That’s Too Hard – Never Mind…

By Kim Bellard, July 9, 2013

I really didn’t want to pile on the Administration for its fumbled implementation of the Affordable Care Act (ACA – that’s ObamaCare to all the haters), -- I’d much rather be reporting on cool new innovations in health care -- but recent setbacks just boggle the imagination. 

Last week was a slow news week due to the mid-week 4^th of July holiday, and the Obama Administration used that opportunity to drop two implementation bombshells.  First, on Tuesday they announced that they were delaying the mandate that employers with 50 or more employees provide insurance to their employees, or pay fines, until 2015.  They cited the difficulty in developing the necessary reporting requirements and associated mechanisms, even though they’ve had over three years to work on these. 

Many businesses and their trade associations applauded the delay, although many had already been working hard on how they would comply with the law.  And, of course, the vast majority of such employers already provide health insurance to their employees. 

Cynics immediately pointed out that the delay put the mandate after the 2014 mid-term elections.  Other pundits immediately questioned how the health insurance marketplaces (a.k.a “exchanges”) would know who qualified for the subsidies without those employer reporting mechanisms, and later that week the other shoe dropped.  On the dead news day of late Friday afternoon, the Administration said they wouldn’t bother verifying eligibility, and would just trust consumers’ self-reported income and other information. 

These subsidies are literally thousands of dollars per family per year, mind you.  No one who has ever applied for any other kind of federal money would recognize this kind of leniency.  This relaxation of the requirements is again positioned as simply a delay, while they work on the associated systems, but again – what has been going on the past three years?

Not surprisingly, conservative organizations, such as the editorial board of the Wall Street Journal, Fox News or House Republicans have been all over this.  Critics note that these are not the first ACA provisions delayed or waived; for example, they’d previously delayed giving multiple plan options to employees working for small employers who buy coverage through the marketplaces, and killed the CLASS long term care program altogether. 

One can’t entirely blame the Administration for it, but even aside from these latest fumbles, but let’s keep in mind that, according to AP estimates, 2 out of 3 people that ACA intended to cover under its Medicaid expansion not only won’t get Medicaid but can’t qualify for the marketplace subsidies either.  Over half of the states have not elected to approve the expansion.  Between them, Texas and Florida alone have 3 million such uninsured low income people.  Similarly, over half the states are not implementing their own health insurance marketplaces either, creating much more work than intended for the federal government. 

Speaking of blunders, don’t even get me started on the Administration’s “compromise” rules on contraception coverage for faith-based organizations, with the contraception-only coverage to be offered to employees by insurers or third party administrators.  Even Rube Goldberg would know that approach isn’t going to work.

As if enough canaries haven’t died in the coal mine already, as many as nine of the pioneer Accountable Care Organizations – the centerpiece of ACA’s approach to controlling costs – look like they may drop out of that program, shifting to a no risk model. 

I did a quick search on “ObamaCare train wreck” and got almost 2,000,000 results.  That phrase has quickly become the standard ObamaCare description, after Senator Max Baucus started that metaphor rolling earlier this year.  And he’s an ACA supporter.

ACA did three things that our health system badly needed: assuring everyone can qualify for coverage, regardless of health status; making every poor person eligible for Medicaid; financially assisting other low-income individuals with premiums and out-of-pocket expenses (although 400% of poverty is not where I would have set the limits).  It’s how they did these, and the many other complex provisions in ACA, that is the problem.

The bill has proven to be as incomprehensible as critics warned, with new problems emerging every day – e.g., the “Bay State Boondoggle” that shifts money from other states to Massachusetts hospitals, or how ACA treats Congressional staff.  One suspects more surprises are in store, and more retreats.  The Administration had hoped that support for ACA would grow over time, but the reverse seems to be happening, with recent polls showing it is more unpopular than ever. 

The Administration is justifiably terrified than healthy uninsured individuals won’t sign up for coverage, which risks blowing up the individual marketplaces due to the expected new influx of unhealthy individuals (just look what happened to the ACA high risk pools).  Accordingly, it is gearing up for a huge PR campaign to encourage enrollment.  They can’t even do that without controversy, as Secretary Sebelius first was caught trying to strong-arm organizations that her department regulates into donating money for the effort, then got caught fibbing about getting the NFL involved. 

One has to assume that the only reason she’s still around is so that she can take the fall for whatever debacle happens this fall when the marketplaces are supposed to go live. 

With perfect hindsight, I would suggest that ACA tried too hard to keep much of the existing system, and that has led to many of these problems.  It did so for political reasons, obviously, but it’s hard to argue now that those expediencies make as much sense as planned.  I believe that three simple but major changes would have made a dramatic difference:

• Not voluntary: If we truly want everyone covered, and are not willing to deny care to those who do not take action to make that happen, then the system can’t be voluntary.  It certainly can’t be voluntary with penalties that are far less than the cost of coverage, as is true with ACA.  It should be set up more like automatic enrollment in 401k, where people have to actively opt out of being enrolled, not vice-versa. 
• Not employment-based: It’s the open secret of our health system that the tax preference for employer coverage has decidedly perverse effects, yet ACA only tinkered with it.  In addition, trying to ensure uniformity of anything among the literally hundreds of thousands of employer plans is a Sisyphean task, as the recent mandate delay and contraception rules well illustrate.  Until ACA’s reforms, there were no viable individual options for many Americans, but with the guaranteed issue requirements and the exchanges, we could have moved away from the anachronism of our employment-based system.
• Fix Medicaid: there is no program, not even Medicare or the VA, that serves more vulnerable populations than Medicaid’s, yet our patchwork of state-based Medicaid programs, operating under a byzantium set of federal rules and funding, is a national disgrace.  Blowing it up, and finding ways to mainstream coverage of those populations (e.g., buying private coverage) while still addressing their unique vulnerabilities, could have brought in support from many of those Republican Governors and legislators that are now opposing Medicaid expansion. 

I’d like to put on rose-colored glasses and assume everything will all work out, at least in time, but I fear that things are going to get much, much worse before they get any better -- especially if the Administration is just going to throw its hands up when things become more difficult than they expected.