So Much for Choice and Competition

It is hard to miss the irony in the fact that the very same week that Republicans were publicly heralding Congressman Paul Ryan's plan to inject market forces into the American health care system, they were crafting a budget deal to strip them from the health reform law. While Free Choice Vouchers didn't fulfill my vision of a health care system in which every American would be empowered to hire and fire their insurance company, they were a foothold for choice and competition and a safety valve for Americans whose employers are already forcing them to bear more and more of their family's health insurance costs.

Free Choice Vouchers were a true marriage of both Democratic and Republican ideas and they were killed in last night's budget agreement. Given the battle it took to get them into the health reform law in the first place, I guess I shouldn't have been surprised by their execution.

Under the new health law, Americans whose income falls below 400 percent of the federal poverty level and whose employer-sponsored health insurance premiums are between 8 and 9.8 percent of their total income will be exempt from having to purchase health coverage but will not be able to access the exchanges or qualify for government assistance to buy insurance.

If an employee's share of their health insurance premiums rise to 9.9 percent of their total income, they would be allowed to shop for more affordable health insurance in the new health insurance exchanges, with a taxpayer-funded subsidy. But again, at 9.8 percent and below their only options will be to pay for their employer-sponsored coverage or to go without health insurance altogether.

Had Free Choice Vouchers survived, they would have given this group a third option: to take the tax free money that their employer would otherwise contribute to the cost of their health insurance and use it to buy a more affordable health insurance plan at the exchange. This provision would have meant that fewer Americans would have to go without health insurance and by leveraging private dollars versus relying solely on taxpayer funded subsidies, it would have ultimately saved money. If employer premiums continued to rise, more and more Americans would have become eligible for this option and more choice and competition would have been injected into the health insurance market.

Some employers -- especially small employers -- had already expressed interest in expanding the Free Choice Voucher provision so that they would no longer be in the position of having to pick their employees' health insurance. They liked the idea of giving their employees access to a health insurance system, much like the Federal Employee Health Benefits plan, in which employers can essentially subsidize their employees ability to shop on the new health insurance exchanges.

This would be good for the employers because it would get them out of the health insurance business. It would be good for employees because they would be able to pick the plan that best works for them versus the plan that works best for their employer and it would be good for the system as a whole because it would get more Americans into the exchanges' risk pools, holding down costs for everyone.

Not every employer likes this idea that Americans might be able to get good health insurance outside of their job or union. Which is why some of the most powerful interest groups spent most of 2009 fighting the inclusion of even this small version of Free Choice Vouchers into the health reform law.

In my mind, that is a short-sighted position. The employer sponsored health insurance system is currently unsustainable. Premiums are going to keep going higher and higher burdening both employers and employees. Free Choice Vouchers offered a safety-net and a bridge to another system.

I thought that those of us championing free choice won that argument when Free Choice Vouchers passed as part of the health reform law. And as employer premiums have continued to rise over the last year, it seemed that the case for Free Choice Vouchers was getting even stronger.

Recently the Kaiser Family Foundation reported that while premiums had increased an average of 3 percent last year, the typical employer had shifted an additional 14 percent of the cost onto workers. With workers facing higher health costs combined with stagnant wages, more and more workers will face that Hobson's choice of unaffordable employer sponsored insurance or going without health care.

But last night, after weeks of closed-door negotiations to keep the federal government open, Free Choice Vouchers were placed on the chopping block even though there is no budget savings from cutting them this year.

I'll leave you to speculate how they got there.