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ACA: Accidental Birth Explains the Law's Illogic Today

Historical perspective from SPBA Past President, Fred Hunt

Both supporters & opponents (and regulators who must implement the law) are driving themselves crazy trying to find logic and make sense of the Patient Protection & Affordable Care Act (a.k.a. PPACA, ACA, & Obamacare).  Relax…it was an accident.  The current text was never intended to be passed into law.  It was a fluke & political accident explained below.

Also, both supporters & opponents proclaim that President Obama personally and purposely inserted various provisions in the design of the law.  False.  President Obama had almost zero role in the drafting of the text of what is now the law with his name, as explained below.

Many Presidents & Congress have been eager to pass some major health reform and expand access, going back to Republican Teddy Roosevelt in 1902, Harry Truman in the late 1940’s, Sen. Teddy Kennedy in late 1970’s into early 1980’s.  There have also been about two-dozen “health reform” bills & provisions since 1980, such as the Hillary Clinton proposal and Patient Protection.  Other than some mandates & tinkering the efforts at comprehensive health reform have risen and then failed to win.  The importance of knowing that background is to realize that by post-election 2008, there was a huge reservoir of pent-up eagerness by various members of Congress & special interest groups (most with different ideas & proposals) to pass a massive comprehensive health reform.  The enthusiasm was all the more, because Democrats had strong majorities in the House & Senate and a popular new President….a winning combination to get big legislation to overcome opposition and pass into law.

So, even before the Inauguration, after President Obama was elected, the “old lions” of the House & Senate, who had pushed health reform ideas in the past, each started amassing their ideas & allies to come up with bills.  It was fully expected that the new President, who had discussed health as one of his issues in the election (but mainly as a foil to Hillary Clinton’s candidacy in the primaries), would submit his own bill, outline, or ideas.  So, the various versions being thrown together in Congress expected to only be grab-bags & filler of extra options that might be added into the President’s proposal.

President Obama did not submit his own bill or framework or ideas.  In fact, many of the proponents in Congress were openly angry that the lack of Presidential input might slow or starve the overall health reform effort.  The old lions did not want to lose this once-in-a-lifetime political opportunity.  They also resented that the popular new President was not giving the effort part of his adoring spotlight and goodwill.  

However, the Senate Finance Committee, under Chairman Baucus, and some House committees continued to pull together bills that they expected to be grab-bag working drafts….with the President… or on their own.  Each group fully expected the House to pass its rough draft, and the Senate to pass its rough draft.  Then, the two very different bills would go to Conference intensive horse-trading to come up with a mutually agreeable compromise.  This is the way most legislation is born, so both sides load up their version with all sorts of throwaways….things they will gladly trade off to the other side.   Also, both versions include odd provisions included in the draft only to get some Congressmen to sign on during the development phase, and those would quietly be dumped during Conference.

Things were moving along.  The Senate Finance Committee version passed the whole Senate, and the House versions seemed to be making progress to eventually get a House version.

Senator Ted Kennedy had died, and the election for his successor in MA was assumed to produce a Democrat, so the partisan make-up of the Senate would not change.  Whoops!  Sen. Brown, a Republican, won.  This meant that the Senate no longer had an unassailable majority, so any one Republican might stall any future vote in the Senate.

This changed the whole political game.  The only way to guarantee passage of a health reform law was for the House to vote to accept the Senate version as-is.  That would preclude the need for a “Conference”, and the President could directly sign it into law.  This was a gigantic ego gulp for House members, and it also explains Speaker Nancy Pelosi’s (true) statement that “We have to vote on the law to know what’s in it.”  The House truly had never seen it.  They just knew they had to say yes, or the whole effort would fade away.

So, the text of today’s health reform law is the grab-bag hodge-podge of items the Senate had planned to use as bargaining chips & throwaways.  It was never, in anyone’s wildest dreams, envisioned or intended to be the law of the land.  However, that is what happened, and that’s why it is useless to try to find logic in something never designed to be a logical or coherent document.

It is NOT Obamacare.  The President remained aloof to the health reform project.  Most Presidents would have been very visibly involved from day one.  Some say that he did not want to waste his “honeymoon” & political goodwill on the emotional and often-losing issue of health reform.  So, until opposition started to grow to what had become nicknamed Obamacare, and the White House feared that something with the President’s name going down to defeat so soon would undercut the image & influence of President Obama, he did not get really visibly involved until comparatively late in the game.  By that time, the text of what is the law had been pretty firmly set.  So, failures or unpopular portions of the law cannot be blamed on the President.

The most influential moment in the evolution of the law came at the SPBA 2009 Spring Meeting.  Since SPBA members are involved with the largest and broadest range of employers and plans, SPBA meetings are a popular non-political non-lobbying off-the-record brainstorming venue for legislative ideas and regulators.  At that 2009 session, several of the staff putting together the Senate version (which became law) brainstormed with the SPBA attendees.  The biggest item was that the various fines, fees, limits, caps & transparency imposed on insurance companies would also have been applied to self-funding….even though they made no sense or could not be achieved with self-funding.  The 400 people at the SPBA meeting explained that there is no profit anywhere in the self-funding concept, so parts of the legislation related to controlling “profits” were nonsensical & not applicable.  It was also pointed out that ERISA strict fiduciary duty, transparency & detailed Form 5500 reporting has been applicable to self-funded plans & TPAs since 1974.  The result of that discussion is that self-funding is already meeting the intent of ACA, so the onerous rules on fully-insured were not applied to self-funding in the law.

So, the moral of the story is that the text of the law was never envisioned or intended to be a piece of legislation.  That’s why the parts don’t fit, and some provisions make no sense.  It was a legislative accident of desperation.  Congress often likes to pass “something” with a nice name rather than wait and do it right.  Also, President Obama should neither be blamed nor given credit for the law, so the Obamacare nickname is inaccurate.

Parting thoughts:  Truth is stranger than fiction. +  “No one should look too closely at the making of sausage & laws.”

Fred