Wednesday, December 23, 2009

Between the Scylla and Charybdis of Hyde and Casey: The Health Insurance Reform Legislation and Abortion-Neutrality

By Bob Hockett

I’ve been planning to add my two or three cents’ worth of reflections on the current ‘health care reform’ controversies for a while now. I am delighted at last to be in effect forced to do so, via the assurances I made to my DoL friends last week that I’d be happy to try to help with the attempt to fill in here while Sherry and Mike are away. (Yah, I know – ‘“please, please, please,” in the words of the immortal James Brown –  – hurry back!’ you are already crying out to the ColbDorfs.) And I am all the more delighted because, with reconciliation of the House and – one hopes, soon to be passed – Senate bills still ahead, there is still time to be prospectively rather than at best retrospectively relevant.

Had I managed to post earlier as I’d intended, I would have emphasized what I’ve thought – and still think – to be the most important insufficiently noticed aspect of the current ‘health care reform’ effort. That is the fact that we are currently engaged less in a ‘health care reform’ debate than in a ‘health insurance reform’ debate. And this is important because, as I elaborate in this article –  – coming out in the economic policy journal Challenge, health insurance bears certain ‘natural monopoly’ characteristics that render much that might seem mysterious about recent proposals and debates more intelligible. In particular, they go a long way toward explaining (a) why it is that most states’ insurance markets are dominated by one or two health insurers, (b) why, relatedly, it is that the US’s peer nations in the OECD have long since treated health insurance (if not health care itself) as a social insurance problem on a par with retirement and unemployment insurance (if not public utilities), and (c) why, again relatedly, a ‘public option’ or Medicare extension, not to mention a repeal of the McCarran-Ferguson anti-trust law exemption enjoyed by US health insurers, would be so desirable as fall-backs in the absence of a full-bore ‘single payer’ or ‘single provider’ system of the sort maintained by all of our developed peer nations.

But I did not manage to post earlier as I’d intended. And while discussing the insurance-theoretic aspects of the current ‘health care reform’ debate still might be helpful in explaining the desirability of what remains of the Senate bill after the ravages wrought by Senators Lieberman and Nelson, I think that more value can be added now by addressing what looks apt to become more salient when the House and Senate turn to reconciling their health care reform bills. That is the matter of how the bills affect the delicately balanced regimes of abortion rights and abortion insurance in the US – a subject that strikes me as having generated rather more heat than light in the past month or so.

Now there is of course an awful lot that one could say about this subject, and saying either too much or too little runs the risk of adding much more to the heat than to the light. What I’d like to do, then, is limit myself here to one particularly charged issue that has come up already and is apt to come up again during the reconciliation process – the issue of abortion-neutrality. In a later post, I shall perhaps address a related but distinct issue – namely, that of what method of assessment ‘pro-lifers’ and ‘pro-choicers’ should employ in deciding whether to support or oppose legislation that they would tend unequivocally to favor were it not for what they view as its objectionable effects upon the abortion rights or abortion insurance regimes.

On then to abortion-neutrality. As most DoL readers will know, it has been viewed as a desideratum by most who acknowledge the need of greater health insurance accessibility and affordability – be they ‘pro-life’ or ‘pro-choice’ (I shall use the parties’ own preferred names for themselves) – that where abortion and its funding are concerned the status quo ante should be maintained as nearly as possible. That way the two sides can ‘agree to keep disagreeing’ on what they’ve long disagreed about, without this still intractable disagreement’s preventing their pushing forward on a distinct front about which they agree. The hope, then, is to ‘bracket’ abortion so as to avoid an agreed-to-be-needed reform’s being held hostage to a separate question on which no unanimously accepted resolution is yet in sight.

Now this (to my mind, altogether sensible) desideratum of abortion-neutrality raises at least two sub-desiderata: Pro-lifers, for their part, do not want to see any change that might tip the delicate balance thought to have been struck by the Hyde Amendment many years back, such as might result in federal moneys’ going toward the funding of abortion or treatments incidental thereto. Pro-choicers, for their part, do not want to see any change that might render abortion and related treatments less available, more stigmatized, or otherwise unduly burdened after legislation than before legislation. So we must navigate, if I might put it this way, through the Scylla and Charybdis that are Hyde and Casey.

The question raised by the abortion-neutrality desideratum, of course, is first whether the desideratum can be met, and second whether, if not, one can at least manage to err so minimally as to render the resultant legislation nevertheless acceptable to all. The later post that I said above I’ll perhaps offer later will be addressed to that second question. Here I address only the first. Thus far the foci of attempts to address this question have been the Stupak amendment to the House bill, and this past weekend’s Nelson-wrought change to the Senate bill.

