66 5.13 Chapter 5 – CASE STUDY: DESIGN AND FORMULATION OF THE ACA
CASE STUDY: DESIGN AND FORMULATION OF THE ACA
Early in the policy design process, President Obama discussed a causal link between the goals of the new health care legislation and “skyrocketing health care costs.” He argued that by lowering the two most expensive healthcare costs, emergency room visits and chronic illnesses, healthcare costs would decrease overall. Accomplishing this goal would mean changing the rules of the healthcare system. People could no longer be uninsured, insurance companies could not exclude patients with preexisting conditions, and insurance companies must provide preventative care measures to encourage people to go to a primary care doctor instead of using the more expensive emergency room. Thus, early in the policy design phase, the Obama administration created a causal link between the policy goal, lower health care costs, and the factors that they believed caused those costs.
When President Obama took office, he believed that both Congress and the American public would support sweeping health care changes. Despite early efforts to convince stakeholders, Obama realized that his ideas would not be met with open arms in Congress. This knowledge changed the policy design strategy considerably. Rather than taking a purely rational comprehensive approach to policy making, Obama recognized that he would have to make concessions if he wanted health care reform to pass. Those concessions might result in the elimination of some of the components that he originally wanted to include in the final policy. For example, Obama had planned to include a public option insurance plan that would compete directly with private insurance companies. The goal of this plan was to create more competition and reduce health care costs. Opponents resisted the public option, so it was never added to the bill. In the end, Obama decided that he wanted to pass health care reform more than he wanted to fight for the public option (Morris et al., 2019). In this instance, initial plans for policy design had to be modified to gain support from key policymakers.
The public option is not the only example of adjustments made to the policy design process. President Obama studied Bill Clinton’s earlier and unsuccessful attempts at health care reform and resolved to include a coalition of key actors in the policy design process. Doctors, insurance companies, pharmaceutical representatives, labor unions, and elected officials all assembled to design a plan that suited the desires of a vast constituency. The coalition developed a set of shared principles that they would use to guide the new health care reform law. These goals included sharing responsibility for universal health coverage, improving affordability and quality, reducing waste and spending, while focusing on preventative care and community health (Morris et al., 2019). Policy designers knew that to get the policy to pass, they would need to take an incremental approach to health care reform. Instead of deconstructing the entire system, they maintained the current U.S. health care system (private insurance) and focused on incremental changes, such as employer-sponsored insurance, Medicare, and Medicaid. The coalition also made equity and efficiency two of the key pillars of the plan by focusing on affordability, accessibility, diversity, and inclusivity. Protection for individuals with preexisting conditions was a priority, along with prohibiting insurance companies from capping the amount of health care coverage that individuals could receive throughout their lifetime. In one speech, Obama remarked that we “should promote best practices, not the most expensive ones” (Stolberg, 2009).
Policymakers designed a health care policy that gave power to state governments to implement the policy as they saw fit. State officials could adapt the policy to meet conditions in their state, thus avoiding the “one size fits all” moniker. State autonomy was included in the bill because there was a sense that Republicans would support a health care plan with a decentralized implementation strategy. After all, state’s rights continued to be a central tenant of the Republican Party, even after Ronald Reagan’s presidency (Morris et al., 2019). In the initial policy design, all states were required to expand their Medicaid programs to everyone living below the federal poverty line. States that refused to expand Medicaid would be sanctioned and have their federal Medicaid funds withheld. The Supreme Court later ruled in NFIB v. Sebelius (2012) that this provision was unconstitutional. The federal government then decided to take a different approach and formulated the policy to include a system of rewards—more significant medical assistance funding—to states that chose to expand Medicaid. To further entice states to expand Medicaid, policymakers promised to pay 100% of each state’s program costs during the first two years of the ACA’s implementation.
In retrospect, it is remarkable that the ACA became law. The policy was passed in an extremely divisive political environment. The $900 billion price tag— combined with an economy recovering from a recession—was a sticking point for policymakers. The policy design coalition included a plan to pay for the ACA primarily through new taxes. This solution alone created additional opposition. The ACA faced numerous legal challenges and an uncertain future once President Trump was elected into office. The successful passage of the ACA is due in no small part to those who designed the policy. They knew that they would have to make concessions to gain the necessary support. They focused on providing equity and efficiency throughout the process, and when sanctions were unsuccessful, they created incentives for compliance.
