OBAMACARE DECEMBER 31, 2013
Everybody is talking about how Obamacare will look on January 1, 2014. But how will things look on January 1, 2015?
We put that question to eight smart people who follow health policy. They represent different political perspectives and come by their expertise in different ways. There's an economist, three trained physicians, plus a longtime consumer advocate and organizer. Two of them worked for Republican presidents, one served a Democrat. One frequently criticizes Obamacare from the right, another from the left.
But their predictions have more in common than you might suspect:
In 2014, the most interesting political and policy stories will shift from Washington to the fifty states. States face a mammoth implementation challenge. They also provide the terrain in which we will see whether bipartisan health policy is actually possible. In some parts of the country, we’ll see some fascinating negotiations as Republican governors and the Obama administration each seek a dignified path to make this thing work.
I hope that we see something else, too: An end to the politics of impunity toward the poor and the uninsured.
It’s sobering to think that the same inequalities that make universal coverage a moral imperative pose the chief political obstacles to universal coverage itself. Those with the most to gain from the Affordable Care Act’s Medicaid expansion are economically marginal, disorganized, alienated from the levers of politics, distrusted or disliked by many other Americans. This reality produces a striking sense of impunity among governors and legislators who deny Medicaid coverage to five million people, even as the federal government stands ready to foot virtually the entire bill.
As Medicaid expansion becomes real, Republican politicians who embrace it will begin to profit. Hospitals, cities and counties, and other interest groups in non-expansion states will ask hard questions about why their states chose a different path. Poor people themselves, in campaigns such as texasleftmeout.org, will increase the pressure, too.
It’s important that these recalcitrant officials pay some price—not just to smooth the way for expanded coverage, but to debunk a particularly toxic assumption in American life. Too many politicians assume that poor people just don’t matter, politically. On many issues from the sequester to unemployment insurance, the practical consequences of this assumption are only too obvious.
This assumption is being put to the test. In 2014, I’m betting that some governors will be surprised.
Harold Pollack is Helen Ross Professor at the School of Social Service Administration and executive committee member of the Center for Health Administration Studies (CHAS) at the University of Chicago.
As expected, 2014 was a tumultuous year for the Affordable Care Act. It started in January with many people who thought they had enrolled not actually being insured--either because the information hadn't been accurately transmitted back to their insurance companies or because they hadn't paid their premiums by January 10. After a lot of pressure from the Administration to cover people retroactively if necessary, people newly insured began receiving services.
Access to health services was less problematic than many had feared because of the smaller-than-predicted numbers enrolling in private insurance. Only 4.5 million got coverage, even after the March surge in sign-ups. And there were the many "red" states that hadn't expanded their Medicaid coverage. Some states reported challenges getting primary care services provided to the newly insured--California having the most significant problems.
Some of the smaller regional insurance companies participating in 2014 decided not to participate again in 2015. Some larger companies that had only selectively participated in 2014 increased their participation only modestly for 2015, still concerned about the significant adverse selection that had occurred in 2014 and their difficulty to price properly.
The biggest uproar occurred when many smaller/mid-sized employers received notices that their existing policies didn't meet ACA standards and weren't being renewed. As expected, the Administration provided a variety of accommodations to these employers.
The best news is that the majority of states that had not previously expanded Medicaid announced intentions to do so for 2015. The bad news is that the newly elected Congress is even less likely to pass any legislative "fixes" than the previous Congress.
By the end of 2014, more than 2 million Californians will be enrolled in new coverage options under the Affordable Care Act. A million will have coverage through our exchange, Covered California, following its second open enrollment period. More will be getting coverage through our Medicaid program. Already 700,000 newly covered people have insurance through an early expansion of Medicaid; by February it will be more than 1 million.
Washington-based media will continue to hyperventilate about Obamacare, mistakenly using every website glitch or early enrollment figure as a binary barometer of the law’s success or failure. But even in a state like California—where the website (mostly) works, premiums came in below expectations, and enrollments are on target—officials aren't putting up a “Mission Accomplished” banner yet. Just as rollout problems were never indications of the ACA’s demise, progress to date is not proof the job is finished.
As elections are about the future, not the past, I predict Obamacare itself won't be a major factor in future contests. The debate will be “What’s Next?”
In states that have been more hostile to the law, at least some officials will change their minds about the Medicaid expansion, allowing it go forward.
In states like California that have embraced the law, officials and supporters of reform will focus on improving the law. Among the questions they will address:
1. How can we ensure a safety-net that survives and thrives—to provide primary and preventative care to the remaining uninsured, including undocumented immigrants that were excluded from the ACA?
2. How can we further regulate the insurance market—beyond basic steps like banning pre-existing condition exclusions—so that insurers compete not on avoiding sick people, but on cost, quality, customer service and prevention? How else can we make the health industry more accountable for improved quality and reduced cost of care? California is likely to debate (through bills, the budget, and the ballot box) more oversight of networks, transparency of health spending, rate regulation, investments in prevention and public health, and more.
While we will concentrate on the unfinished work of implementing the law in 2014, the work to fulfill the full promise of the law will be just beginning.
Although it’s unlikely that 2014 will be as bad for the ACA as the initial rollout was, the law still faces significant challenges in the New Year.
The biggest hurdle will be enrollment, particularly among the young and healthy. Deductibles are high, premium subsidies generally aren’t available except to the poorest, the tax for being uninsured is low, and the young have always been overrepresented among the uninsured. This will continue to be the case in 2014 and beyond.
Late in 2014, insurers will announce premiums for 2015. They will be higher, inflicting a political price on Democrats. Expect more creative interpretations and regulatory flexibility out of the Obama administration in order to smooth over more unintended consequences of the ACA.
