Archive | Health Care Bill Impact on Business

Humana CEO: Health insurance will go the way of pensions

The health care system of the future will likely come with fewer guarantees, said Bruce Broussard, CEO of Humana Inc.

  • In other words, rather than offering a health plan, employers will probably begin offering specified payments and telling their employees to buy their own insurance.
  •  “What happened to retirement is probably going to happen to health care,” Broussard told me Wednesday. The shift, from defined-benefit to defined-contribution plans, is exactly what happened when 401k retirement accounts replaced pensions.

Broussard figures that change will take a decade to kick in fully. Corporations will increasingly use wellness offerings, he said, to differentiate themselves in recruiting.

Questions that insurance companies already face, such as whether their customer is the employer or the individual, will be amplified. “Our role becomes a role around health more than just the financing of health care,” he said.

*Modified from a Cincinnati Business Courier article

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It’s easier to apply for green card than the Obamacare Application for new health exchanges

THE APPLICATION FOR THE NEW HEALTH EXCHANGES IS 21 PAGES, AND INCLUDES 61 PAGES OF INSTRUCTIONS

If you thought nothing could be more tedious than filling out your tax forms, just wait until you try to apply for health insurance through the Affordable Care Act’s new exchanges.

  • The draft of the paper application is 15 to 21 pages, depending on whether someone is applying individually or for their family. And the instructions for the application run no less than 61 pages. That’s nearly six times longer than the instructions for a green-card application.
  • The Department of Health and Human Services recently released the draft versions of the applications consumers will need to fill out in order to get insurance if they can’t get it through their employer or family. But while the point behind the law and the exchanges is to make it easier for Americans to get health insurance, some consumers are complaining that a major barrier now stands in their way: too much paperwork.
  • The forms bring to mind the IRS instructions for filing the 1040 tax form, which is 105 pages long. In fact, many of the questions have less to do with health matters than financial ones.
  • “It’s a lot of information that consumers are going to have to provide, and that could deter people from signing up,” says Laura Adams, senior insurance analyst at InsuranceQuotes.com.“That could be an issue for some people who don’t like paperwork. And who likes paperwork?”

“If you like IRS forms, you’re going to love this one,” says Ken Hoagland, chairman of Restore America’s Voice, a conservative organization that advocates for the repeal of the health-care law, as in all kinds of health care will be covered even hair care that can be seen at www.myhealthymane.com/provillus-reviews-does-it-work/. “These are the kinds of things that are going to drive people crazy.”

Adding to the confusion from this new bureaucracy is that experts say most Americans are still largely in the dark about what the health-insurance exchanges — the new marketplaces for individual insurance stipulated by the health-reform law — even are. Though government officials are hurrying to set them up before open enrollment for 2014 begins this fall, a survey released today by InsuranceQuotes.com found that 90% of U.S. consumers don’t know that the exchanges open Oct. 1, and 22% said they thought the exchanges were already open now.

That lack of knowledge doesn’t bode well for how consumers will actually manage to sign up for insurance on their own, experts say — something they will have to do or else pay a penalty mandated by the health-reform law.

While the health reform law also provides for a support staff known as “Navigators” to help consumers sign up for insurance in the exchanges, experts worry that the Navigators will be overwhelmed with requests, and consumers who call their inundated phone lines will be stuck on hold for a while. “People won’t be able to get through,” Adams says. (Yesterday, HHS proposed training and ethics regulations for the Navigators, which don’t include specific provisions about answering phones in a timely fashion, but dictate that Navigators “will be fair and impartial and will be appropriately trained, and that they will provide services and information in a manner that is accessible.”)

Adams recommends that consumers start the application process right away when the exchanges open in October, because as 2014 approaches, the deadline for when all Americans must have health insurance, the rush of last-minute applicants may bring the enrollment websites crashing down. “Our fear is that people are going to put it off til New Year’s Eve, and by then the sites will be overloaded and Navigators will be overloaded,” Adams says.

*Modified from a MarketWatch.com article

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Little hope seen for millions priced out of health overhaul

Millions of Americans will be priced out of health insurance under President Barack Obama’s healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

  • In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs.
  • Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
  • The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker’s share of the premium does not exceed 9.5 percent of the worker’s household income.
  • That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.
  • “It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance.

