Twisted History

A few months ago, Stanek messaged me with an interesting observation: it's curious to see all the nostalgia these days for a supposed "time before corporations" in American history when we consider that we are a country that was literally founded by one (that's not his argument verbatim, just my summation of it). I know almost nothing about economics so I won't comment on American corporate history here. However, I've always been one to keep an eye out for tidbits that fly in the face of the generic, vague, or flat-out false "facts" about U.S. history that get thrown around, especially those used for political arguments (what I call "twisted history"). It's not that I'm a buff for alternate history or that I go out of the way to find any facts I can that support my own opinion, but I do keep the door open while reading for when those facts do happen to show up. And at the very least if it turns out that I'm wrong then my own views on history will have been challenged for the better.

Thus, with all the generalized comments these days about returning to a time in American history when the government never told us what to do and that the states should be calling the shots, it made me laugh when I caught this brief mention in Ira Berlin's Many Thousands Gone: The First Two Centuries of Slavery in North America of South Carolina telling its citizens what to do:

"...other strictures were added, including limitations on movement of slaves and penalties against white persons who traded with slaves. A recapitulation of these laws in the 1691 slave code forbade slaveowners from giving slaves Saturday mornings free, 'as hath been accustomed formerly.'" (page 68)

To me, there is something incredibly ironic about the government of South Carolina, of all places, not only attempting to force its citizens to do something (that is, be more cruel to their slaves) but also trying to control the free market. But to be fair, Berlin shows throughout the book that the north had its share of reprehensible laws regarding slavery and individual rights too. This passage in particular caught my eye:

"Often the punishment meted out to free blacks drove them back into bondage, as the Pennsylvania law enslaved free blacks found to be without regular employment, and who "loiter[ed] and misspen[t]" their time." (page 187)

Freed blacks being enslaved for not spending their time the way the state thinks they should... I understand the different mindset whites had back then towards African Americans but regardless, that is a pretty significant showing of just how intrusive state governments could be back then. Of course libertarians might argue that government at any level should stay out of our lives, whereas I would counter that that's likely one of the ways slavery got started in the first place.

Anyway, I don't really have an overall argument here. It is generally true that government was less intrusive in 18th and 19th centuries. The examples I pointed out were also from the colonial era, although to me it's a hard argument to say colonial governments were any more intrusive than early American state governments. Additionally, these laws are hundreds of years old and have little to do with the governments they are associated with today; if conservatives in South Carolina or Pennsylvania want little or no government interference today then that's their political ideology. I just like pointing out that governments at all times and in all places have had a tendency to try and tell people what to do, for better or for worse. In many instances in addition to the two that I listed, things weren't as hands off and "free to do as you please" in the previous centuries as certain people like to believe. Ironically, you would think that having a system of slavery would make that self-evident...

Simpsons Flashback

Life as a Movie

I recommend playing both videos simultaneously.

Necessary, ergo Improper

One (brief this time) addendum to the last post. In thinking more about the N&P-related bit of Vinson's ruling, I find a piece of it very puzzling. Here's an extended quote to get the point across:

One of the amicus curiae briefs illustrates how using the Necessary and Proper Clause in the manner as suggested by the defendants would vitiate the enumerated powers principle (doc. 119). It points out that the defendants are essentially admitting that the Act will have serious negative consequences, e.g. encouraging people to forego health insurance until medical services are needed, increasing premiums and costs for everyone, and thereby bankrupting the health insurance industry--unless the individual mandate is imposed. Thus, rather than being used to implement or facilitate enforcement of the Act's insurance industry reforms, the individual mandate is actually being used as the means to avoid the adverse consequences of the Act itself. Such an application of the Necessary and Proper Clause would have the perverse effect of enabling Congress to pass ill-conceived, or economically disruptive statutes, secure in the knowledge that the more dysfunctional the results of the statute are, the more essential or "necessary" the statutory fix would be. Under such a rationale, the more harm the statute does, the more power Congress could assume for itself under the Necessary and Proper Clause. This result would, of course, expand the Necessary and Proper Clause far beyond its original meaning, and allow Congress to exceed the powers specifically enumerated in Article I. Surely this is not what the Founders anticipated, nor how that Clause should operate.

[...]

If Congress is allowed to define the scope of its power merely by arguing that a provision is "necessary" to avoid the negative consequences that will potentially flow from its own statutory enactments, the Necessary and Proper Clause runs the risk of ceasing to be the "perfectly harmless" part of the Constitution that Hamilton assured us it was, and moves that much closer to becoming the "hideous monster [with] devouring jaws" that he assured us it was not.

