For all that has been written, spoken, screamed, and whispered about the Affordable Care Act, there is still a lot of confusion and lack of knowledge among the public. No wonder, I suppose. Republicans continue to attack it as if it were a scourge from hell. Democrats are desperate to tout it. Meanwhile, it keeps changing, as portions are altered, fixed, or dropped. Maybe it’s a good moment to take stock. For starters, after all those changes, what is Obamacare, exactly? What is out, what is on hold, and what is still standing in this large and controversial law? And what have been Obamacare’s plusses and minuses so far? Here’s the first of a two-part scorecard.
WHAT’S STILL STANDING?
The individual mandate.
This is the heart of the law—the requirement that everyone carry insurance or face penalties, and it is still scheduled to take effect January 1, with enrollment in the state health exchanges beginning October 1. Most Americans—about 160 million of them—are insured through their workplace, but some 50 million have no insurance at all. Many of those who have no coverage now will be able to shop in the state exchanges set up by the ACA and, depending on their income, receive a subsidy to help pay the premiums. Those with incomes up to 150 percent of the poverty level ($17,235 for individuals and $35,325 for a family of four) will get further help by having their out-of-pocket costs cut by as much as two-thirds. And if people have pre-existing conditions, they won’t be turned down for coverage.
An important wrinkle: Workers with employer coverage who pay more than 9.5 percent of their income for that insurance can shop in the exchange and receive subsidies for themselves or their families. But because of the way the Treasury Department has interpreted this provision, if the worker’s contribution to an individual policy is less than 9.5 percent of income but the contribution to a family policy is more than that, family members are out of luck when it comes to getting subsidies.
One of the pillars of reform, Medicaid expansion, is sort of in and sort of out, thanks to the Supreme Court and several reluctant GOP-led states. Obamacare was supposed to bring coverage to some 15 million people through the expansion by raising the eligibility limit to 138 percent of the federal poverty level—or to about $32,500 for a family of four and $15,000 for a single person. The Supreme Court ruled that states had the option of dropping out of his expansion, however. By early July 19 states said they would not expand their Medicaid programs, 23 plus the District of Columbia said yes they would, while five were undecided and three were considering another kind of expansion. As a result, people with incomes below the poverty line—the poorest of the poor—are stuck if they live in states that have chosen not to expand. These people have almost no coverage options. They have little money to buy insurance on their own, and because of the way the law was written, they are barred from shopping in the exchanges and receiving subsidies.
Hospital penalties and bonuses.
These carrots and sticks aimed at encouraging better care remain in effect—despite grumbles and complaints from hospital officials. Medicare now penalizes hospitals for readmitting too many patients, though there have been fits and starts implementing the program. Medicare made some mistakes in calculating penalties and had to reduce them a bit, but so far has penalized about 2,200 hospitals. Hospitals also get bonuses or penalties if they meet or don’t meet certain targets that measure quality of care. One example of good care: giving beta blockers to patients who’ve had heart surgery. Hospitals scoring the highest were not necessarily the ones with brand name reputations.
The CLASS Act
Short for the Community Living Assistance Services and Support Act, the CLASS Act was supposed to be a down payment on a national program to pay for long-term care, a big shortcoming in the US health system. It was a voluntary effort in which people could join a government plan and pre-fund their long-term care needs. When they needed care, they would get a daily cash benefit to pay for services. The program was none too popular with many politicians. In the end the government found it unsustainable. Because it was voluntary (meaning there was no mandate to buy here), lots of people had to sign up to make it viable. If they didn’t, premiums would rise, and very few people could afford them. There was no way, the government decided, to make the program actuarially sound over 75 years.
Co-op insurance companies.
These are gone, too. About $6 billion in federal start-up money for co-ops was supposed to spur their development as a lower-priced alternative to big insurance carriers; it was sort of a sop to the public option advocates. Twenty-four co-ops were funded even though the government had begun to reduce funding. Then came the New Year’s surprise. In final negotiations over the fiscal cliff deal, Congress killed the remaining funding for 40 more co-ops whose applications were in the pipeline. Insurers, it seems, were not keen on the new competition.
WHAT’S BEEN DELAYED?
The employer mandate.
