a small but welcome move that invites opponents of the law to shift from repealing it to improving it. Unfortunately, they probably won't accept that invitation.
The healthcare law already includes a provision by Sen. Ron Wyden (D-Ore.) to let states seek waivers from four requirements: state insurance exchanges to help people buy individual policies; minimum standards for what those policies must cover; insurance subsidies for lower-income Americans; and mandates on individuals and large businesses to carry coverage. To obtain a waiver, a state would have to commit to an alternative reform that would be just as effective at increasing coverage and improving affordability without increasing the federal deficit. Under current law, those waivers would not be available until 2017, three years after the requirements took effect.
The bill that Obama endorsed this week would make those waivers available in 2014, the same time the law's most controversial provisions kick in. The change makes sense. States that want to pursue their own reforms shouldn't have to toe the federal government's line for three years as a prerequisite.
But there's a fundamental disconnect between what the administration is offering and what opponents of the healthcare law are seeking. Obama wants to focus the debate on how best to achieve the law's interrelated goals of increasing insurance coverage, improving the quality of care and slowing the increase in cost. Republican critics, however, don't share those goals. To them, the reform should be primarily about controlling the cost of care.
Rather than offering a specific plan for the uninsured, the Republicans' healthcare proposal in the last Congress called for Washington to pay multimillion-dollar bonuses to states that found a way to reduce the percentage of their residents without coverage. They also would try to increase competition among insurers and give doctors and hospitals more protection against lawsuits. Although the GOP's approach could slow the increase in healthcare premiums, the Congressional Budget Office has projected that it wouldn't bring much help to the uninsured, nor would it reduce the deficit.
Unless coverage is extended to more people, the uninsured will continue to be treated in expensive and inefficient ways, and those costs will continue to be passed on to everyone else. That's why, even if the objective were simply to control costs, it would be important to adhere to the standard the new law sets for increased coverage. The means to achieve that goal, however, should be open to vigorous innovation.