The defendants have asserted again and again that the individual mandate is absolutely "necessary" and "essential" for the Act to operate as it was intended by Congress. I accept that it is. Nevertheless, the individual mandate falls outside the boundary of Congress' Commerce Clause authority and cannot be reconciled with a limited government of enumerated powers. By definition, it cannot be "proper."

Legislation often has unintended consequences so I agree with the sentiment here insofar as any decision upholding the mandate on N&P grounds would have to do a good job thinking through some tests or conditions for understanding the word "necessary" in future applications to similar cases. As I said in the last post, however, I don't think it should be absurdly difficult to boil down to basics what separates this application to a law involving health insurance markets from future silly attempts to apply this logic to tea or car markets.

All that aside, the argument here seems to be: "Yes, the mandate is necessary but only because the rest of the law makes it so! Therefore, by [my] definition, it must be improper!"

Is he saying here that the very fact that the rest of the law makes the mandate necessary is itself the very thing that makes the mandate improper? That is, if a provision is necessary for a law to function effectively (i.e. without self-imposed negative consequences), it is by definition improper.

Is it just me, or is that absurd?

Necessary and Proper, again

Last week, a federal judge in Florida, Roger Vinson, ruled that the individual mandate to carry health insurance in the Affordable Care Act is unconstitutional. But his ruling was considerably more sweeping than that of the judge who concluded the same thing in December because he decided that this made the entire health reform law unconstitutional.

But I'm back at the point of confusion I wrote about in December and this ruling has thrown it into even starker relief. As we all know, the Constitution grants Congress the power "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

I'm certainly not a lawyer but the interpretation of this provision seems to me to be fairly well-established. As Madison wrote in Federalist 44:

No axiom is more clearly established in law, or in reason, than that wherever the end is required, the means are authorized; wherever a general power to do a thing is given, every particular power necessary for doing it is included. Had this last method, therefore, been pursued by the convention, every objection now urged against their plan would remain in all its plausibility; and the real inconveniency would be incurred of not removing a pretext which may be seized on critical occasions for drawing into question the essential powers of the Union

Similarly, in 1819 the Marshall Court concluded the following in McCulloch v. Maryland:

We admit, as all must admit, that the powers of the Government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional.

And, more to the point I'm going to come to in a moment, Antonin Scalia summed up the current understanding of the Necessary and Proper clause's application to the Commerce Clause just a few years ago:

As the Court put it in Wrightwood Dairy, where Congress has the authority to enact a regulation of interstate commerce, “it possesses every power needed to make that regulation effective.” 315 U.S., at 118—119. [...]

Unlike the power to regulate activities that have a substantial effect on interstate commerce, the power to enact laws enabling effective regulation of interstate commerce can only be exercised in conjunction with congressional regulation of an interstate market, and it extends only to those measures necessary to make the interstate regulation effective. As Lopez itself states, and the Court affirms today, Congress may regulate noneconomic intrastate activities only where the failure to do so “could … undercut” its regulation of interstate commerce.

Now let's switch gears for a second. It seems to be the case that both the federal judges who ruled against the ACA and even the plaintiffs who brought the lawsuits to them largely accept the insurance market regulations in the ACA, except for the individual mandate, of course. I quoted from the Virginia judge's ruling in December:

The Commonwealth does not appear to challenge the aggregate effect of the many moving parts of the ACA on interstate commerce. Its lens is narrowly focused on the enforcement mechanism to which it is hinged, the Minimum Essential Coverage Provision.

And, similarly, the ruling out of Florida this week concedes:

In light of United States v. South-Eastern Underwriters, 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440 (1944), the "end" of regulating the health care insurance industry (including preventing insurers from excluding or charging higher rates to people with pre-existing conditions) is clearly "legitimate" and "within the scope of the constitution."

