By Kim Bellard, April 16, 2013
If I was HHS Secretary Kathleen Sebelius, I think I’d be asking for a pay raise, or maybe a (verbal) flak jacket. Of course, there’s probably no money for them.
Sebelius is front and center for any developments with ACA, and she has been a very visible spokesperson for the controversial legislation. I don’t know whether she actually believes all the things she says, or is just a loyal soldier for the Obama Administration. Either way, the news about ACA seems like a slow drip of continued bad news, and I fear that the news is going to keep getting worse before it gets better.
Latest up was the request, included in the Administration’s 2014 budget, for an additional $1.5 billion to run the health insurance exchanges for the 26 states who have opted to have the federal government run their exchanges, plus another seven that are to be jointly run. That’s far more than had been originally expected, which means much more work for HHS. Congress refused a similar request for just under $1 billion last year, and is likely to view this request equally skeptically.
In testimony before the House Ways and Means Committee last Friday, Secretary Sebelius vowed that the exchanges will be up and running by the October 1 deadline, but admitted there’s no backup plan in case she’s wrong. Presumably she’s lined up someone to blame in case she’s wrong.
Curiously, even though far fewer states are planning to run their own exchanges, HHS expects their grants to those states to be more than twice as much as they estimated last year – some $4.4 billion instead of the earlier $2 billion. HHS doesn’t need to ask Congress for this money, but the increase certainly raises eyebrows. Twice as much for half as many states?
The Washington Post recently pointed out that, even though ACA is arguably the signature accomplishment of the Obama Administration, the President’s recent budget proposal doesn’t do anything to spell out its expected costs. They are spread out through the budget and not always cleared spelled out. Cynics might argue that the budget deliberately obfuscates the costs to avoid drawing attention to how much they are. CBO had recently estimated, for example, that the subsidies are now expected to be much more expensive than originally forecast. Some of that is because health insurance premiums are expected to be higher than expected – the Administration had promised they would drop due to ACA, something Secretary Sebelius now acknowledges isn’t going to be the case.
The Administration has already started to cut corners on how the exchanges will operate. They recently announced that employees of small employers who get coverage from the exchange will not initially get options of health plans; they will be limited to a single option. I’ll be waiting for the other shoes to start dropping about what else they will be cutting back on. Maybe they can start with their complicated application…
Then there is Medicaid expansion, which is not going well at all. I’d previously written on this, and the situation isn’t getting better. The Arkansas approach, which relies on purchasing private insurance, was seen to be a potential solution for wavering states, but the Arkansas House recently failed to approve the approach. Similarly, in Ohio, Gov. Kasich faces rebellion from his own party on his support for their version of expansion. The number of states who have not opted to expand Medicaid should, ironically, hold down the projected federal spending, but it is not clear how the Administration is scoring the impact of those states’ reluctance.
ACA used employer coverage as a continued cornerstone for source of coverage – remember “if you like your health plan, you will be able to keep your health plan”? – but that cornerstone is weakening. The Robert Wood Johnson Foundation recently detailed what has long been known: employer coverage has declined drastically over the past few years, dropping 10 percentage points nationwide from 1999/2000 to 2010/2011. Some states saw even worse results, led by Michigan with a 15.2% decline. And that was before ACA’s biggest impacts.
Optimists are pointing out that there is no sign yet of employers planning to drop coverage or cutting back on full time hours to avoid their 2014 mandate requirements, but I think their optimism is premature. Even if 70% of benefit professionals say their companies would “definitely will” keep health coverage, as cited by the International Foundation of Employee Benefit Plans survey, that number is still alarmingly low, and those same professionals are coming to be more pessimistic about how much ACA has been increasing their costs.
Similarly, quoting the recent Minneapolis Federal Reserve survey results -- which indicated 89% of employers hadn’t shifted full-time employees to part-time – as good news seems slightly Orwellian. Eleven percent is a lot for something that hasn’t happened yet, and the Fed notes that the 89% didn’t exactly say they wouldn’t in the future.
When one adds up the various things that are becoming visible problems about ACA, the list starts to get long. For example, the tax on employer plans, the medical device tax, and the affordability test for large employers’ contributions to dependent coverage have all come under fire in the past few months. And let’s not forget that the Class Act was the first part of ACA to go, with Secretary Sebelius killing it back in fall of 2011.
According to Kaiser Family Foundation’s latest survey, three years after the passage, over half of Americans report they don’t understand how ACA will impact them, and a plurality still oppose the law. One wonders how many members of Congress who supported ACA originally would still vote for it if they had a second chance.
One way or the other, we’re going to put putting increasing numbers of people in the exchanges in 2014 and beyond, which will increase the strain on them and will increase the cost of subsidies. Maybe that’s not so bad, but we better go into 2014 with our eyes open about the difficulties the system may face. No matter what Secretary Sebelius says.