Tuesday, August 05, 2014

No, Ben Nelson didn't scuttle the ACA's federal exchange

[Update, 1/29/15: As Jonathan Cohn reports, Nelson has just precisely confirmed the reading below of his position re federal and state exchanges.]

The latest bit of sophistry deployed by Halbig supporters to convince the world that the Senate Democrats who drafted the ACA deliberately barred subsidies from flowing through any exchange set up by the federal government is a claim that "Ben Nelson made them do it," Here's David Catron in The American Spectator (retailed without value-add by the Wall Street Journal's James Taranto):
Jonathan Cohn advises his New Republic readers, “Like other journalists who were following the process closely, I never heard any of them suggest subsidies would not be available in states where officials decided not to operate their own marketplaces.”

This is an odd statement indeed considering that high-profile publications were reporting a lively debate over this very issue. And Ben Nelson’s name was frequently mentioned. In January of 2010, for example, Politico reported that he regarded federal control of Obamacare’s exchanges as “a dealbreaker.” Nelson said that too much federal involvement would inevitably lead to government-run health care: “I wouldn’t support something that would start us down the road of federal regulation of insurance and a single-payer plan.”

He reiterated his objection to federal exchanges in this 2010 video, wherein Greta Van Susteran presses him to provide a legitimate motive for ultimately voting in favor of health care “reform.” Nelson vehemently insists that no one bought his vote: “I had requirements… no government-run plan, no federal exchange… and adequate language to deal with abortion. Those were requirements, but no one was buying any vote.” Nelson clearly implies that these conditions had been met and this is why he flip-flopped and voted for the bill.
These statements prove nothing, and indicate nothing.There was precisely zero public debate over whether the Senate bill allowed a federal exchange to credit subsidies. Catron strips the context out of the Politico article, which in fact indicates the opposite of what Catron and Taranto imply.

The article in question was published a week after Scott Brown's special election victory ended the Senate Democrats' filibuster-proof 60-vote majority. The author, Carrie Budoff Brown, was framing an anticipated battle between Senate and House versions of what became the ACA. The House version created a federal exchange, with an opt-out for states that wanted to create their own. The Senate bill stipulated that states would establish their own exchanges, with an opt-out for those that chose to cede the function to the federal government. Brown seems to anticipate that the House version may prevail, because it could be incorporated in the reconciliation bill by which the House modified the Senate bill, and reconciliation only requires 51 Senate votes:
Sen. Ben Nelson (D-Neb.) said Monday that he would oppose any health care reform bill with a national insurance exchange, which he described as a dealbreaker.

"The national exchange is unnecessary and I wouldn’t support something that would start us down the road of federal regulation of insurance and a single-payer plan," Nelson told reporters Monday.

If Senate Democrats still had 60 votes, this would matter a lot.

Before the Massachusetts election, the White House and Democratic leaders were attempting to negotiate a compromise that could win 60 votes in the Senate. And Nelson could have deprived House Democrats from securing what they have increasingly viewed as a must-have -- a national exchange rather than a series of state exchanges.

But for now, Democrats are trying to write a companion bill to the full Senate legislation that would need only 51 votes in the Senate. That means Nelson's threat to vote against any bill with a national exchange doesn't mean much.

Nelson knows it, too.

"Those who didn’t want me to be the 60th vote, get their wish," he said.
Nelson is setting his face against the House-model federal exchange that would be the assumed default option (while acknowledging he might be powerless to stop it), not against the federal "backstop" that was incorporated in the Senate bill.  And he never said anything about that backstop being empowered to credit subsidies to qualified buyers or not.

It's true that during the reconciliation process, both before and after the Scott Brown bombshell, there was considerable tension about the degree of control the federal government would exert over the individual insurance market. But the focal point was how much power would be left to the states to regulate insurance and shape the market at the state level.  A January 13, 2010 New York Times article by Reed Abelson makes this clear:
Should someone in Idaho or Nevada have significantly different health care coverage from someone in Massachusetts? ,,,

The House and Senate take starkly different approaches to the question. And some policy analysts say the version that lawmakers ultimately choose could determine whether residents in some states end up with significantly better or worse coverage than people in other states.

The House bill envisions a new federal agency to oversee a national marketplace in which people could buy insurance. House leaders said this week that they would fight to keep that provision in the final legislation. But the Senate bill calls for the industry overhaul to take place on the state level, with marketplaces, or exchanges, set up in each of the 50 states....

Under the Senate legislation, the same state officials who now oversee the insurance market with varying degrees of intensity would be largely responsible for putting into effect and enforcing the new law — rules intended to give individuals and small businesses access to better, more affordable coverage. Besides running the insurance exchanges, the states would determine which health plans can be offered and how much in premiums the insurers can charge from year to year.

The House bill, on the other hand, would essentially put the federal government in charge of the new insurance system. It would create a new agency, the Health Choices Administration, to vet the health plans available and review any premium increases.

In the ACA as enacted, there is quite a bit of variation in the degree to which states undertake their regulatory responsibilities in the individual insurance market. But the law as written met Nelson's federalist specs: states are expected and encouraged to use their power to make the insurance market work for their citizens -- to set their own standards for plans allowed into their exchanges, to guard against adverse selection, to administer the ACA's reinsurance and risk adjustment programs.

The ACA invites the states to be active stewards of their private health insurance markets.  But there's nothing in the law that coerces them to.

It's also clear that Nelson did not write the language at issue in Halbig. Joseph Morton of the Omaha World-Herald covers this ground:
...lawmakers and congressional aides from both parties cast doubt on whether Nelson had much to do with the language that a federal appeals court targeted this week in throwing out a key aspect of the Affordable Care Act.
Instead, they say the questionable language already had been put in place by the time Nelson began negotiating in earnest with the Senate's top Democrats...

It's true that Nelson made a number of demands in exchange for his vote. But the key language cited in the court ruling was in the bill when it was passed by the Senate Finance Committee. Nelson wasn't a member of the committee, which means he had little to do with that version...
Morton goes on to note that Nelson's main input, via the infamous "cornhusker kickback," was to ease states' (quite limited) fiscal responsibility for the ACA's Medicaid expansion. With regard to the exchange structure:
Nelson also spoke generally about the need for states to have input and control. That's the kind of talk that some have cited as contributing to the legislation's wording that focuses on state-based exchanges.

But various aides who worked on the law have noted that many lawmakers had expressed a desire to empower the states and said no one actually envisioned excluding the tax subsidies from the federal exchange.

That generalized ideological preference is what's reflected in Nelson's exchange with Van Susteren, on April 13, 2010, in an interview focused almost entirely on the cornhusker kickback. Here too, Catron leaves out an important bit of context, italicized below:
There was no quid pro quo. There was no effort at all to buy my vote. I had requirements, my requirements were no government-run plan, no federal exchange, national exchange, and adequate language to deal with abortion. Those were requirements, but nobody was buying any votes.
A "national exchange" suggests one exchange serving the entire nation, rather than merely an exchange run by the federal government that states could opt into (and in April 2010, Nelson could have no inkling that more than 30 states would do so). In defense of his own role, he could take refuge and solace in the law's highly federalized structure, which is designed to foster state officials' control of their state health insurance markets. But there's no evidence that he ever envisioned or took credit for sabotaging the federal backstop written into the law.

The Halbig file
The ACA preserved state regulation of health insurance
Michael Cannon gives the game away
The ACA provision that should have killed Halbig

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