“It’s an issue. It needs to be fixed,” Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called “the family glitch problem.”

“The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care they need,” Pollack said.

Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer’s health plan is affordable.

 

*Modified from a Reuters article

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Health Insurers Warn on Premiums

  • Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.
  • In a private presentation to brokers late last month, UnitedHealth Group Inc., the nation’s largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%
  • Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators.
  • An official with Blue Cross & Blue Shield of North Carolina told a gathering of brokers last week that individual premiums could go up by as much as 40% to 50%, according to brokers who were present.
  • Aetna Inc., in a presentation last fall to its national broker advisory council, suggested rates on individual plans not being grandfathered under the law could go up 55%, on average, and gave a figure of 29% for small business rates.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law’s effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers’ premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down.

Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people’s health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees’ health status and claims history.

The law’s 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won’t touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law’s impact on premiums and costs.

The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law.

The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law.

. The company said the estimates were driven in part by growing medical costs not directly tied to the law. It also cited the law’s requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things.

Jeff Alter, who leads UnitedHealth’s employer and individual insurance business, said the numbers represented a “high-end scenario,” not an average. “There are some scenarios in which a member could see as much as a 116% increase or over,” he said, though others, such as some older consumers, could see decreases. He said the company dwelled on the possible increases because it was trying to prepare brokers to speak with clients facing big jumps.

Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact.

There has long been debate, even among insurance experts, over how the law will affect premiums. Because the effect is likely to vary, different measurements can arrive at different conclusions. The CBO analysis cited by the administration determined that average premiums for consumers who buy their own coverage would be 14% to 20% lower because of the law—if the law didn’t change the types of plans they purchased.

But the CBO also suggested the law would lead to consumers buying more expensive plans, largely because it requires coverage to include certain benefits and limit charges such as deductibles. When this effect was taken into account, the average premiums would go up 10% to 13%, the agency said, though subsidies would ease the bite for most people. The agency also said small-business policies were likely to cost within a few percentage points of the amount they would have without the law.

Health and Human Services officials say competition among insurers, as well as provisions to limit their financial risk from attracting high-cost consumers, will exert downward pressure on premiums, and point to the tax subsidies that will limit many consumers’ costs.

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

*Modified from a WSJ article

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More Docs Plan to Retire Early

Six in 10 physicians said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years.

Most physicians have a pessimistic outlook on the future of medicine, citing eroding autonomy and falling income, a survey of more than 600 doctors found.

  • Six in 10 physicians (62 percent) said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years, a survey from Deloitte Center for Health Solutions found. That perception is uniform across age, gender, and specialty, it said.
  • Another 55 percent of surveyed doctors believe others will scale back hours because of the way medicine is changing, but the survey didn’t elaborate greatly on how it was changing. Three-quarters think the best and brightest may not consider a career in medicine, although that is an increase from the 2011 survey result of 69 percent.
  • A quarter of physicians would place new or additional limits on accepting Medicare patients if there were payment changes.

“Physicians recognize ‘the new normal’ will necessitate major changes in the profession that require them to practice in different settings as part of a larger organization that uses technologies and team-based models for consumer (patient) care,” the survey’s findings stated.

About two-thirds of the survey responders said they believe physicians and hospitals will become more integrated in coming years. In the last 2 years, 31 percent moved into a larger practice, results found. Nearly eight in 10 believe midlevel providers will play a larger role in directing primary care.

Four in 10 doctors reported their take-home pay decreased from 2011 to 2012, and more than half said the pay cut was 10 percent or less, according to Deloitte. Among physicians reporting a pay cut, four in 10 blame the Affordable Care Act (ACA), and 48 percent of all doctors believed their income would drop again in 2012 as a result of the health reform law.

Other findings:

26 percent believe Medicare’s sustainable growth rate formula will be repealed in the next 1 to 3 years
One in 10 believe medical liability reform will pass Congress in the next 1 to 3 years
55 percent of physicians believe the hospital-doctor relationship will suffer as admitting privileges are put at risk to comply with hospital standards of meaningful use
31 percent gave the U.S. healthcare system a favorable grade of “A or B” compared with 35 percent in 2011

Despite those pessimistic views, seven of 10 said they were satisfied about practicing medicine, although that number was lower for primary care providers and higher for younger age groups, the survey found. Dissatisfaction was attributed toward less time with patients, long hours, and dealing with Medicare, Medicaid, and government regulations.