With respect to the Stupak amendment, there seems now to be a broad consensus among many pro-lifers (at least the honest ones) and pro-choicers alike that it quite possibly violates the neutrality condition. The principal reason appears to be that, in restricting public assistance solely to those who purchase comprehensive health insurance policies not covering abortion, a Stupak-including bill will yield one of two unacceptable results: Either nobody will receive public assistance, because all comprehensive health insurance policies cover abortion; or abortion will become less available, because many or all firms will simply continue offering the same policies as before save without covering abortion.

A predicate assumption here – sometimes stated, sometimes not – is of course that insurance companies, owing to accounting costs, will not offer parallel comprehensive policies respectively covering and not covering abortion. I must admit to some uncertainty about the likelihood of the predicate assumption’s being vindicated or otherwise (it’s not clear to me whether all or most insurers would in fact go all or nothing), but as it happens I shall not have to address it. For I am going to propose what seems to me an obvious solution to this problem, if problem it is, in a moment – after considering the Senate’s Nelsononian alternative to the House’s Stupak Amendment.

With respect to the Nelsonian method of putatively assuring abortion-neutrality in the Senate bill, there seems to be greater uncertainty as to its likely effects than there is in the case of Stupak. Pro-lifers assert that the ‘one plan, two cheques’ regime contemplated by the measure is nothing but an ‘accounting gimmick,’ since it does not prohibit recipients of federal subsidies from availing themselves of the ‘abortion portion’ of insurance plans to which their second cheques go. In consequence, the argument proceeds, the spirit of the Hyde Amendment will be violated and for the first time, federal funds will be used for the financing of abortions. Meanwhile, pro-choicers object that the seemingly gratuitous transactions costs and stigmatization introduced by the Nelson-wrought change to the Senate bill constitute Casey-offensive undue burdens placed upon women who seek abortions. More seriously, they argue, the opt-out from federal subsidies that the Nelson measure affords states that object to possible expenditures by recipients on abortion-covering plans effectively gives states the power as it were to ‘go Stupak’ themselves. So Nelson amounts to a sort of ‘federalist Stupak.’

Now, what to make of these arguments as we go forward? Should we all just ‘grit our teeth’ and go the Nelson route, as some now are reporting that the House is readying itself to do? Well, if that’s the best we can do, maybe. But possibly we can do better – by both pro-life and pro-choice lights alike – with the most minimal of changes, such as will not risk scuttling reform altogether.

Here’s my suggestion: First note that oddly missing from the WWID (what would insurers do?) question that those on either side of the Stupak and Nelson debates assume answers to, as well as from these answers themselves, is any mention of the fact that we don’t have to speculate. We can mandate. Why not, then, simply require that all health insurers offer parallel plans? Abortion-covering plans – ‘A-plans’ – would cover abortion in the manner that most comprehensive plans do now. Non-abortion-covering plans – ‘NA-plans’ – would be, in all respects save abortion-coverage, identical. Then the final House-Senate reconciled bill can restrict subsidies to the purchase of NA-plans, and abortion-neutrality would seem thereby to be maintained. No new burden raised before those seeking abortion or its coverage, and no change to the Hyde regime governing federal funding of abortion.

This proposed solution would of course result in some additional (but surely de minimis, no?) accounting costs to be faced by the insurers. But that seems apt to be a pittance in comparison to the great boon that the ‘health care reform’ legislation, alas, as it’s now shaping up, is conferring upon them. (Had a look at the share price performances of the majors ever since Senator Lieberman’s bombshell of last week?) More importantly, it would place the burden of adjustment on the insurers, which are not hurting, rather than on would-be insureds, who either are hurting already or will be hurting if abortion-neutral health reform legislation is not crafted.

Another problem with this proposed solution might be that it appears, perhaps perversely in the eyes of pro-lifers, to require something never required before – namely, that private insurers offer abortion-covering health plans. But this appearance is surely no more than the epiphenomenal by-product of a misleading ‘framing effect.’ For it is anything but clear, on reflection, that ‘requiring’ something that is already done anyway amounts to anything more than a prohibition from withdrawing, in response to legislation that pro-lifers themselves by hypothesis approve, something long hitherto offered. For again, all that this requirement would do is ensure that that possible result feared by Stupak-opponents – the withdrawal of insurance coverage for abortion by private firms responding to health reform legislation – not materialize. That seems an entirely innocent result if and insofar as it is the only means of assuring bona fide abortion-neutrality in the health reform legislation.

One final perceived obstacle to my proposed solution to the neutrality problem is that it would amount to a federal requirement placed upon health insurers, while the McCarran-Ferguson regime under which we continue to live reserves the power to regulate insurance to the states. This doesn’t seem a serious obstacle, however. For one thing, the change I propose, coming later in time, would presumably amount simply to an implicit partial-repeal of McCarran-Ferguson, rather as sundry ERISA provisions already do. For another thing, as I’ve argued elsewhere and will continue to argue in future in another connection – that of financial regulation – it is high time we repealed McCarran-Ferguson in any event. But more of that on another day.