As I've pointed out on here before (and opponents of the law have been eager to point out all along), the ACA is a big law. It's a lot of pages. It's a lot of words. It's a lot of policy. The charge from disgruntled liberals that the ACA is merely "health insurance reform, not health care reform" is, I think, misguided. Certainly one can imagine more sweeping, immediate, and fundamental reform frameworks than that offered by the ACA. But that's not the same as implying the ACA addresses only health insurance. Indeed, the law contains ten titles:

TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
TITLE II--ROLE OF PUBLIC PROGRAMS
TITLE III--IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE
TITLE IV--PREVENTION OF CHRONIC DISEASE AND IMPROVING PUBLIC HEALTH
TITLE V--HEALTH CARE WORKFORCE
TITLE VI--TRANSPARENCY AND PROGRAM INTEGRITY
TITLE VII--IMPROVING ACCESS TO INNOVATIVE MEDICAL THERAPIES
TITLE VIII--CLASS ACT
TITLE IX--REVENUE PROVISIONS
TITLE X--STRENGTHENING QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

The reforms of the private insurance market are contained entirely in Title I. The individual mandate (also, of course, contained in Title I) is in there because of those Title I provisions. No one wants the individual mandate to be in the law, it's not favored as a policy unto itself. Obama the candidate sure didn't like it. It remains virtually the only major, visible component of the law that the majority of Americans dislike; it's not much of a stretch to think that the negative impression of the ACA lingering in the minds of 50-60% of Americans is due in large part to the presence of the individual mandate. Assuming politicians are self-interested and wish to avoid shellackings at the polls, one might think that if they could reliably further their health reform agenda without it, they would.

The mandate's presence in the law isn't aesthetic and it isn't ideological, it's functional. Preventing insurers from turning people away and forbidding them from charging the sick higher premiums gives the healthy among us license to drop out of health insurance pools until we get sick (at which point we can opt back in without any penalties or negative repercussions for our irresponsibility), a phenomenon known as adverse selection. Enabling this free-riding threatens to destabilize health insurance markets. For a taste of this, we need look no further than another piece of the ACA itself. The ACA instituted guaranteed issue rules immediately for one very small segment of the population: children obtaining insurance independently from their parents. Insurers offering child-only policies can no longer turn away kids with pre-existing conditions. The result of this small gesture--which opens the door to adverse selection, even though some tools for fighting it, like charging sick kids more than healthy kids, are still available to insurers--has, in many states, been market destabilization.

So let's get back to Vinson's ruling. In throwing out the individual mandate as unconstitutional, he signals that he accepts it's essential for making the rest of the insurance reforms work:

In other words, the individual mandate is indisputably necessary to the Act's insurance market reforms, which are in turn, indisputably necessary to the purpose of the Act.

He has to accept that if he's going to take the extreme step of concluding that overturning the mandate requires overturning the entire law. And he does just that, suggesting that the individual mandate cannot be severed from the rest of the law ("This conclusion is reached with full appreciation for the 'normal rule' that reviewing courts should ordinarily refrain from invalidating more than the unconstitutional part of a statute, but non-severability is required based on the unique facts of this case and the particular aspects of the Act.").

Now, you might say, even if the mandate can't be severed from the insurance market reforms it was included to protect, i.e. Title I of the ACA, can't it be severed from Titles II-X of the law? I had the same thought and the answer seems to be "presumably." But Vinson doesn't stop at Title I even though the mandate's effect is entirely restricted to directly affecting the provisions of Title I because, in his estimation, if Congress had known that the individual mandate would get thrown out, they might not have enacted any of the provisions in the law, even the parts of the law that have nothing to do with the private insurance market reforms, i.e. all of the parts outside of Title I--at the very least, he can't be expected to sort out the parts they would have enacted anyway from parts they wouldn't ("There are simply too many moving parts in the Act and too many provisions dependent (directly and indirectly) on the individual mandate and other health insurance provisions--which, as noted, were the chief engines that drove the entire legislative effort--for me to try and dissect out the proper from the improper, and the able-to-stand-alone from the unable-to-stand-alone.").

But it seems to me that now we're in an odd place. The insurance market reforms (aside from the individual mandate) are accepted by everyone to be an appropriate exercise of Congress's power under the Commerce Clause. And Vinson accepts that the mandate is "indisputably necessary to the Act's insurance market reforms" because that's the first link in the logical chain he tries to build to justify tossing out the entire law, which he acknowledges is a departure from the "normal rule" that would oblige him to nullify only the individual mandate.

Referring back to the quotes explaining the Necessary and Proper Clause I posted above (particularly Scalia's succinct summation of where it stands in relation to Commerce Clause powers), it seems to me that accepting it's "indisputably necessary" for implementing a Commerce Clause-sanctioned insurance regulatory scheme ought to be enough for it to pass constitutional muster. In fact, it seems to me that, as a matter of logic, any argument that nullifying the mandate must require throwing out the rest of the reform law because the two cannot be functionally disentangled itself implies that the mandate is constitutional under the Necessary and Proper Clause.

