Once again, the Obama Administration has needed to announce the delay of a provision of the Affordable Care Act (ACA). The provision that limited out-of-pocket costs to $6350 for individuals and $12700 for families has been delayed for a year until 2015. Actually, information about delays in enforcing the provision has been on the Labor Department’s website for 7 months but wasn’t noticed by the news media until last week, when it appeared in a list of 137 “frequently asked questions and answers.”
The delay implementing the limit on out-of-pocket costs comes in addition to a series of deferments or waivers of other provisions, such as extending key deadlines for states on establishing health insurance exchanges, delaying the employer mandate for a year, delaying verification of an individual’s attestation regarding insurance exchange eligibility for a year, and suspending the CLASS Act that provided a new long-term-care benefit. That suspension occurred because the Department of Health and Human Services Secretary was unable to declare the program financially solvent as constructed in the law.
Will the Exchanges Be Ready to Function?
Some of the most serious questions have been raised about whether the federal and state health insurance exchanges will be able to function appropriately—having the proper information and being able to handle an unknown volume of calls—as of October 1. A report issued by the Government Accountability Office (GAO) in June indicated that various interim deadlines had already been missed, and that while this might not affect implementation, any additional missed deadlines could do so.
The GAO also reported that the scope of activities required by the Centers for Medicare & Medicaid Services (CMS) in each state was “still evolving,” thus “suggesting a potential for challenges going forward.” The plans to train the “navigators” who will help people purchase insurance within the exchanges are running about 2 months behind. Grants worth $67 million that were supposed to be issued in June were released last week. This in turn has delayed training and other related activities.
The 16 states that are running their own exchanges are reportedly in various states of readiness; how ready will become clearer in the next 6 weeks. CMS has pledged to carry out exchange functions for any of the states that aren’t able to implement all of the required activities—a pledge that might be more comforting if the agency were clearly on schedule for completing its own tasks.
Not surprisingly, the amount of effort and money that states are putting into promoting the availability of newly subsidized insurance or an expanded Medicaid varies dramatically and in proportion to whether the state has embraced or pushed back against the ACA. Maryland and Colorado, where the governors were early supporters and the legislatures supportive as well, are spending as much as $5.47 and $4.23 per capita (including grant support), respectively, to promote the ACA and its benefits. Other states have resisted the ACA and relied on federal exchanges; Virginia and Missouri are spending much less, $0.49 and $0.71 per capita, respectively.
Enroll America, a private nonprofit with close ties to the administration, is focusing its efforts in 10 of the states with the largest numbers of uninsured individuals and the lowest levels of state-funded outreach to “get out the message” and making uninsured residents aware of the coming benefit.
The likelihood of a rocky rollout for the health insurance exchanges on October 1, as well as the availability of new benefits on January 1, has led some Republicans to push for delaying these start dates and to remain hopeful that there will be an eventual repeal of the legislation after the 2014 election. Neither of these outcomes seems to me to have any basis in reality, although there is little doubt that the next 16 months will have a lot of missteps.
A Complex Process
Implementing the ACA is much more complicated than implementing the Medicare Part D prescription drug benefit that went into effect in 2006, a comparison that is sometimes made—erroneously, in my estimation. The ACA is much more complex. For Part D, the Medicare beneficiaries were all known and generally were already receiving Social Security payments and were in the Social Security and CMS computer systems. In addition, a freestanding outpatient drug benefit, while previously unavailable in the private insurance market, represented a relatively small change to a well-established program.
The ACA, on the other hand, is creating new programs for people who are not easily identifiable before they present themselves. Their relationships with bank accounts, credit cards, or other means of modern money management are unknown. It is unclear how the insurance companies are supposed to collect the premiums in the exchanges or what the consequences will be of not being able to cut individuals off from their new insurance until 90 days after their last payment. The ability of exchanges to waive income verification for the first year seems like an open invitation to fraud by the least scrupulous among us.
Despite these challenges, and even with the ACA having approval ratings of only about 39% (according to June polls by NBC News/Wall Street Journal and Real Clear Politics, there is little likelihood of the law being repealed. The re-election of a Democratic Senate and president in 2012 meant that the most critical provisions of the ACA—subsidized private insurance for those not offered employer-sponsored insurance and a federally subsidized expansion of Medicaid for the states that have chosen to do so—will proceed as scheduled. Once these benefits start, it’s impossible to imagine that they will be removed. I know of no precedent for the removal of an entitlement once it’s been put in place.
The 2014 election will be important, but with a Democratic president who regards the ACA as his signature legislation, even the election of a Republican Senate won’t make it possible to change the dynamics just described. At some point, Republicans need to start thinking about how to modify the ACA to minimize its negative effects and move it in a more positive direction.
About the author: Gail Wilensky, PhD, is an economist and Senior Fellow at Project HOPE, an international health foundation. She directed the Medicare and Medicaid programs, served as a senior adviser on health and welfare issues to President George H. W. Bush, and was the first chair of the Medicare Payment Advisory Commission. She is an elected member of the Institute of Medicine.
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