Trigger Troubles—And Why the Senate Can’t Fix Them

Jacob S. Hacker, Ph.D.
Stanley B. Resor Professor of Political Science, Yale University

A persistent bad idea in the debate over the public health insurance option is the so-called trigger. In theory, a trigger would make a public health insurance plan available to Americans receiving coverage through a health insurance exchange if private health plans did not sufficiently hold down costs. In practice, however, a trigger inserted into either of the two Senate bills now being merged (the Senate Finance Committee bill and the Senate HELP bill) would not be able to work.

The motive of the trigger is political—to find a compromise in the Senate that will attract the support of the small number of conservative Democrats who have expressed reservations about the public health insurance option, as well as Republican Olympia Snowe, who has proposed a trigger. This is obviously a crucial goal. But to be a compromise between such skeptics and the majority of Senators who support a public plan, a trigger must have some prospect of working.

A workable trigger would, at a minimum, need to achieve three goals: (1) establish a reasonable and measurable standard for private plan performance that sets out clear affordability and cost-containment goals for a specifically defined package of benefits, (2) assess this standard in a timely fashion with information available to policymakers after reform legislation passes, and (3) if this standard were met, quickly create a public health insurance plan that would effectively remedy the situation.

The modifier “quickly” in the third goal is crucial: Runaway health costs are a grave and growing threat to federal and state budgets and to the health security of workers, their families, and their employers. Waiting longer than absolutely necessary for affordable coverage is certain to cause great harm. Indeed, it might actually compound the current crisis. Without an imminent threat of public plan competition, private insurers are likely to raise premiums in anticipation of the implementation of reform—as suggested by AHIP’s recent prediction of big premium increases if reform passes. Delaying a public plan may also jeopardize the cause of reform itself, because requiring Americans to buy unaffordable coverage has the potential to provoke a political backlash. (Polls show that Americans are more supportive of a mandate when they know they will have the choice of a public plan.)

In short, we cannot wait for a public plan—and one of the biggest problems with a trigger is that it virtually guarantees we will have to.

The problems, however, do not end there. Consider just a few of the other serious difficulties:

  • None of the trigger proposals that have been floated contains criteria for triggering the creation of a public plan that concern both affordability of coverage and the growth of premiums over time. It is simply not enough for coverage to be defined as “affordable” for a given share of the population. To judge private insurance successful in restraining costs, premium inflation would also need to be restrained—but the triggers on the table do nothing on this score.
  • The proposals on the table also assess affordability based on the price people pay after receiving assistance from the federal government. This means that efforts to help people afford coverage, perversely, reduce the chance of a public plan that will rein in costs for individuals and taxpayers.
  • The triggers under discussion assess whether affordability standards are met at an aggregate level, such as within states. Yet local markets vary greatly even within states. If some markets have very high premiums or runaway costs, a trigger might not be pulled if other markets in the state have lower premiums or experience more modest growth. Residents of a high-cost, low-competition area would, in effect, be held hostage by an overly aggregated measure.
  • The triggers being discussed all focus on the premiums people pay, rather than their total out-of-pocket costs. As problematic, they are vague with regard to what is affordable—that is, what package of benefits is required. Within the exchange, the Senate bills create new rules for coverage that are relatively strict, though still leave too much room for tailoring benefits to shift costs to high-risk patients. But outside the exchange, in the employment-based market from which most Americans will continue to receive coverage, the bills are much more lax. The Finance Committee bill, for example, sets a standard for minimum coverage that is substantially less generous than the typical employment-based plan today. There is every reason to think plans will simply cover less or shift more costs onto patients to meet the affordability standard, since, again, the standard concerns only the individual premium, not total costs.
  • None of the trigger ideas under discussion envision the creation of a national plan built on Medicare’s infrastructure, the only public plan option that has been shown by the Congressional Budget Office to produce substantial savings.

All this is not surprising in light of the history of trigger proposals in health care and other policy areas: As is well recognized, triggers are generally designed to create political cover, not effective policy.

Less well understood is that some of the key difficulties with triggers are intrinsic to central characteristics of the Senate health bills. In particular, the Senate bills, unlike their House counterparts, leave an enormous amount of responsibility for the regulation of private insurance to the states—which for the most part have not had the wherewithal or will to take on large private insurers. The Senate bills also have much weaker regulations of private insurance plans outside of the exchange—the plans on which most Americans will rely after reform. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. At the same time, the Senate bills lack strong requirements on private insurers to provide data that could be used to assess whether a trigger should be pulled. Ironically, these characteristics make a public plan without a trigger especially vital in the Senate, where, of course, the public plan has also been more controversial.

Added to the Senate bills, a trigger would represent a backdoor way of killing the public health insurance option that a majority of Americans (and U.S. Senators) support. It is well past time to trigger real competition for private plans that have failed to ensure affordability or cost restraint for decades.

Further Reading