Despite accepting the "necessary" half of the Necessary and Proper argument for the individual mandate, Vinson ultimately rejects the N&P argument for the mandate's constitutionality for reasons that appear to me to be more ideological than logical: the mandate "cannot be reconciled with a limited government of enumerated powers. By definition, it cannot be 'proper.'"

The thought process here hinges on the notion that if the individual mandate is allowed through this argument, then effectively the federal government's power becomes limitless. In that sense, it's similar to the argument that if the mandate is constitutional, then the federal government can require you to purchase anything: vegetables, tea, cars, whatever. To argue this point, Vinson draws upon a case decided by the Supreme Court in 1997, Printz v. United States. This case revolved around a challenge to a provision of the Brady gun control law that essentially drafted state officials to handle the background check component of the law until the feds were prepared to take on that responsibility:

Brady Handgun Violence Prevention Act provisions require the Attorney General to establish a national system for instantly checking prospective handgun purchasers' backgrounds, note following 18 U.S.C. § 922 and command the "chief law enforcement officer" (CLEO) of each local jurisdiction to conduct such checks and perform related tasks on an interim basis until the national system becomes operative

In the Supreme Court's decision it held that forcing state officials to act as agents of the federal government to conduct those background checks wasn't "proper" under the N&P clause:

When a "La[w] . . . for carrying into Execution"the Commerce Clause violates the principle of state sovereignty reflected in the various constitutional provisions we mentioned earlier, supra, at 19-20, it is not a "La[w] . . . proper for carrying into Execution the Commerce Clause," and is thus, in the words of The Federalist, "merely [an] ac[t] of usurpation" which "deserve[s] to be treated as such." The Federalist No. 33, at 204 (A. Hamilton). See Lawson & Granger, The "Proper" Scope of Federal Power: A Jurisdictional Interpretation of the Sweeping Clause, 43 Duke L. J. 267, 297-326, 330-333 (1993). We in fact answered the dissent's Necessary and Proper Clause argument in New York: "[E]ven where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts. . . . [T]he Commerce Clause, for example, authorizes Congress to regulate interstate commerce directly; it does not authorize Congress to regulate state governments' regulation of interstate commerce." 505 U.S., at 166 .

In quoting this passage in his ruling, Vinson truncates the phrase "violates the principle of state sovereignty reflected in the various constitutional provisions we mentioned earlier" to "[violates other Constitutional principle]." Clearly he's taking it for granted that the principle of "limited government of enumerated powers" can easily be substituted in here for the principle that states retain sovereignty in our federal system and can't be compelled to do the bidding of federal law. Assuming that notion is beyond reproach, the argument still falls apart if allowing an individual mandate under the N&P clause doesn't actually offer the government near limitless power.

Consider again Scalia's point that a power sanctioned by the N&P Clause "can only be exercised in conjunction with congressional regulation of an interstate market, and it extends only to those measures necessary to make the interstate regulation effective." That sounds about right to me. What that reminds us is that a N&P power (whatever it might be in a given circumstance) is always Robin to some other policy's Batman. It can't exist in isolation. So, for example, if you introduced a piece of legislation that consisted of one sentence instituting an individual mandate to buy insurance, it wouldn't work under this argument. It must be part of a package deal; it has to be included because it's necessary and proper for something else to function effectively. And that something else has to be plainly constitutional under one of the enumerated powers.

For the same reason, accepting this line of argument doesn't afford the federal government the power to require you to, for example, buy tea. In order to pass an individual mandate for the purchase of tea using the argument that the provision is justified under the Necessary and Proper Clause, you'd have to pass it as part of a package. And the rest of that package must 1) be plainly constitutional (say, under the Commerce Clause) and 2) dysfunctional without the tea mandate. Can you think up a regulatory scheme authorized by the Commerce Clause that plainly--without logical leaps, extreme contortions, or other indefensibles--requires the purchase of tea in order to function and achieve its goals? Perhaps I'm short on imagination but I can't.

