The Nine Lives (and counting) of Obamacare
It is hardly an understatement to characterize the health insurance exchange rollout as a big disappointment. A botched website poses a serious problem and threatens to dampen enthusiasm for the new law—especially among the coveted “young invulnerables” who need to sign up for coverage to keep premiums affordable for all. In the short term, the website troubles put the Obama administration firmly back on the defensive, scrambling to explain to Congress and the public how officials missed such serious problems.
Testimony from vendors involved in designing various parts of the network broke down into a predictable blame-fest, while Health and Human Services Secretary Kathleen Sebelius singled out certain vendors as the main source of the website flaws. Yesterday, CMS head Marilyn Tavenner used her testimony in front of the House Ways and Means Committee to offer the first true apology from the Obama administration for the botched site.
It seems that the worst consequence of this website debacle is the resurgence of the fanatical foes of the Affordable Care Act who briefly lost momentum when they forced an unpopular government shutdown in an attempt to defund “Obamacare.” Despite lingering calls for Sebelius’ head, the bluster over the website’s problems is now giving way to a new source of outrage: the unrealistic promise behind President Obama’s tag phrase; “if you like your insurance, you can keep it.” According to the Washington Post, “The president’s promise apparently came with a very large caveat: ‘If you like your health care plan, you’ll be able to keep your health care plan — if we deem it to be adequate.’”
More on this later, but in her testimony yesterday, Marilyn Tavenner cited new projections from a government report that nearly half of uninsured young adults — 46 percent of those ages 18 to 34 — should be able to purchase a plan through HealthCare.gov for a monthly premium of $50 or less. In her own testimony before the same committee today, Sebelius noted:
“The weighted average premium for the second-lowest-cost silver plan, looking across 47 states and DC, is 16 percent below the premium level implied by earlier Congressional Budget Office estimates.” The Secretary also points out that a recent Kaiser Family Foundation report found that while premiums will vary around the country “fifteen of the eighteen states examined would have premiums below the CBO-projected national average of $320 per month for a 40-year-old in a silver plan.”
So as the forces regroup for yet another sustained attack on the ACA via billboards, sound bites, Congressional hearings where those called to testify are rudely interrupted by political screeds, and a conservative media blitz, it’s important to remember that the health law has weathered relentless attacks over the last three years. Frankly, the opposition is beginning to look desperate. As Ezra Klein writes, “The classic definition of chutzpah is the child who kills his parents and then asks for leniency because he’s an orphan. But in recent weeks, we’ve begun to see the Washington definition: A party that does everything possible to sabotage a law and then professes fury when the law’s launch is rocky.”
Time for a reality check: It’s no small miracle that the ACA is still even moving forward in the face of this kind of intense and often duplicitous opposition. As Austin Frakt writes on his Incidental Economist blog, “Elected Republicans (not all, but most) have fought for defeat, reversal in the courts, repeal, defunding, and certainly tried in every way possible to sow the seeds for troubled, if not failed, implementation.”
Here are just some of these potentially fatal roadblocks:
- After the Affordable Care Act was signed into law in March 2010, states were slow to decide whether or not to operate their own exchanges or have the federal government do it for them. By May 2013, just 5 months before exchanges were set to open, 26 states indicated they would likely default to federal control of their marketplaces. By rollout, 34 states opted out of setting up their own insurance marketplaces.
- The Affordable Care Act included $1 billion to be used in overall implementation of the law. That was before it became clear that the feds would be running the exchanges in dozens of states. The Congressional Budget Office projected that federal agencies will actually need between $5 billion and $10 billion to get the law up and running over the next decade. Meanwhile, HHS has requested additional funds from Congress for implementation multiple times but has always been turned down. Most recently, Congress rejected a request in March for nearly $1 billion in additional spending for fiscal 2013. Now the Obama administration is asking for $1.5 billion for fiscal 2015 to run dozens of exchanges. That request is viewed as highly likely to be turned down as well.
- The votes of no confidence keep rolling in. By October 1, the House had voted to repeal or dismantle the ACA a meaningless but sensational 46 times.
