It is now common knowledge that the new health insurance marketplaces (also known as “exchanges”) created under the Affordable Care Act (ACA) got off to a rocky start last week. Indeed, it’s possible that more Americans now know about the technical glitches experienced by the exchanges than even knew open enrollment was beginning October 1. In fact, just 1 in 8 of those who potentially have the most at stake—uninsured individuals—was aware of the October 1 debut of the exchanges, according to the Kaiser Family Foundation’s latest tracking poll.
Many observers anticipated early hiccups in the eligibility and enrollment systems (see, for example, my JAMA Forum post from February). Assuming these initial computer problems in the exchanges are fixed soon, none of this will ultimately matter to people, particularly people who were previously uninsured. The Medicare Part D drug benefit experienced similar technical challenges at first when it started enrollment in 2005, but those are now a distant memory except to us policy wonks.
But if these early problems will likely not be consequential in the end, what will be? Here’s a rundown of things that will ultimately determine the success of the ACA, some of which we know and some of which we don’t.
What we already know:
- The new health insurance marketplaces will have significant competition and choice. Virtually everyone will have a choice of 2 or more insurers, and many people will have more options to choose from.
- In part because of this competition, premiums are coming in lower than expected—in particular, lower than projected by the Congressional Budget Office (CBO). Previously, medical underwriting prevented many consumers from being able to compare prices for insurance in the individual insurance market. Until an insurer completed a review of your medical history, you had no way of knowing if you would be accepted for coverage and, if so, what your premium would be. Under the ACA, discrimination against people with preexisting health conditions is prohibited, so people can comparison shop more easily.
- Coverage and implementation will be uneven across states. For example, only half of states have decided to go forward with expanding Medicaid to everyone with incomes up to 138% of the poverty level (about $16 000 a year for a single person and $32 000 for a family of 4), a provision that was made optional for states by the Supreme Court last summer. This will leave millions of poor people with no access to affordable insurance, because tax credits that provide subsidies to low- and middle-income people in exchanges are only available to people with incomes between 100% and 400% of the poverty level. The law originally envisioned that all poor people would be eligible for Medicaid, so there was no need to make them eligible for tax credits as well.
- Even when the early technical kinks are worked out, applying for coverage will undoubtedly seem confusing to some. Many people will likely need one-on-one help navigating the enrollment process, and the availability of that assistance will vary quite a bit from state to state. But it will still be simpler than it is now. For example, our recent review of insurance applications in the pre-ACA individual insurance market shows that they included 5 or more pages of detailed questions about an applicant’s medical history, none of which will be required or allowed under the ACA’s insurance market changes.
What we don’t yet know:
- How will people judge the affordability of premiums and the value of the coverage they receive? Although premiums have come in lower than expected, that doesn’t necessarily mean that people will see them as affordable. In fact, most people buying their own insurance are projected to be eligible for tax credits to help them pay their premiums. That means they will not be paying the full “sticker” prices advertised in the exchanges, but they may not realize that now. Also, premiums are only half the story. All insurance plans offered in the individual market will include the essential health benefits specified in the law, including services like maternity care, mental health, and prescription drugs that were often previously excluded from coverage or limited. However, many plans will also come with high deductibles that mean many people may not see tangible benefit from their coverage.
- Who will enroll? It stands to reason that people who are sick—who clearly will benefit from insurance and have been excluded from the market previously—will buy coverage. But if young and healthy people don’t enroll as well, premiums will likely increase significantly for 2015. This may be one of the most important reasons to get the exchange websites fixed as soon as possible. There are “carrots” (the tax credits) and “sticks” (the so-called individual mandate) to encourage millennials to buy insurance, but the ease of the enrollment process will be particularly critical for those sitting on the fence.
- How many will enroll? The CBO projects that 7 million people will buy coverage in exchanges in 2014 and 9 million more people will be covered by Medicaid, while 44 million Americans will remain uninsured. These coverage numbers—which the CBO expects to ramp up quickly in the years ahead—have taken on a life of their own and in many ways become a target as well as a projection. Although there is nothing magical about these specific estimates, it is clearly the case that for the law to work as intended, people need to enroll. There may, in fact, be some signs in the early technical glitches that suggest people may be more likely than expected to take up coverage in the first year: one of the reasons for the problems websites are experiencing is that a lot of people are visiting them.
It’s not surprising that the focus in the first week of open enrollment under the ACA—or the law that many now know as Obamacare—has been on the technological snags. Those problems have been highly visible and certainly need to get resolved if the law is to function smoothly. However, signing people up for a health insurance program should not be confused with the actual coverage provided under the program. How people benefit from that coverage, how they perceive the cost, and who decides to buy it will ultimately mean much more to the ACA’s success or failure than what happened in the early weeks of the program’s 6-month open enrollment period.
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.
About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.