I continue to support the Affordable Care Act’s (ACA) goal of increasing access to quality, affordable health care, despite ongoing implementation challenges. As a nation, we have a moral obligation to create a health care system that works for all Americans. While I would have wanted a different law, I respect that the ACA is the law of the land – upheld by the U.S. Supreme Court in 2012 in spite of intense political challenge. Unfortunately, the failure to get a bipartisan law created a Greek tragedy that continues to bifurcate this country and is making it difficult for the law to live up to its potential.
I believe the law should and will evolve as we gain more experience with what works and what doesn’t in the larger context of transforming America’s health care system. To that end, I offer a few observations.
Good intentions are not enough when it turns to real work
It has been widely recognized that 2014 is a seminal year for the Affordable Care Act as significant health insurance reforms take effect. This new era in health care consumerism was to be marked by online health insurance exchanges, where people could comparison shop to find a policy that best meets their needs. Unfortunately, transforming the individual health insurance market has proven far more difficult than anticipated.
The new marketplace got off to a rocky start in October, with the launch of the exchanges. The federal and some state exchanges were impacted by technology glitches that directly affected consumers’ ability to enroll in a health plan. Compounding the situation was the cancellation of individual insurance policies that no longer met 2014 ACA requirements, causing further worry among consumers. In response, the Administration recommended that policies should be extended into 2014, leaving it to the states and health insurers to decide what to do.
The Administration needs to restore consumer confidence as they continue to fix the federal exchange. Progress has been made to the system’s “front-end,” improving wait times and capacity. However, more must be done to fix the “back-end,” which verifies identity and transmits enrollment data to health insurers. Consumers are rightly concerned. While state and federal exchanges continue to improve, it is almost certain that a small percentage of consumers, (which translates to a 100 percent for the individuals involved), who thought they were enrolled in a plan may, in fact, not be enrolled. Regulators need to work with health insurers and consumer groups to identify this cohort before coverage takes effect, and take steps to solve the problem so consumers won’t be adversely impacted in January.
Consumers suffer when one entity is both the player and the referee
A big problem with the execution of the federal exchange was that the regulator became the player and referee resulting in issues of oversight and accountability. If a health plan behaved in the same way, the government regulator would issue a “cease and desist” order until the health plan proved it could operate in an effective way.
A good example of how it should work is Medicare Advantage enrollment. The Centers for Medicare and Medicaid Services (CMS), in their role as “referee, “ sets the rules and regulates the plans. If an insurer’s plan does not meet CMS standards, it is not allowed to participate in the Medicare Advantage market. In the federal exchange situation, I believe that political considerations may have caused delays in the release of rules and regulations, providing inadequate time for systems development, leading to a failure to apply traditional, proven systems implementation and testing protocols such as end-to-end testing and a beta group prior to full launch.
When the government is both player and referee, there is no one to “blow the whistle” on a bad call and consumers are left with no place to go because there is no competition and no regulator.
There will be short-term winners and losers, but long-term the system will right itself
It’s fair to say that as we continue to implement the most far-reaching health care legislation in 70 years, the size and scale of this effort is daunting by any measure. For example, annual health care spending in the U.S. is equal to the gross domestic product of France. In restructuring a sector of this magnitude it should surprise no one that there will be winners and losers – at least in the short term – as we work to transform the health care system:
Winners – 2014 insurance reforms will best serve the uninsured and underinsured:
- Millions of people will benefit from the expansion of Medicaid up to 138 percent of the federal poverty level.
- People, who could not afford insurance previously, will receive premium tax credits and cost-reduction subsidies.
- People in states with guaranteed issue prior to 2014 (e.g., New York) will see their rates decrease.
- Older people in states with a 5:1 age rating band, will see their premiums decrease in 2014, as the band is compressed to a 3:1 ratio.
- Chronically ill people without employer-based insurance will now be guaranteed health insurance.
Losers -- Conversely, there are some consumers who will not immediately benefit from health reform:
- People in the Individual market prior to 2014, will see an increase in their premiums due to essential benefits requirements, some of which they may or may not need. In essence, they will get more coverage but will also pay more.
- Adults under age 50, who don’t qualify for a subsidy because of their income, and live in a state with broad age bands will see a substantial increase in their premiums.
- Young people will also see their premiums go up due to age band compression. As a result, we may find that young people will put off buying health insurance, causing an imbalance in the risk pools in 2014. If this occurs, then based on health insurers’ experience, premiums could increase in 2015 for everyone.
Over time, as the marketplace regains its equilibrium, I expect the lines between winners and losers will blur. Consumers will adapt to a new health insurance paradigm and find what works best for them and their families.
Transformation takes time
It took Massachusetts 18 years to implement health reforms designed to expand coverage to its citizens. Rather than implement multiple changes all at once, Massachusetts took deliberate steps over several years to implement health reforms. First they implemented guaranteed issue and modified community rating, followed by coverage and affordability standards. In 2006, they merged the small group and individual insurance markets, and implemented an individual insurance mandate. This final step was a broadly supported bipartisan initiative.
Give consumers useful information not rhetoric and opinions
Recently, several politicians and commentators have suggested that all individual health insurance policies before 2014 offered limited coverage and were terrible – the implication being that consumers were duped into buying them. What many failed to report is that individual insurance products must undergo a rigorous assessment by each state insurance commissioner. In addition, many consumers have been happy with their coverage because it suits their particular needs. Political and media spin are not helpful to consumers trying to navigate a highly complex health care system. They want useful information that helps them make the best decision possible for they and their families.
Exchanges are a bellwether for the ACA
There are many lessons to be learned when it comes to the implementation of the insurance market reform aspects of the Affordable Care Act. I continue to believe that exchanges can play an important role in helping people get access to affordable, quality health care. How exchanges evolve in the next two years will be a bellwether for the long-term success or failure of the Affordable Care Act. My hope is that with greater collaboration between the Administration, regulators, health insurers and consumer groups, exchanges will succeed.
The Affordable Care Act is a highly complex piece of legislation that includes 10 titles, each with multiple sections and provisions. We have many steps to take before we can conclude implementation of insurance market reform and other components of the law. As we continue to make progress, however, a larger issue remains, and that is how the ACA, once fully implemented, will impact affordability and value for health care consumers over time. We can’t lose sight of this fundamental issue if we are to make the health care system work for all Americans.
Postscript: Since this Viewpoint was posted the Administration announced additional rule changes related to individuals whose insurance coverage was cancelled because it did not meet 2014 ACA requirements. Affected individuals may now apply for a hardship exemption that would exempt them temporarily from the Individual Mandate or allow them to buy catastrophic coverage. This rule change could lead to serious unintended consequences such as a weakening of the Individual Mandate, which in turn could result in an unstable marketplace.