Another Big Step in Reshaping Health Care

Hospitals and health insurers are locking horns over how much health-care providers will get paid under new insurance plans that will be sold as the federal health law is rolled out.

The results will play a major role in determining how much insurers will ultimately charge consumers for these policies, which will be offered to individuals through so-called exchanges in each state.

  • The upshot: Many plans sold on the exchanges will include smaller choices of health-care providers in an effort to bring down premiums.
  • Exchange plans will take effect in 2014. In that first year, health plans sold on the exchanges could have 11 million to 13 million enrollees and generate $50 billion to $60 billion in premium revenue, according to an estimate from PwC’s Health Research Institute, an arm of PricewaterhouseCoopers LLP.
  • Plans with smaller choices of health-care providers are a big focus for insurers, partly because many other aspects of exchange plans, including benefits and out-of-pocket charges that consumers pay, are largely prescribed by the law, giving them few levers to push to reduce premiums.
  • “The need for a smaller network with lower pricing was critical,” said Juan Davila, an executive vice president at Blue Shield of California, which said it hopes to offer a preferred-provider-organization plan for individuals on the exchange. It would be built around a provider network around 40%-45% of its traditional PPO scope.

To keep costs low, the insurers are pressing for hospitals to grant discounts from the rates hospitals usually get in commercial plans. In return, participating hospitals would be part of smaller networks of providers. Hospitals will be paid less by the insurer, but will likely get more patients because those people will have fewer choices. The bet is that many consumers will be willing to accept these narrower networks because it will help keep premiums down.

  • Tenet Healthcare Corp., one of the biggest U.S. hospital operators with 49 hospitals, Tuesday said it had signed three contracts for exchange plans that would involve either narrow or “tiered” networks, in which people pay more to go to health-care providers that aren’t in the top tier.

Tenet said that in exchange for favorable status in these plans, it granted discounts of less than 10% to the three insurers, which it said were Blue Cross & Blue Shield plans covering 15 of its hospitals, or around 30%.

Analysts said Tenet’s disclosures, which came during an earnings call with analysts, are the most explicit from any hospital chain so far about how the negotiations are shaping up. “It’s the clearest statement they’ve gotten about exchange products, pricing and impact,” said Sheryl Skolnick, an analyst with CRT Capital Group LLC.

Stonegate Advisors LLC, a research firm that works for health insurers, has been testing clients’ plans with consumers in a mock-up version of an exchange, which is an online insurance marketplace.

  • The tests have found that premiums are the most important factor in consumers’ choices, he said, with more than half typically opting for a narrow-network product if it cost them at least 10% less than an equivalent with broader choice.

So far, insurers and hospitals have sent differing signals on what kinds of discounts the hospitals might grant for the exchange plans, which would vary by market. Publicly traded hospital chains have said they are pressing to get paid approximately what they receive for traditional commercial health insurance.

Some insurers talk about steeper discounts from hospitals. WellPoint Inc. has said it is aiming to pay providers somewhere between Medicaid and Medicare rates, and sees talks trending toward rates close to Medicare. Medicare rates are often substantially lower than commercial prices. An Aetna Inc. official at an investor conference Monday suggested the rates might settle somewhere between Medicare and commercial.

For their part, hospitals have to weigh whether discounts they grant for exchange products pose a risk to the richer pricing they get for traditional commercial health plans, which include those now offered by employers.

*Modified from a WSJ article by Anna Wilde Mathews and Jon Kamp

0

Key Facts About The Medical Insurance Premium Tax Credit

Starting in 2014, individuals and families can take a new medical premium tax credit to help them afford health insurance coverage purchased through a state-based Health Insurance Marketplace.

How much is the tax credit?

The credit amount is generally equal to the difference between the premium for the benchmark plan and the taxpayer’s expected contribution.

•The expected contribution is a specified percentage of the taxpayer’s household income. The percentage increases as income increases, from 2% of income for families at 100% of the FPL to 9.5% of income for families at 400% of FPL.

•The benchmark plan is the second-lowest-cost plan that would cover the family at the “silver” level of coverage.

Are there any special rules?

