WASHINGTON — Ezekiel J. Emanuel,
who helped devise the Affordable Care Act, has a vision for how it will
eventually work. Democrats hope it will not materialize anytime soon.
Mr. Emanuel expects the law to
produce an unadvertised but fundamental shift in where most working Americans
get their health insurance — specifically, a sharp drop in the number of
employers who offer coverage to their workers. That scale of change would dwarf
what took place last fall, when a political firestorm erupted over President
Obama’s “if you like your plan you can keep it” pledge.
His former colleagues in the Obama
White House say there is no evidence the law will bring “the end of
employer-sponsored insurance,” as Mr. Emanuel puts it in his
new book with the mouthful of a title, “Reinventing American Health Care:
How the Affordable Care Act Will Improve our Terribly Complex, Blatantly Unjust,
Outrageously Expensive, Grossly Inefficient, Error Prone System.”
The law fines large companies that
do not offer health coverage, but most have voluntarily offered coverage for
many years. The proportion of Massachusetts employers offering health coverage
actually increased when the state passed a similar health law a few years
ago.
But now Mr. Emanuel thinks that a
number of well-known national companies will break the mold and begin a trend.
By his estimation, the proportion of private-sector workers who receive health
care from employers will fall below 20 percent by 2025. Currently, just under 60
percent of private-sector workers get health care from employers.
“It’ll be a matter of a few big
employers, blue-chip companies,” Mr. Emanuel said in an interview. “Then it’s
going to be the norm.”
Mr. Emanuel, the brother of Rahm
Emanuel, the mayor of Chicago and Mr. Obama’s former chief of staff, said
that shift “will be a good thing” by helping control costs and enhance consumer
choices. He concluded that “you might put it under positive, unintended
consequences.”
Many health experts, both liberal
and conservative, agree that it would be a good thing.
The American system of
employer-provided health insurance was an accident of history spawned by wage
controls during World War II. Employers were limited in giving employees raises,
so many decided to reward workers with heavily subsidized health care instead.
Since then, the practice has been widely blamed for limiting choice and
accelerating health cost inflation.
Right now, an end to employer-paid
health care is about the last thing Democrats want, especially as they face
midterm elections in a defensive crouch after the administration’s bungled
rollout of the health care law last fall. “It would be a big, big problem
politically,” said Jonathan Gruber, an M.I.T. health economist who also advised
the White House on the law.
Would-be health reformers have
long struggled with how much change American consumers and voters would accept.
In 2008, Senator John McCain of Arizona, the Republican presidential candidate,
experienced the dangers when he proposed a plan eliminating the tax break for
employer-provided health coverage — and faced blistering “tax increase” attacks
from Mr. Obama.
As president, Mr. Obama intended
his program to limit the number of changes required. He grafted expanded
coverage and changes in the individual insurance marketplace onto the existing
system rather than building an entirely new one. He also left mostly undisturbed
the much larger employer-provided insurance market, which currently serves an
estimated 149 million people. “If you’re happy with it and your employer’s happy
with it, keep it,” the president said at one point.
But Mr. Obama included a feature
sure to make some employers less happy: To help finance his plan and constrain
health costs, he reversed course and supported a new tax, beginning in 2018, on
the most generous health care plans that some large companies provide.
Mr. Emanuel argues that this
“Cadillac tax,” along with taxpayer subsidies now available for Americans with
modest incomes, will expand and accelerate the trend away from employer-provided
health care.
Even though the health law’s
“employer mandate” requires that companies with 50 or more workers pay a penalty
of $2,000 per employee if they do not provide health care, many large companies
now spend far more than that to offer coverage. As a result, Mr. Emanuel says
they will be able to pay the penalty, give workers a raise and shed the burden
of providing coverage by sending workers to the public exchanges.
“By 2025, few private-sector
employers will still be providing health insurance,” Mr. Emanuel writes in his
book.
So far, his view remains an
outlier among health policy experts. “There’s not going to be massive erosion”
in employer-provided coverage, Mr. Gruber said. Similarly, White House advisers
argue that large companies will continue to view health coverage as a crucial
competitive tool for attracting the best employees. The Congressional Budget
Office has projected a comparatively modest drop affecting three to five million
people annually by 2019.
Avik Roy, a senior fellow at the
conservative Manhattan Institute who advised Mitt Romney’s Republican
presidential campaign in 2012, said shifts would be most likely among retailers
and restaurants with heavy concentrations of low-wage workers eligible for
public subsidies. But if it happens, a large-scale shift would give Republicans
a fat new political target. They would argue that Mr. Obama had once again
expanded the role of government, forced taxpayers to subsidize a growing number
of workers “dumped” onto exchanges and further misled the country to win passage
of the law.
Mr. Roy hopes fellow conservatives
will react with restraint, not out of sympathy for Mr. Obama but because the
shift would bring a market-friendly improvement to American health care.
“He did lie, and he should be held
accountable,” Mr. Roy said. But, he added, “It’s a better world where people
shop on their own.”
The caveat is that a switch from
employer-provided health care will become an issue only if the public exchanges
evolve into the easy-to-navigate, Amazon-style marketplaces the Obama
administration promised in the first place. Mr. Obama says the public exchanges
are operating smoothly as the March 31 deadline for 2014 coverage approaches,
but for Mr. Emanuel’s vision to be realized, they have to be.
“A lot of that’s going to depend
on how good the exchanges are,” said Mr. Emanuel, who now teaches health policy
at the University of Pennsylvania. With consistent attention, he insists,
government can solve the technical problems just as major retailers have.
“Zappos didn’t put up a website and go home,” he said.