Insurance regulations that institute guaranteed issue and community rating laws (i.e. prohibitions on turning people away or charging them differently based on health status or medical history) are 1) constitutional under the Commerce Clause and 2) potentially fatally undermined by adverse selection. That's why a remedy--a deterrent to adverse selection--would be allowed under the N&P clause. That remedy would be both necessary and proper for implementing those insurance reforms without risking that market destabilization I mentioned above. But adverse selection is, I believe, a relatively unique phenomenon and one limited to special markets like insurance markets. I think finding an equivalent phenomenon created by a particular regulatory structure in a more traditional market, like the market for tea, would be difficult. And yet without it you can't pass an individual mandate to purchase tea. So I don't buy the argument that accepting the legitimacy of the individual mandate for health insurance in this particular (rather unique) instance necessarily does away with the principle of "limited government of enumerated powers."

So, as I said, I'm back at the point of confusion I've been at all along: since the N&P argument for the constitutionality of the individual mandate in the ACA tracks perfectly with the actual policy reasons it's in the law in the first place (despite its political unpopularity, it's actually necessary to ensure that the insurance market reforms work properly) and doesn't supply the federal government with limitless powers, why is this argument not enough to give the individual mandate the green light? And if for some reason it doesn't fly, why doesn't that failure automatically insulate the rest of the law from the mandate's nullification by severing it?

Why 2014?

The other day, after the anti-ACA court ruling was handed down, over at the (great) blog The Incidental Economist Austin Frakt wrote:

The brilliant legislative logicians that dreamed up (or forced) a 2014 start date for the exchanges, Medicaid expansion, many of the health insurance market reforms, and, yes, the mandate, will be very nervous. Could they have made it much harder for the court to rule against the law?

Had the implementation been one to two years sooner, a nullification of the law, or part thereof, would be dramatically more disruptive. The pressure would be enormous for something to be done to prevent that possibility. I gather 2014 was a budgetary necessity. How much harder would it have been to buy another year or year and a half? Was that completely out of the question?

The conventional wisdom as to why 2014 is the start date of the coverage expansions in the health reform law is that it's largely a budgetary gimmick: conservatives charge that this is intended to mask the law's deficit impact, liberals generally seem to accept that this is to lower the price tag over the 10-year budget window that the Congressional Budget Office uses in its analyses (note that these are different suggestions).

I'm not sure I buy that fiscal forecast finagling is the reason the timeline is what it is.

Simplifying a scenario or concept can sometimes be helpful for working out its basic principles. A physicist putting Newton's laws to work might deal at first only with idealized point particles for conceptual and calculational simplicity. For identical reasons, students of government might choose to assume that laws--public policies--are born whole in a triumphant, poly-penned signing ceremony at the White House, the culmination of a winding legislative process. But real objects are extended in space, not points. And policies take shape during an implementation process, their final form is not reached instantaneously.

To a large degree, implementation of the Affordable Care Act lies in the hands of states. Certainly that's the case with the big ticket coverage items in the law. The two mechanisms by which millions of people will be gaining health insurance are: 1) expansions of state Medicaid programs, and 2) the construction, by states, of state-run health insurance exchanges.

What does that mean? That means instead of one particular top-down federal solution--a national Medicare-like payer or a single federally-administered health insurance exchange--you're potentially going to see 51 unique exchanges and 51 state-tailored solutions to the strains the expansion will put on their Medicaid program. That means you have to navigate state legislative calendars, state budget and procurement cycles, and state-specific troubleshooting and customization of the ACA. That takes time.

Take insurance exchanges, the new insurance markets that will be created under the ACA (if you want to see what that looks like in a concrete sense, Wisconsin developed a prototype of an exchange web portal that you can play around with). Given that they have to throw the doors open and be live on January 1, 2014 that really means that by the fall of 2013 they have to be in the final stages of implementing all the functionality they'll need; indeed, as you can see from this helpful timeline, exchanges will likely have to actually start selling insurance by the late fall of 2013. This means that thirty months from now, they'll have to have determined which health plans they'll allow to be sold through their exchange and negotiations/contracting with health insurers will have to be in full swing. And by that point, the construction of the infrastructure supporting their exchanges will have to be well underway.

Seems like a long time to get to those end stages, doesn't it? But it's not. A common motto in states is some variation of "2014 is tomorrow" and, indeed, it is.

It's been ten months since the ACA was signed into law in March of 2010. In most states, the exchange-building process remains in its infancy. 2010 was a year for reflection (and, in some states, acceptance). Planning and coordinating bodies were formed in states to assess the health care landscape in the state, analyze the contents of the ACA, and synthesize the two to chart a course for the coming years.