Speaking of the ACA, fewer physicians (38 percent in 2012) believe the ACA is a step in the wrong direction compared with 44 percent in 2011. The number who think the law is a good place to start remained the same.

Two-thirds of physicians in the Deloitte survey say they use an electronic health record (EHR) that meets meaningful use stage 1 requirements, but that number has been lower in other surveys. Three in 5 respondents were satisfied with their EHR.

Deloitte mailed the survey to more than 20,000 physicians selected from the American Medical Association’s master file. Just 613 returned completed surveys, giving a margin of error of 3.9 percent at the 0.95 confidence level.

*Modified from an EveryDay.com article

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Obamacare Insurance Plans Will Be Bare Bones — And Expensive

There’s mounting evidence that come fall, the health plans sold through the Obamacare exchanges will be bare bones affairs – with narrow networks of providers to select from, and heavy co-insurance once patients go “out of network.”

In many ways these plans will be a throwback to insurance schemes of the late 1990s, when managed care was dominant and restrictive networks standard fare. With one difference: The Obamacare plans won’t be cheap.

Quality of coverage is just one issue. Price is the other. There’s mounting evidence that even though the new health coverage will be austere, it’ll still be pricey.

Health plans have ample incentives to price the Obamacare coverage high, which is precisely what they’re likely to do.

  • For one thing, insurers will want to protect against the risk that individuals entering the exchanges are those who most need health insurance because of pre-existing illness. If this sort of “adverse selection” occurs, it will raise costs to insurers. To guard against this, insurers are likely to price the coverage at a premium.
  • Second, health plans want to reduce uncertainty around how all the risk-sharing provisions in Obamacare will eventually play out. The legislation puts in place mechanisms that forces Washington to share with health plans some of the cost of the covering the sickest beneficiaries. But the regulations outlining these parameters were only released last Friday. Nobody yet trusts how they’ll work.
  • Third, health insurers will want to reduce the incentive for employers to drop coverage and dump employees into the exchanges. This is especially true when it comes to insurers’ lucrative small group and large group segments. If insurers price the exchange products too low, they’ll give employers another inducement to do this sort of dropping. By pricing exchange products higher relative to the insurance offered in the private market, they reduce this incentive.
  • Finally, the providers that Obamacare plans must contract with are unlikely to offer significant price cuts to attract this volume. Since the Obamacare plans are likely to pay providers less than rates offered by standard private coverage (and maybe even less than Medicare rates) many doctors could also refuse to accept Obamacare, just like they refuse Medicaid. Or refuse to offer insurers discounts for these patients.

To mitigate uncertainty, plans will price their products high. Insurers know that any excess profits they earn will have to be paid back to the government, anyway (owing to caps that Obamacare places on how much profit health plans can earn). Health plans are better off aiming high, and owing money back, then getting underwater. After all, Washington takes away “excess” profits, but it doesn’t share in losses.

The architects of Obamacare designed the scheme without much thought to how its overlapping incentives would discourage competition on the price of the new coverage. Health plans will try to drive down costs by offering very narrow networks of providers that they can more easily control. It will be a race to the bottom to see which plan can offer the cheapest benefit, while still meeting minimum standards. But it won’t be a race to the bottom on price.

Plans have too many reasons to price their products cautiously, and not automatically pass along any cost savings to consumers.

If the Obamacare plans are priced higher than initial assumptions made by the Congressional Budget Office, it will burst the estimates placed on Obamacare’s total costs. It could also make these plans unappealing to consumers.

 
* Modified from a RealClearMarkets.com article by Scott Gottlieb

 

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White House Issues Final Rule on ACA’s Essential Health Benefits

On Wednesday, the Obama administration issued a final rule outlining 10 broad categories of essential health benefits that most health insurance plans must offer in 2014 under the Affordable Care Act.

About the Final Rule

Under the ACA, health plans in state health insurance exchanges must provide coverage for 10 broad categories of benefits, such as maternity care, prescription drugs and preventive care. HHS in November 2012 released a proposed rule on the minimum benefits (California Healthline, 11/21/12).

