A Health Care Fix Bernie Sanders and Tim Pawlenty Can Both Love?

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Sen. Ron Wyden, of Oregon, has a knack for linking up with Republicans to introduce innovative health care policy that can garner real bipartisan support. When the Affordable Care Act was but a glimmer in President Obama’s eye, Wyden and Republican Sen. Bob Bennett, of Utah, introduced the Healthy Americans Act. This health care reform bill was widely praised by health policy experts and economists and had support from some key Republicans and Democrats. Of course, the bill never made it very far in Congress and fell under the weight of the divisive health care debate.

Well, once again, Wyden has linked up with a Republican – Sen. Scott Brown of Massachusetts this time – to introduce another piece of health care legislation. Like the Wyden-Bennett Health Americans Act, there are no guarantees, but this has the potential to be a game changer.

The text of the bill is less than 200 words and all it would do is move one provision of the Affordable Care Act from 2017 back to 2014. But don’t let this simplicity fool you. Wyden and Brown want states to be able to opt out of some of the most onerous requirements of health care reform the year the law largely takes affect.

This may sound like it would destroy reform altogether, but this provision was already in the bill and slated to kick in by 2017. It got there thanks to Wyden, who introduced an amendment to include this state opt-out provision in the final days of the Senate Finance Committee markup. (I wrote about the opt-out provision in this Oct. 2009 story.)

The purpose of the opt-out provision – or “Waiver for State Innovation” – is to allow states to pursue health care reform in their own way. It eliminates the federal one-size-fits-all approach that Republicans have been railing against. It paves the way for single payer or a plan that revolves around HSAs and catastrophic coverage. “This could have saved the Clinton health care plan,” Wyden told me in an interview Thursday. “I think this has the potential – after an extraordinarily divisive campaign where health care was front and center – to bring people together…We’ve got to find a way out of the gridlock and this provides a chance to do that.”

The purpose of allowing states to opt out earlier, Wyden says, is that it prevents them from having to waste time and money to implement systems by 2014 – like exchanges and individual mandates – that they plan to walk away from just three years later. In fact, Wyden, a fierce advocate for choice and competition in health care, told me today he wanted the state opt-out provision to be pegged to 2014 in the first place, but didn’t succeed.

Well, now he might. If Republicans are honest brokers on health care and, since they concede that the current health care system badly needs to change, they may have a hard time opposing the Wyden-Brown plan. (They still could oppose it, however, as I explain below.) The proposal would, in 2014, allow states to take all the money they would receive in federal health insurance subsidies and use the funds to implement health care reform as they see fit. In other words, since repeal of the ACA is not realistic, this is a way to encourage state innovation and state control over the money being spent under the ACA. The catches – or requirements a state plan must fulfill in order to get a waiver from the ACA provisions – as outlined by Wyden, are:

a) The state waiver ensures that individuals get insurance coverage that is at least as comprehensive as provided under federal law;

b) The state waiver ensures that individuals get insurance coverage that is as affordable (i.e. cost-sharing and protections against out-of-pocket spending) as it would otherwise be under federal law;

c) The state waiver ensures that as many people are covered as under the federal plan;

d) The state waiver will not increase the Federal deficit.

These are not trivial requirements. But if a state can meet them, it can – according to the Wyden-Brown plan – opt out of the individual mandate, the employer mandate, the health insurance exchange and federal design of health insurance coverage.

Still, don’t expect all Republicans and Tea Party folks to embrace this idea lock, stock and barrel. Aside from the political implications of endorsing a plan championed by a Democratic leader on health reform – even if he is in cahoots with a Republican from a blue state – some on the right might balk at the Wyden-Brown plan on the grounds that it’s still an expensive expansion of government. The Wyden-Brown plan, after all, does not – as far as I can tell – spend any less money than the ACA without a state opt-out. On the contrary, it may cost more.

The Wyden-Brown plan also does not impact the huge Medicaid expansion called for in the ACA, which Republicans vehemently oppose. It doesn’t eliminate taxes on expensive health insurance plans, or fees levied on medical devices or pharmaceuticals. But if Republicans really want to make changes to the ACA – not just gut the law, which they can’t do anyway – this might be a real chance to do so.

Another catch: The Wyden-Brown plan only allows states to opt out if they have a good plan for how to undertake comprehensive health care reform on their own. Most states don’t have such a plan. Massachusetts, which enacted reform in 2007, obviously does, which is why Brown was a logical co-sponsor of the opt-out bill. California, Connecticut and Vermont are three other states that are on their way toward developing health care reform inside their borders. But red states – especially southern states – are among those least equipped to design and implement reform that could accomplish what the ACA attempts to do, as they typically have higher percentages of uninsured residents and looser insurance regulation.

I’ll be interested to see the reaction to this plan from, say, Minnesota Gov. Tim Pawlenty or Virginia Gov. Bob McDonnell. These two Republican governors are leading the state-level fight against health care reform, saying it amounts to the federal government imposing itself on states.