Some of the key questions facing states as they consider the design of their exchanges are laid out in this article from the Denver Post on the process in Colorado:

More than 500,000 Coloradans who lack health insurance will use a new state-run exchange to get generous subsidies and comparison shop for a health plan — that much is a given.

What that consumer website — the centerpiece of national and state health care reform — will look like upon launch in 2014 is the next great task for medical and insurance leaders in Colorado.

Will it be a bare-bones, three-choices- and-good-luck Web page? Utah is going that route.

Or will Colorado take the activist route pioneered by Massachusetts and California, adding mandates for coverage, negotiating directly with insurers and carefully policing rates, complaints and care? Will insurance plans created by the state Medicaid office and Denver Health compete for customers alongside big names such as Kaiser, Anthem, Cigna or Rocky Mountain Health Plans?

And even before that, who creates and operates the exchange that will guide billions of dollars in health spending? A state agency controlled by the governor? A private nonprofit? A quasi-governmental board where legislators, Cabinet secretaries and insurance interests will vie for appointments?

But the very first question to be answered is still being deliberated in many states: should the state build an exchange at all? While all states are required by the ACA to have an exchange, states aren't required to design, construct, and run an exchange. If they decline, the federal government will step in and run one in the state. While many states have recommendations on this question from their planning bodies, the issue is not yet settled in most states.

The only state whose legislature has passed the enabling legislation required to create an exchange at the state level is California. The matter has been complicated by the fact that 2010 was an election year. Indeed, 37 states had gubernatorial elections and the result is that this year we have 23 first-time governors taking office. And gubernatorial turnover ripples through the upper echelons of the state government's health policy leadership.

The point of all this is that as we sit at the beginning of 2011, states have a lot of ground to cover in the next two and a half years. In addition to building exchanges (a significant undertaking in and of itself), they'll need to modify their Medicaid programs to absorb significant numbers of new enrollees. And at the intersection of these two responsibilities is the imperative to revamp their IT systems to handle the new eligibility and enrollment burdens the exchange and Medicaid expansion will place on them. There are additional things for states to focus on in implementing the ACA but we need not go into them here.

In addition to the intricacies and idiosyncrasies of state-level implementation, there is still a federal element to consider. When it comes to exchanges, even though states will (in most cases) be building them, there will still be some sort of federal regulations guiding them. States were asked to submit initial suggestions for these regulations to the feds months ago. I don't know when a draft product will be out but from what I've heard, a final product shouldn't be expected before this fall.

Suppose the year 2014 had been scratched out of the ACA before passage and the year 2012 substituted. Could we make this deadline? I would say almost certainly not, given where we are now and all that remains to be done. The original House legislation had an implementation date of 2013, a full year earlier than the final product that became law. But even that strikes me as potentially overly ambitious (though, remember, the House bill didn't have 51 exchanges being developed by 50 states and D.C. at their own pace, it relied on a national exchange) given that many states are waiting until the final federal regulations on exchanges are released to begin their state legislative process. That means we can probably expect many state legislative debates to wrap up in 2012 and their bills creating exchanges to be passed around that time. Then comes the actual implementation period with about 12-18 months to go. With a 2013 deadline, that would be six months to completely build an exchange.

You might argue that setting a 2013 date would've lit a fire under both the federal and state governments and all of this would be moving at an accelerated pace--the federal regulations, the state legislation, the state implementation process. But I'm not convinced there's any reason to believe that would actually be the case. As I said, state legislative calendars and procurement cycles place obstacles in the path of any would-be speed demons. The politics and the fiscal challenges facing states would still be the same, and these are minefields that must be navigated carefully. Additionally, in fleshing out the details of the ACA on the regulation-writing front, the feds have a lot on their plates right now. And there's plenty of reason to be wary of overly ambitious implementation target dates. Arguably, with the spate of provisions required to take effect in the first 6-9 months of the law's existence (deadlines which were often missed, if not by much), some of the law's early implementation was rushed to generate solid products that could be pointed to by the administration. We want to make sure, particularly for the big, enduring things like exchanges and Medicaid program revisions, that states get this right. And that requires having not only the resources but the time to get it right.

All this is my long-winded way of saying I suspect the 2014 start date isn't really all that unreasonable, given the enormous role the myriad states have in bringing the text of the law (and yet-to-be-written regulations) to life. We might wish it took less time to get from Presidential signature to functional program but the real world is messy.