The final rule goes beyond what regulators initially proposed and applies to non-grandfathered plans for individual and small group markets inside and outside of the health insurance exchanges.

Most of the rules include benefits that commonly are covered by plans, including:

Ambulatory patient services;
Chronic disease management;
Emergency care;
Hospital services;
Laboratory services;
Maternity and newborn care;
Prescription drugs; and
Preventive wellness services.

However, some changes represent an expansion of coverage to include rehabilitative care in the santa cruz residential recovery program, pediatric dental care and pediatric vision care. Further, the rule expanded coverage and federal parity protections for mental health and substance use disorder services, including behavioral health treatment, to both the individual and the small group market.

HHS Secretary Kathleen Sebelius described the rule as a major expansion of mental health coverage, noting that millions of individuals will gain access to mental health care and an additional 30 million individuals who already have some mental health coverage will see their benefits become more generous.

  • The final rule also prohibits insurers from discriminating based on an “individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life or other health conditions”. In addition, the rule sets four levels of coverage that new health policies offered on health insurance exchanges must offer.

Consumers choosing bronze plans — the least generous policy — will pay an average of 40% of the costs of covered benefits, while insurers will pay the remainder. Those choosing platinum plans — the most generous policy — will pay 10% of the costs, and the insurer will pick up the rest.

However, the administration did not set a national standard and allowed states to set specific requirements for the minimum benefits to be covered in each essential health benefit category. Under the rule, each state could select a benchmark plan reflecting coverage typically offered by the largest plan by enrollment for employers.

In addition, insurers in each state typically will be required to cover all benefits required under state laws adopted prior to Dec. 31, 2011. States can require insurers to cover additional benefits, but they will have to cover the extra costs themselves.

Although states will be responsible for ensuring that insurers comply with the rule, the federal government said it will step in if a state is not adequately protecting consumers.

Cost of Coverage

Insurers and some business groups had lobbied the federal government to scale back the scope of mandated coverage categories because of concerns that such coverage would make policies too costly, the Wall Street Journal reports. However, rather than scale back benefits, the rule includes several ways to limit the costs to consumers, such as capping total out-of-pocket costs and limiting the deductible amount for plans offered in the small-group market to about $2,000 for an individual and $4,000 for a family. Consumers could face extra costs if the seek care outside of their plan’s network of physicians and hospitals.

Health insurers have been waiting for the final rule and other pending regulations before finalizing plans and pricing them. Further, state insurance regulators must also approve the plans before they can be marketed.
*Modified from a California Healthline article

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Health Care Reform Checklist for Individuals and Families

Whether you are uninsured, or just want to explore new options, the new Health Insurance Marketplaces will give you and your family choice.

Starting October 1st, 2013, you will be eligible to enroll in health insurance via the new health insurance marketplaces (for coverage starting January 1st, 2014).

Here’s step-by-step check list to ensure you are prepared for the October 1st, 2013 open enrollment.

Step 1 – Find out whether your employer will offer group health insurance post-2014

There are two primary categories of health insurance to choose from:

Individual health insurance,

Group health insurance.

1) Individual Health Insurance

Individual health insurance plans are health insurance plans purchased by individuals to cover themselves or their families. Anyone can apply for individual health insurance. In 2014, insurance companies will no longer be able to decline individuals for individual health insurance based on a pre-existing medical condition. Also, starting in 2014, there are new special tax incentives available to businesses and employees when employees purchase individual health insurance.

2) Group Health Insurance

Group health insurance plans are a form of employer-sponsored health coverage. Costs are typically shared between the employer and the employee, and coverage may also be extended to dependents. In certain states, self-employed persons without other employees may qualify for group health insurance plans.

  • Many small businesses are expected to terminate group health insurance (in favor of individual health insurance) in 2014.

Step 2 – Learn about different types of health insurance

Whether you’re looking at individual health insurance or group health insurance, there are several different types of health plans available. The four you should know are:

PPO Health Insurance Plans,

HMO Health Insurance Plans,

HSA-Qualified Health Insurance Plans, and

Indemnity Health Insurance Plans.

  • The plan type that is best for you and your employees depends on what you and your employees want, and how much you are willing to spend. 