There will be more Americans who pay directly for more of their health care. The ACA is projected by the Congressional Budget Office to leave 30 million people uninsured, and tens of millions more will get high-deductible plans through exchanges or their employers. These self-pay patients will demand price transparency and discounts for paying in full at the time of treatment, and innovative entrepreneurs will step up to cater to them while ignoring the traditional third-party payment system.
At the end of 2014, I expect to see many advocates of the ACA look back and conclude that while it’s too early to call the law a failure, the meager results fall far short of what was hoped for.
The most recent CBO projections for ACA coverage, from May 2013, suggested there would be 7 million new privately insured Americans and 9 million new enrollees in Medicaid/CHIP by the end of 2014.
Through December 30, 1.9 million Americans had enrolled in private coverage through the federal and state marketplaces. As of December 20, 627,000 had enrolled in Medicaid/Chip. Let’s assume that by January 1 the numbers stand at about 2.0 million for private insurance (30 percent of the CBO 2014 target) and 1 million for Medicaid (11 percent).
The real deadline, however, for the first ACA open enrollment period is March 31, 2014, when penalties kick in. It would be reasonable to expect enrollment during February-March, 2014 to equal the 2013 numbers, bringing the total for private enrollees to about 4.0 million or 60 percent of CBO projections
Medicaid/CHIP numbers are harder to predict because enrollment can proceed continuously over the year. Assuming 1.5 million Americans enroll in Medicaid/CHIP during 2014, participation in public plans would come to 2.5 million or about 28 percent of projected.
Including the 3 million young people under 26 who have gained coverage under their parents’ plans in 2013, these projections would mean that a minimum of 10 million Americans would have become newly insured under provisions of the Affordable Care Act by the end of 2014.
As for costs, the ACA is given some credit (deserved or not) for keeping growth in overall health care costs below historical rates. However, times of rising personal wealth have always been times of rising health care spending. If the economy experiences strong GDP growth in 2014, growth in health spending is also likely to increase beyond the 2012 level of 0.8 percent per capita. A reasonable prediction: both GDP and health care will grow in the 2-3 percent range. As a percent of GDP, health care expenses would remain unchanged at the 18 percent level. This would have been viewed as a big accomplishment only a few years ago, but that was then.
One year from now, the Affordable Care Act will be hobbled but still there. The hangover from the botched rollout will continue to haunt the program, but the website will be in better shape, and an increasing number of people will be getting subsidized insurance via the exchanges. At the same time, sticker shock will continue, especially among those without access to subsidized rates, and take-up rates will continually be lower than the administration predicted.
This will lead to a situation where Democrats are touting the number of covered individuals and calling the ACA a success, while Republicans will highlight the increased costs, lower than expected numbers of covered individuals, and the roll out problems to determine that the plan is a failure. The answer to the question of whether the law is a success or a failure will come from the employer-based market. If employer-based plans continue without significant disruptions, the ACA will weather the storm; but if individuals in the employer-based market lose their insurance or see major changes in their plans, the ACA’s political troubles will worsen.
In addition, one year from now, Republicans will be pleased with their election gains in the House and Senate, but will also realize that, even with their political victory, they cannot repeal the ACA while a lame duck President Obama remains in office. This will set up the 2016 election as yet another do-or-die test for the ACA.
Tevi Troy is a former Deputy Secretary of HHS and the author of What Jefferson Read, Ike Watched, and Obama Tweeted: 200 Years of Popular Culture in the White House
John Z. Ayanian
The most notable change will be 12 million newly insured Americans. In May, 2013 the Congressional Budget Office (CBO) projected 9 million low-income adults would gain coverage in states opting to expand Medicaid during 2014, and another 7 million Americans would obtain private insurance through new federal and state health insurance exchanges. However, because of incomplete ACA awareness among eligible adults and early technical problems with the exchanges, I expect overall enrollment gains in 2014 will be 12 million instead of 16 million Americans.
A second major change over the next year will be much better functioning insurance exchanges. Major problems faced by HealthCare.gov and many new state exchanges will be essentially resolved through effective technical solutions.
The ACA’s future hinges on the U.S. Senate elections in 2014. If Democrats retain control of the Senate, ACA implementation will continue largely as planned. In contrast, if Republicans control both the Senate and House in 2015, Republicans and moderate Democrats in Congress will agree to change several features of the ACA. Essential benefit requirements for insurers will be loosened, financial penalties for uninsured individuals will be lightened, insurance subsidies will be reduced or eliminated for some currently eligible households (those at 300-400% of the federal poverty level), and the medical device tax will be eliminated. Because President Obama will veto a full ACA repeal, its two core components—Medicaid expansion in 25 or more states and subsidized private coverage for most currently eligible households—will be preserved until the 2016 Presidential election.
There is no doubt that, in 2014, we will see enough individuals enrolled in Medicaid, in the exchange plans, and some new enrollment in employer-sponsored plans (to avoid the penalty, though small this year), that the Affordable Care Act will be considered a success. But success is not measured by enrollment in insurance plans but rather by the ability to obtain access to affordable health care.
Not only will tens of millions remain uninsured, those insured that need health care will face financial barriers of high deductibles and other cost sharing, and many will face lack of choice due to narrow provider networks. Unavoidable care provided out of network could result in catastrophic expenses. We will continue to hear stories of people facing excess costs and network problems that will prevent them from accessing care of their choosing.
Already, from both the left and the right, there is much discussion of single payer (improved Medicare for all) as an inevitability once it is realized how poorly functioning will be our fragmented, dysfunctional system of financing health care. We will not see the threshold for action in changing to single payer reached this year, but within a few years, demand for change will occur.
The feeble recommendations from the right would only make things worse, partly by diminishing what little protection we do have, so there isn’t much left other than single payer. Once enough people understand that all of us can have free choice of care that is affordable through equitable public funding, they will demand single payer.