- Some 28 states filed joint or individual lawsuits challenging the constitutionality of the individual mandate and the Medicaid expansion. It took until June 2012 for the Supreme Court to rule that that ACA and the individual mandate were constitutional; the decision to expand Medicaid, however, was deemed a state decision.
- The 2012 elections threw the future of the ACA back into question—all Republican candidates for President and Congress vowed to defund the law. The fate of the legislation was not secure again until Obama was reelected.
- Insurers were unprepared. Federal rules establishing minimum standards for benefits and premium rates were not finalized until March 2013, and extensive guidance for insurers participating in the federally run exchange was only published on April 5, 2013. Yet, in most states, insurers were required to submit applications by May 3, 2013.
- And finally, the last-ditch defund effort: Last month, House Republicans, led by a small group of Tea Party renegades, held the government hostage for two weeks, demanding that Obamacare be delayed or defunded before any agreement could be made on funding the federal government.
Getting anything done in such a politicized and antagonistic environment is challenging, yet there are a couple of precedents. During its rollout 8 years ago, Medicare Part D, the hugely popular program that adds prescription drug benefit to Medicare, faced opposition (mostly from Democrats) and delays. According to a brief from the Health Policy Institute at Georgetown University, popular opinion of Medicare Part D was also quite low at first; just before the 2005 implementation, only 31 percent of those polled said they had a favorable opinion of the program versus 37 percent who said they had an unfavorable opinion.“[A]s Part D’s first open enrollment period approached, observers questioned whether the program would work and many called for delaying key elements. During initial enrollment, officials encountered significant technical, educational, and coordination difficulties under intense public scrutiny. Eight years later, many of Part D’s initial difficulties have been forgotten, and the public generally views the program as a success.”
Meanwhile, Jonathan Cohn in New Republic reminds us that enrollment in Obamacare is supposed to be slow—at first. Instead of website woes, “[t]he main reason for low enrollment will be that people don’t sign up for health insurance programs right away. They wait until the last minute. This is true of public insurance and this is true of private insurance,” writes Cohn. He looks at the case of the Massachusetts, specifically at enrollment in premium-charging plans from Commonwealth Care. Citing numbers provided by Jonathan Gruber, economist and an architect of the Mass. health plan, he notes that of the 36,167 people who eventually enrolled in Commonwealth Care, just 123 (or about 0.3%) signed up in the first month. Over the first two months, the number reached only 2,289 or 6.3%.
Of course, launching the ACA is a far more complicated endeavor than the prescription drug benefit or implementing Massachusetts’ health reform law. For example, whereas the target audience for Part D was confined to Medicare enrollees, the ACA hopes to enroll Americans of every age and income bracket who currently lack suitable insurance in a combination of private and state programs.
The bottom line is we are still in the early stages of full-on health reform. It’s too soon to get hysterical and it’s way, way too soon to pronounce the ACA a failure or success. The Obama administration plans to enroll 7 million people in private health plans through the exchanges by the end of 2014; 29 million by 2019. So far, Tavenner testified that 700,000 people have set up accounts on the exchanges—there are no figures available yet on how many actually enrolled in plans. The health insurance exchanges are expected to be fully functional by the end of November and people have until March 31 (a six-week extension) to obtain insurance before incurring a penalty.
It may take another month or longer, but the complicated enrollment system for the ACA will be up and running. But that doesn’t mean the end of opposition or smooth sailing for the legislation. Controversy will continue around premium prices and over whether young, healthy people will sign up for insurance or whether older, sicker folks who ultimately drive up the cost of premiums will burden insurers. Some of us wonder if the tax penalties for forgoing insurance are high enough to deter these younger Americans from remaining uninsured. Despite these questions and more, eventually there will be a new status quo, says Frakt. “Therefore, what I expect is not a conversation about “success” or “failure” or — in time — about “repeal,” but about how to incrementally change the law to start to take better control of costs.
“After all,” he notes, “Medicare has a cost control problem, has for decades, and it’s not ever been close to being repealed.”