Step 3 – Make sure you understand the health insurance terminology

When shopping for a health insurance plan, one of the challenges people face is understanding health insurance terminology. Here are five key health insurance terms you and your employees need to understand:

“Premium” – The premium is the amount you pay to the health insurance company each month to maintain your health insurance.

“Copayment” – Your copayment, or “co-pay,” is the specific dollar amount you may be required to pay up front for a specific type of service.

“Deductible” – Your annual deductible is the amount you may be required to pay out-of-pocket before the insurance company will begin paying for your covered medical claims.

“Coinsurance” – Coinsurance is the amount that you are obliged to pay for covered medical services after you’ve satisfied any copayment or deductible required by your health insurance plan.

“Max Out-of-Pocket (OOP) Costs” – Your maximum out-of-pocket cost sets a limit to your annual financial liability.

Step 4 – Make a list of questions to ask your broker 

Some questions you might want to ask include:

Can I stay with my current doctor?

Will this plan cover my health costs when I’m traveling?

Will I be eligible to contribution to an HSA?

How will this cover my pre-existing condition?

Step 5 – Gather basic information about your household income

Beginning 2014, individuals will have access to tax subsidies to buy private health insurance through the public exchange. These subsidies will be for those who enroll in a silver plan through the exchange.

  • The subsidy caps the cost of individual health insurance at 2% – 9.5% of their household income if their household income is less than 400% above the federal poverty line. This equates to roughly $90,000 per year for a family of four.

*Modified from a Zanebenefits.com article

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Seven million will lose insurance under Obama health law

President Obama’s health care law will push 7 million people out of their job-based insurance coverage — nearly twice the previous estimate, according to the latest estimates from the Congressional Budget Office released Tuesday.

  • CBO said that this year’s tax cuts have changed the incentives for businesses and made it less attractive to pay for insurance, meaning fewer will decide to do so. Instead, they’ll choose to pay a penalty to the government, totaling $13 billion in higher fees over the next decade.

But the non-partisan agency also expects fewer people to have to pay individual penalties to the IRS than it earlier projects, because of a better method for calculating incomes that found more people will be exempt.

Overall, the new health provisions are expected to cost the government $1.165 trillion over the next decade — the same as last year’s projection.

With other spending cuts and tax increases called for in the health law, though, CBO still says Mr. Obama’s signature achievement will reduce budget deficits in the short term.

During the health care debate Mr. Obama had said individuals would be able to keep their plans.

*Modified from a Washington Times article

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Obamacare’s Pressure Points There are at least nine stumbling points in its implementation.

President Obama’s reelection, along with the Supreme Court’s ruling last June on his signature health-care reform, may seem to have guaranteed that the Affordable Care Act (ACA) will remain the law of the land. But that could turn out to be the easy part of Obamacare. Implementing the ACA’s main provisions by January 1, 2014 — the date on which the law is to take full effect — presents a more grueling and protracted set of tests.

The next round of health-care-policy battles will play out not just before Congress but also in state capitals and health-care markets across the country. You could think of these fights as being like a martial-arts battle, in which various “pressure points” are attacked to produce significant pain, serious injury, or even temporary immobilization, not to mention an aversion to future fighting. Let’s take a closer look at the more painful pressure points in the ACA.

1) Health exchanges.

Nearly two-thirds of states still are not fully on board with running their own exchanges to offer the federally subsidized coverage dictated by the ACA. As many as 23 states would rather leave the daunting implementation process entirely in the hands of federal officials. Another ten may enlist as junior apprentices in largely federal-run “partnership” exchanges. But the White House desperately needs state governments to provide infrastructure and local-market experience as well as to take more of the political blame for the implementation fiascos ahead. Many states complain that the rules for exchanges are unclear, costly to administer, coercive, or all of the above. The federal government is supposed to set up exchanges in states that fail to do so, but, later next month, a federal district court in Oklahoma will begin to rule on arguments that directly challenge the authority of the federal government to distribute tax credits in federally run exchanges, which does not appear to be provided for in the text of the ACA.

2) Medicaid expansion.

