Three years ago this weekend, President Obama signed the Affordable Care Act into law.
Its provisions sound sweeping – get health insurance to 32 million Americans who don’t have it now, stop insurers from cherry-picking their customers, require basic coverage that’s proven to improve health and lower costs, not to mention initiatives to get doctors to work together in teams. But the law’s written to go into effect in stages, and it’ll be years before all the provisions are up and running.
The federal government has barely met each deadline, and the biggest batches of changes are coming up in the next few months.
Don’t expect it to go smoothly, experts predict.
The next big deadline is Oct. 1, when states are supposed to have the new health insurance marketplaces, called exchanges, up and running. This one’s down to the wire for most states, and it’s still impossible to say what they will look like, how many policies people will have to choose from and how much they will cost.
The 55 percent of Americans who are covered by their employers already know it can be confusing at “open enrollment” time, when they often have to choose among several plans. Dental or vision coverage? Which prescription plan? If you choose a high co-pay -- an amount paid every time a patient visits a doctors or other caregiver, or fills a prescription -- does the lower premium balance that out? Or will you end up paying more in co-pays if you end up making a lot of doctor visits, or need surgery?
Expect that to be multiplied, a lot, on one of the new exchanges. And most of the people buying on these exchanges will not have much experience in this area.
Lori Dustin, chief marketing officer for HighRoads, a human resources consulting firm, sees more than a few bumps in the road. “Consumers will be faced with a lack of information to shop for plans,” she predicts. While big states like California and New York are likely to provide many choices, smaller states with a history of limited insurance options may not have much to offer, she says.
“They have to service consumers who are uninsured, who don’t understand what a co-pay is,” she said. “There are going to be a lot of calls into customer service centers.”
Many people will get sticker shock when they see the premiums they will be charged, Dustin predicts. No premiums are yet set – insurers have until April 30 to apply to sell a product on the federally run exchanges.
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But the new plans will be comprehensive – the law requires that. So they’ll cost more than some of the bare-bones plans offered in the past. That could scare off younger, healthier customers, Dustin says. “If the premiums are unreasonable, an uninsured person is going to weigh the difference between paying a penalty and paying premiums that may be enormous,” she says.
The whole basis of health insurance is to get a wide variety of people paying premiums, so the insurer can pay for the health care of those who need it, while still covering its administrative costs and staff, not to mention making a profit. If healthier people who don’t yet need insurance don’t buy in, then insurers are stuck with a pool of sick customers.
No coverage cap or ban on those with pre-existing conditions
In the past, many insurers would exclude these sickest people whenever possible, even kicking some off the rolls when they started to cost too much. “Obamacare”, as even the administration now calls it, stops this. Starting in 2014, new policies may not cap coverage and they have to take all comers, even if they are already sick.
But to make this work for the insurers, the new exchanges will have to lure in more healthy payers, too. While the Health and Human Services Department is confident it can, Dustin and some other critics aren’t so sure. In the first year, the fine for not having health insurance will be as low as $95 – not much of a deterrent.
Dustin also sees technological barriers. The websites that form the basis of the new marketplaces are complex. “They don’t even propose to test these websites until late summer and open enrollment is October 1,” she said. “You’d typically want something in place for at least nine months to a year to test quality and usability.”
Jay Angoff of law firm Mehri & Skalet, who oversaw health reform as head of HHS’s Consumer Information and Insurance Oversight office, thinks HHS will meet the deadline and have workable websites.
“It’s a phenomenal accomplishment, when you think about the technology it takes for people to go to the Internet, punch in the answers to a few questions, and get quotes from carriers in their states,” Angoff said in a telephone interview.
The software has to help HHS communicate instantly with other government agencies, for the Internal Revenue Service to the Social Security Administration, to verify what people say and calculate whether they qualify for a federal subsidy to buy the insurance.
But Angoff, an unabashed cheerleader for the effort, admits there may be glitches.
“The administration will be able to say that it has met the deadline. I don’t think everything is going to be elegant in all states,” he said.
Constantly bumping up against deadlines
All along, HHS has met the deadlines set in the law at virtually the last possible moment. “Why always at deadline? For the same reasons that you and I waited until the last minute to do our term papers in college,” Angoff says.
To be fair, there have been distractions. The Supreme Court was asked to rule on whether the Affordable Care Act was even constitutional, and waited until the very last possible day in June to do so. Then Congress went down to deadline after deadline to decide on the “sequester” – the package of mandatory budget cuts imposed in case there was no political deal on the budget. No deal ever came and the sequester’s now in effect, forcing government agencies, including HHS, to scramble almost halfway through the fiscal year to make budget cuts that can include furloughing workers.
HHS has also had to wait for states to decide if they will run their own exchanges, and then approve their plans to do so. HHS will have to do the job for the states that won’t — at last count, 26 of them.
But however they turn out, exchanges are going to shape the future evolution of health insurance coverage, experts agree. And they will eventually be forced to make it an easier process.
“In time I think you’ll see this market evolve,” says Joel Ario, a former Pennsylvania insurance commissioner who helped direct development of the health insurance exchanges for the Obama administration and who now is a managing director at Manatt Health Solutions.
“The winners are the ones who will make it as simple and easy to navigate as possible.”
Although about 7 million people will initially buy insurance on the public exchanges, according to the Congressional Budget Office, Ario says employers will start moving to exchange-style marketplaces as well. And while states and the federal government are the largest forces running exchanges, private groups are already also designing and marketing exchanges – to states, public employers and to companies.
And, by the way, lawmakers are going to get a taste of what the rest of the country is feeling. The law requires that starting in 2014, members of Congress and many of their staffers will have to buy their health insurance on the exchanges, unless they’re over 65 and on Medicare. President Barack Obama is also supposed to buy a plan on an exchange – although he mostly relies on a personal physician at the White House Medical Unit.