MH: Why do you think public perception hasn't changed? You look at some of the polling data and they seem remarkably stagnant across that time.
Jennings: There will always be a core population who's adamantly opposed to the law. Clearly, this issue is about more than healthcare. It has become a debate about the appropriate roles between public and private sectors, perceptions about President Obama and other issues. Secondly, there is a base within the Democratic Party who strongly feels that we should move toward a single-payer system. As such, the polling data are frequently misread because there are Democrats who are still dismayed that, despite having a Democratic White House and Senate, there couldn't have been more of an embrace of that vision. Having said that, we are moving from a debate of perception to one of actual experience. Rarely do people value the benefits of health reform until they are seriously threatened. Should the threat become real, the irony will be that the law will become more popular.
MH: You were in the middle of the healthcare debate in 1993. What changed that allowed this law to pass in 2010 that kept it from happening back then?
Jennings: The history of every major law has seeds of lessons learned and applied from setbacks. One being, that if we were going to reform the healthcare system, we had to be careful about excessive disruption. In 1993-94, we had the same concept of exchanges. We called them co-ops and alliances, but they were much larger and they would have pooled more people together.
They would have been more efficient, but the perception of disruption to the marketplace scared people.
The second difference was that the Health Security Act had more of a focus on employer responsibility than individual responsibility. While that may have polled better, it did not fare well in the Congress.
Thirdly, in order to pass this legislation, there had to be a bigger investment of the Congress in the policy and broader stakeholder support. The details, process and timing of the development of the Health Security Act made congressional buy-in extremely difficult. Also, the policies of the legislation on cost containment were more threatening to the pharmaceutical and health insurance sectors, resulting in strong and effective opposition.
Finally, there were process and timing differences. When President Clinton came on board, he had to make a decision as to whether he was going to integrate healthcare into the budget debate in a reconciliation vehicle. He did not have the 60 Senate Democratic votes that President Obama had. Also, he was advised by his economic team to separate the two issues because the deficit reduction policies were going to be difficult enough.
And since President Clinton only secured that deficit reduction package passage by one vote in both the House and in the Senate, his economic advisors' analysis may have been right.
That pushed off the healthcare debate into the end of 1993. That was after very tough votes on crime and on trade. By the time we got to healthcare, the political environment had changed for the worse, but the economy hadn't turned around yet. The people who cast those tough votes for deficit reduction, crime and trade said, “You're asking me to vote on an issue as hard as healthcare? Are you kidding me?”
What did President Obama learn? He learned he had to do this very early in his tenure before he lost political capital. He learned that you had to pursue a policy that avoided disruption to the furthest extent possible. He understood that exchanges needed to largely target people who either had no coverage or people who wanted to leave their coverage. And the focal point should not be on the employer contribution, but rather on the insurance reforms and the individual responsibility provision necessary to secure them. Not that opponents care now, but President Obama's approach was, of course, the underpinning of the Republican alternative in '93-'94 and Mitt Romney's Massachusetts' approach.
MH: What about the role of insurers in '93-'94 versus 2010?
Jennings: The co-ops are a great example. In '93-'94, the insurers felt threatened by large co-ops and lobbied aggressively against them. The other big difference between '93-'94 and '09-'10 is that the stakeholders all uniformly concluded (in '09-'10) that constraining healthcare costs would be a congressional priority. They made a strategic decision to embrace the notion that those savings should be reinvested to cover more people as opposed to going someplace else. The plans concluded that competing on their ability to avoid sicker populations (and their underwriting practices to do this) was no longer tenable. Republicans and Democrats all agreed with that.
And pharma was another interesting example. They didn't want to be the only ones not at the table and made a strategic decision that they could get something out of a negotiated agreement. They got a catastrophic drug benefit that will cover their most expensive medications and the elimination of the doughnut hole constructed in a way they could support. They also averted some of the most threatening policies that they were most concerned about, including a relatively favorable deal on biosimilars.
Those stakeholders made a strategic decision that it was in their long-term business interest to have people covered, to have it largely administered by private plans and to limit excess federal regulation. This was not an outside-in process; it was an inside-out process. As a result, there was no significant stakeholder opposition to the Affordable Care Act—and there still isn't.
MH: There's been a fair amount of tension around narrow networks and the transition to them under the exchanges. Do you expect there to be blowback against that like there was with HMOs? If not, what's changed?
Jennings: Where there are abuses in networks—they're too narrow, people can't access real care—you will see pushback. I believe that this will be more the exception than the rule. The public is more used to narrow networks. They're more used to private-plan management options and choice, particularly younger populations. Second, the plans have learned that to best avoid political and public scrutiny, they need to work with clinicians. Thirdly, remember that most of those populations who are going into the new narrower networks are people who were previously uninsured. If you're previously uninsured, a narrow network is still a lot better than nothing. In the old days, in the HMO days, people who had healthcare were feeling like they were losing something that they had.
The issue that drives this debate is cost. If the only way you can provide an affordable option is to have narrower networks, people will generally vote with their feet to accept that as an alternative.
MH: How do you see the politics of Obamacare playing out this year?
Jennings: I think the politics of the ACA—for good or bad—are pretty much now baked for the fall. The base of the Republican Party, who feel more strongly against this than the rest of the country, are going to be more motivated to vote. But I don't believe that this will be the driving issue of the 2014 election. Those results will be far more about perceptions of the economy and the president in general.
As time goes on you're seeing Democrats embrace President Clinton's guidance which is: you own this; you must embrace it; you must promote and defend it. What the opponents are talking about is repealing and replacing. Supporters need to talk about working with others, on a bipartisan basis, to improve the law. Fundamentally, that's where the vast majority of the American public is, too. With each passing election, that's going to be more the case, and people who aren't willing to engage at that level are going to be viewed as out of touch.