By one count earlier this month in The New England Journal of Medicine, 17 states have not yet agreed to expand their Medicaid coverage up to the ACA-designated 138 percent of the federal poverty level, A somewhat smaller number of states are officially opposed to the Medicaid expansion, and well under half of all states support it. The Supreme Court ruled that the Medicaid expansion must be optional, not a mandate enforced with penalties to states’ existing Medicaid programs. Many governors and state legislators doubt that the law’s initially generous federal funding will be sustainable within a largely unreformed, but expanded, entitlement program that already is straining their budgets. Existing Medicaid programs already fail to attract enough physicians because of their below-cost reimbursement policies.

3) Individual-mandate enforcement.

The mandate that, beginning next year, requires almost everyone to purchase coverage meeting federal standards remains highly unpopular. Moreover, the tax penalties to enforce it are quite small compared with the premium costs of the required coverage. Many young and healthy individuals will therefore have a strong incentive to remain uninsured. Various exemptions (including those for the relative “unaffordability” of the premiums relative to one’s household income) will limit further the possibility of requiring coverage.

4) “Minimum” health-benefits coverage.

The ACA’s bureaucratic file drawers are full of “essential” benefits and services that all health plans must offer, with four tiers of actuarial value (the share of covered benefits actually paid by an insurance plan).Then add income-based subsidies — to reduce premium costs as well as to lower other cost-sharing expenses. But don’t forget medical-loss ratio floors that limit the value of administrative services that insurers can provide, as well as their return on capital. The ACA also imposes adjusted community rating (effectively forcing lower-risk customers to pay more, so that higher-risk expensive ones can pay less); and guaranteed-issue requirements (allowing customers with costly preexisting conditions to insist on private insurance coverage whenever they want it). All of these ACA requirements affecting most forms of fully insured coverage (technically speaking, neither self-insured nor “grandfathered”) mean that those premiums will spike higher (particularly for healthier young adults in the individual market) and could outrun the budgetary limits of taxpayer subsidies.

5) Who picks up the check?

Realistically assessing the fiscal effects of Obamacare doesn’t show only that we’re running out of room on Uncle Sam’s credit card. In addition, higher health-benefits costs will continue to suppress private-sector wage and job growth as well as prevent public investment in other priorities. Average workers and patients will ultimately bear the cost of the ACA’s new taxes, even though they are nominally aimed at health-care providers and higher-income individuals.

6) Health-care-provider capacity.

The ACA will be much better at stimulating demand for health-care services than increasing their supply. A Congressional Research Service report last month noted current shortages of physicians and cautioned that the ACA may compound the problem by increasing the demand for health-care services. There are a handful of incentives in the law to increase the supply of health-care providers, but they are short-term, discretionary, and yet to be implemented. The ACA’s reimbursement and regulatory disincentives to enter or remain in medical practice, on the other hand, will be permanent.

7) “Pilot” error.

A host of projects under the ACA that are meant to demonstrate innovations in health-care delivery systems have yet to get off the ground or show consistently positive (let alone reproducible) results. Some of these pilot programs look like health-policy kamikaze missions. The more-likely method of restraining health-care spending will be the old stand-by of formulaic, across-the-board reimbursement cuts for doctors, hospitals, and makers of medical products.

8) Transparency without real prices.

Two sets of the ACA’s stated policy objectives appear to be at war with each other. The bill’s jargon of bundled payments, population-based capitation, complex cross-subsidies, risk adjustments, and pay-for-compliance incentives indicate that bureaucrats are really in charge. Such “trust us, we know what’s good for you” approaches threaten to undermine other gestures in the law to make health-care information more transparent, consumers cost-conscious, and providers accountable to patients rather than public payers.

9) Standardization vs. customization.

The ACA embodies the progressive preference for rule by (politically favored) experts. , It treats health care as a manufacturing process with uniform standards based on “best evidence” and top-down quality assurance. Monopsony purchasing and economies of scale reign supreme. Different patients are to be treated as identical cogs on an assembly line. This type of politically driven health care is inherently centralizing and static. Competitive markets, on the other hand, are open to dynamic, bottom-up innovation, product differentiation, and improvements in customer service.

These pressure points, all serious vulnerabilities, suggest that the ACA’s implementation process will be politically precarious and economically painful. However, it will also present new opportunities to retrace our steps and consider a different path.

*Modified from a National Review Online article.

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