Keep Implementing

There's a piece in Robert Caro's lengthy (and excellent) biography of Robert Moses, The Power Broker, where Caro discusses legal challenges to one of Moses' many public works projects, a particular park. As the case spends years winding through the legal system, draining the financial resources of his outgunned opponents, Moses keeps plugging away at the project:

Justice Louis Brandeis brought the legal fight to an end on January 21, 1929, four years after the Biltmore hearing, by refusing to issue a writ of certiorari which would have enabled the Court to hear the case--it was obviously not pressed vigorously in those last stages, as though the case were really over already.

And, in fact, it was. Moses had never stopped developing the Taylor Estate--as if its acquisition were a fait accompli. By the spring of 1927, he had laid concrete for access roads and parking fields, set out scores of stone fireplaces and picnic tables, erected wooden bathhouses with showers and lockers and finished renovating the mansion and outbuildings, at a total cost of hundreds of thousands of dollars. During the summer of 1927, it had hundreds of thousands of visitors. By the time the higher courts came to rule on the question of whether the Taylor Estate was a park it was a park. What was a judge to do? Tell the state to tear up the roads and tear down the buildings, to destroy what hundreds of thousands of dollars of the public's money had been spent to build? Tell the people who had visited the Taylor Estate that they could visit it no more? In theory, of course, judges should not be influenced by such considerations. But judges are human. And their susceptibility to such considerations was undoubtedly increased by Moses' willingness to attack publicly those of them who ruled against him, as he had done to the "local judge," thereby letting the public know exactly who it was who was closing the park to them.

I was reminded of that by yesterday's ruling in a federal district court that the Affordable Care Act is unconstitutional. Unlike the two federal judges who ruled that the ACA is in fact constitutional and the federal judge in Virginia who ruled a few weeks ago that the individual mandate--but only that provision--is unconstitutional, yesterday's sweeping decision declared that the entire law is unconstitutional. But like the Virginia decision, yesterday's ruling didn't issue an injunction halting implementation of the law--at least, not technically, which is leading to some confusion:

The judge declined to immediately enjoin, or suspend, the law pending appeals, a process that could last two years. But he wrote that the federal government should adhere to his declaratory judgment as the functional equivalent of an injunction. That left confusion about how the ruling might be interpreted in the 26 states that are parties to the legal challenge.

But the administration made it clear that it intends to keep implementing the law. And at least for now, says POLITICO, implementation continues in the states, even in the 26 states that are party to this particular lawsuit.

And, recalling the tactics of Mr. Moses, pressing on with implementation--making reform the status quo--only helps proponents of the ACA. Not because it's more likely to melt the icy hearts of the conservative wing of the Supreme Court (although who knows?) but because after a certain point large pieces of it will become self-sustaining. Just about every state has already been funded to start planning their state health insurance exchanges; the application for the next round of grants--establishment of exchanges!--is open right now. And building a new insurance market seems to be an idea even conservative states are open to. For example, from earlier this month:

AUSTIN – A key House GOP health policy writer has filed legislation to create a state-run health insurance exchange in Texas.

A bill by Rep. John Zerwas, R-Katy, would create a Texas Health Insurance Connector, or simplified insurance market.

[...]

"My opposition to the federal health care reforms is no secret, and I continue to support Attorney General Greg Abbott's efforts to have the law declared unconstitutional," he said.

"But the ‘connector concept' has been around for decades and did not originate with Obamacare," Zerwas said. "Quite frankly, it is something that we should consider on its own merits regardless of the fate of the federal reforms."

Things like extended dependent coverage (up to age 26) have become the status quo, the federal Office of Consumer Information and Insurance Oversight has been established, many states are changing their laws to ensure better oversight of insurance premium hikes, some health care providers have started to redesign themselves in responses to the ACA, and so on. We've spent the better part of a year pushing the boulder up the hill, now it's time to get it over the hump and let it roll down the other side.

That's not to say an actual repeal or overturn of the ACA wouldn't be disastrous. The exchanges are being built with the assumption that federal subsidies will be there to support low-to-middle income people who buy insurance through them. The Medicaid expansions can't happen if federal law goes back to the way it was. The altered incentives, the scalpels and chainsaws I've mentioned before, and all of the little (and big) improvements sprinkled into federal law will disappear.

But the further along implementation goes, the deeper the investment that states are making will go and the more the behaviors of insurers and providers will be reshaped. It might all still be for nothing if the ACA were to vanish but it does raise the odds that something that can't be stopped has been started.