This is in the big one in this bucket. In early July the Obama administration announced a one-year postponement until 2015 of the employer mandate, the requirement that businesses with more than 50 full-time employees had to provide health insurance or pay a penalty. The idea was to prod employers that did not provide coverage to do so. Again business complained about the record keeping and reporting requirements.
The law said they had to provide coverage to full-time employees working 30 hours a week. That was tough for firms whose workers’ hours fluctuated. Who was a full-time worker? Who was part-time? Many firms were threatening to cut worker hours to avoid the requirements. The delay means that workers in firms that don’t provide coverage might be offered so-called “skinny plans.” Such plans might cover some drugs and preventive services, but not hospital care or surgeries, for example. There’s little protection for catastrophic illness, but the premiums are cheap for employers and workers. The employee’s share may be as little as $40 or $50 a month.
Rules for smokers
These marketplaces for small businesses to buy insurance for employees, will offer only one plan in 2014 instead of an array of choices the law envisioned. The administration said there were “operational challenges,” and the choice option would be available in 2015. Most small businesses offer only one choice now, so the exchange won’t be of much value unless more carriers can sell their products.
Rules requiring smokers to pay more for their coverage. During debate there was little doubt that insurers would be able to charge smokers more money, because they present greater health risks and more potential costs for insurance companies. But now smoking penalties applied to policies sold through the exchanges are delayed a year because of what the administration described as a “system limitation.” The law says insurers cannot charge older people more than three times it charges a younger person, and it allows carriers to charge smokers 50 percent more. The problem, discovered a few months ago: the system cannot process a premium for a 65-year-old smoker that is more than three times the premium for a 21-year old smoker.
Verification: bumps in the road
Scaling back verification requirements for insurance exchanges. Because about 60 percent of people buying in the exchange probably will be eligible for subsidies, exchange officials needed a way to verify if they were indeed eligible; that is their income was low enough and they had no other insurance coverage. But the administration says that they have now encountered “legislative and operational barriers.” The upshot: the government will rely on the honor system to make sure applicants for insurance are telling the truth about their income and insurance status. The government will do a check when people file their income tax returns in 2015. If income and insurance status change during the year, a family could end up with a tax liability or a tax refund, depending on the subsidy they got and whether their incomes went up or down during the year.
WHAT’S IN LIMBOLAND?
The Independent Payment Advisory Board.
The law called for this 15-member board appointed by the president to advise Congress on actions Medicare could take to reduce the growth of healthcare spending. Congress could take an up or down vote on the recommended measures. The board, however, cannot recommend changes in premiums, benefits, eligibility, or taxes, or other changes that would result in “rationing” of care to Medicare beneficiaries. Nevertheless, it has become something of a political football, with Republicans charging that the board could lead to death panels and rationing, because seniors wouldn’t be able to get treatments, especially the costly ones.
The board is in virtually inactive right now. Members have not been appointed, but more relevant is that Medicare’s costs have slowed somewhat, and in April Medicare’s chief actuary declared that that medical cost inflation would not be high enough to trigger the work of the IPAB. It may not see action for a few years, and then what it does will depend on the political winds and the pace of medical inflation.
The National Health Care Workforce Commission.
The Affordable Care Act set up this 15-member body to prepare for the increased demand in primary care needed by all the newly insured people buying in the shopping exchanges. It’s no secret that the US has a shortage of primary care doctors. The commission was to examine such issues as the right mix of primary care docs and specialists, and whether pharmacists could help coordinate care. The administration requested $3 million for the commission to begin its work, but Congress has not appropriated the money. Federal officials have told commission members they cannot even meet to discuss its work. The stalemate is not about money; $3 million dollars is a droplet in the federal budget. The commission is tied up in the Beltway’s larger political struggle.
Tomorrow: Obamacare Scorecard Part 2—The hits and misses and mixed reviews of the Affordable Care Act.
Follow @USProjectCJR for more posts from Trudy Lieberman and the rest of theUnited States Project team, including our work on healthcare issues and public health at The Second Opinion. And for Trudy’s resource guide to covering the ins and outs of buying insurance on the state exchanges, see Open Wide, from CJR’s new July/August issue.
Fast-tracking the truth in IPAB coverage