The Congressional Budget Office (CBO) recently projected that 7 million people will enroll in new health insurance exchanges under the Affordable Care Act (ACA) next year when the exchanges come online. This is out of tens of millions of people who are potentially eligible to buy insurance in the exchanges and receive subsidies from the federal government to make their premiums more affordable. The CBO further estimates—based on assumptions about expanded Medicaid coverage as well—that 44 million Americans will remain uninsured in 2014.
The CBO forecasts that exchange enrollment will then ramp up quickly over several years, reaching 27 million by 2018. And as a result, the number of people remaining uninsured will decrease. However, as we fast approach the first open enrollment period under the ACA in October of this year, people’s perceptions of the health reform law may very well be formed during the initial stages of implementation.
With several intervening years between when the law passed in 2010 and when its major elements go into effect—and a Supreme Court decision and presidential election in between—there has been plenty of time for proponents of the law to point to the new benefits and protections people will receive and for opponents to warn of the potential risks. Both have been exaggerated to some extent.
Until now, both benefits and risks of the law have been hypothetical. But soon we will have real experience, and it is very likely that it will be less than perfect. As the CBO has projected, enrollment may be modest at first. There also will undoubtedly be technical glitches in the eligibility and enrollment systems that are being created from scratch on a tight schedule. Some people will see their premiums increase, and anecdotes about those cases will undoubtedly be highlighted in the media. The fact that others will see their costs decrease or will have insurance that offers better benefits and more secure coverage may be overlooked. Although personal out-of-pocket costs for health care should decrease for most people, some may nonetheless perceive their deductibles and co-pays as unaffordable.
These experiences are to be expected in any new program, especially one on the scale of the ACA. For example, when the Children’s Health Insurance Program (CHIP) was created, just 897 000 kids were enrolled in the first year of operation (1998). That number quickly ramped up to 4 million kids within 5 years—driven in part by efforts to simplify the application process—and the program has widely been judged as a success.
Similarly, when the Medicare prescription drug benefit (Part D) went into effect in 2006, it ran into early problems processing enrollment in plans, but those difficulties were quickly resolved. The program has operated reasonably smoothly since then, although as with any major program, challenges still remain, such as getting low-income beneficiaries signed up for subsidized coverage.
There are countless other examples of new programs getting off to a slow or somewhat rocky start.
The ACA faces all of the same challenges as these other programs and some additional ones unique to its structure and circumstance. Arguably, it is one of the most complex government programs created in decades, with significant changes in the rules for private insurance, the establishment of entirely new institutions (ie, insurance exchanges), and an expansion in Medicaid, all interacting with a largely employer-based insurance system. Moreover, the process leading to its passage was highly partisan, and the law is still politically divisive.
Effects of Divisiveness
This divisiveness has, in turn, led to very uneven implementation in the states. Not all states are planning to expand Medicaid to everyone with incomes up to 138% of the poverty level (at least at first), now that the Supreme Court has ruled that expansion optional. This will leave many low-income people in those states without access to affordable coverage. Just 17 states and the District of Columbia are planning to implement health insurance exchanges, with a handful of others operating exchanges in partnership with the federal government. This means the federal government will be running exchanges in about half of states.
People will have all the same insurance protections and access to subsidies in states where the federal government will be operating the exchange (called the “Health Insurance Marketplace”). However, it will be challenging for the federal government to effectively market new coverage options in states where the political leadership is at best sitting on the sidelines and at worst openly hostile to the effort. The federal exchange has announced plans for a major media campaign beginning in July, but it may not have the same reach as the kind of localized outreach efforts planned by states creating their own exchanges, where governors are solidly behind the ACA and indeed want to “own” it. Potentially, private efforts like the nonprofit Enroll America can help fill in some of the gaps.
The success of marketing and outreach efforts is key to whether the CBO’s crystal ball about enrollment in the exchanges is roughly accurate or overly pessimistic. Such efforts will affect how many people enroll and get helped by the law’s benefits, as well as how many people are left uninsured. This early period of enrollment could also have domino-like effects on the insurance system if many sicker-than-average people enroll (because the ACA prohibits discriminating against people with preexisting conditions), but young and healthy people do not (a scenario that actuaries call “adverse selection”). The best guarantee of stable and reasonably priced insurance is a large insurance pool that reaches a broad and significant share of the population.
History suggests that enrollment in exchanges is likely to start out low and grow over time and that some technical glitches are inevitable at first. Different people may come to different conclusions about how effective the ACA is and whether and how it should be modified. But we should judge its success or failure based on reasonable expectations and not solely on what happens in the first few months of next year.
About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance.
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