Yes – the credit is advanceable (i.e. advance payments are made directly to the insurance company on the family’s behalf). The advance payments are then reconciled against the amount of the family’s actual premium tax credit, as calculated on the family’s federal income tax return.

4 Key Facts About The Medical Premium Tax Credit

Broad Middle-Class Eligibility

The premium tax credit is generally available to individuals and families with incomes between 100% and 400% of the federal poverty level. The Congressional Budget Office estimates that, when the Affordable Care Act is fully phased in, the premium tax credit will help 20 million Americans afford health insurance.

Larger Tax Credits for Older Americans who Face Higher Premiums

The amount of the premium tax credit is tied to the amount of the premium, so that older Americans who face higher premiums will receive a greater credit.

The Tax Credit Controls Health Care Costs by Incentivizing Families to Choose More Cost-Effective Coverage

The amount of the premium tax credit is generally fixed based on a benchmark plan (which may be age adjusted within Affordable Care Act limitations), so families that choose to purchase coverage that is less expensive than the benchmark plan will pay less towards the cost of that coverage.

The Credit Is Refundable So Even Families with Modest Incomes Can Benefit

The premium tax credit is fully refundable, so even moderate-income families who may have little federal income tax liability (but who may pay a higher share of their income towards payroll taxes and other taxes) can receive the full benefit of the credit.

*Modified from ZaneBenefits.com article

0

Medicare Advantage enrollees could take hit in 2014

The new proposed payment cuts are in addition to the Medicare Advantage cuts and the new health insurance tax included in PPACA.

  • AHIP says that only 4 percent of PPACA’s $200 billion in Medicare Advantage cuts have gone into effect thus far, and the Congressional Budget Office (CBO) projects that, when fully phased in, these cuts alone will result in three million fewer people enrolled in the program. 
  • PPACA’s new health insurance tax starts in 2014; Oliver Wyman had previously estimated that this tax alone will result in seniors facing $220 in higher out-of-pocket costs, reduced benefits next year and $3,500 in additional costs over the next 10 years.

The cuts were proposed last week by Centers for Medicare & Medicaid Services (CMS) to take effect next year. The analysis is by actuaries at Oliver Wyman, prepared for AHIP.

According to the Oliver Wyman report, “Virtually all of the 14.1 million Medicare beneficiaries are likely to be affected by these changes, either through increased premiums, reduced benefits, or plan exits from local markets.”

The potential 2.3 percent reduction in Medicare Advantage payments proposed by an arm of the Department of Health and Human Services (HHS) combined with PPACA’s payment cuts will result in benefit reductions and premium increases of an average $50 to $90 per month for a typical Medicare Advantage beneficiary next year, warned America’s Health Insurance Plans (AHIP).

The cuts would affect 14 million seniors, or roughly 28 percent of all Medicare beneficiaries, the lobbyist group says.

The new analysis prepared for AHIP states that the combined effect of the changes included in PPACA and the new payment cuts will result in an estimated 6.9 percent to 7.8 percent cut to Medicare Advantage plans in 2014, causing the net out of pocket for seniors and those with disabilities to rise, according to AHIP.

The cumulative impact of these changes will reduce Medicare Advantage payments next year by more than eight percent, or approximately $11 billion.  These cuts will result in seniors facing higher out-of-pocket costs, reduced benefits, and fewer health care choices, AHIP stated.

“President Obama is sticking it to seniors yet again by cutting Medicare Advantage funding,” according to Dan Weber, president of the Association of Mature American Citizens (AMAC).

It was announced last week that the CMS will publish new rules for Medicare Advantage programs on April 1. Subsidies will be slashed and access will be severely restricted, according to insurance industry analysts, AMAC stated in a press release Friday.

Medicare Advantage is the part of Medicare through which private health plans provide comprehensive medical coverage to seniors and other Medicare beneficiaries.

Health insurance stocks reacted to the news negatively, according to a report by the Associated Press. The costs per person for Medicare Advantage plans are a bigger drop than many analysts who cover the industry anticipated, the AP report stated.

Conservative bloggers and the health insurance industry are not happy, arguing the payment cuts are funding entitlement programs and leaving seniors happy with their plans strapped.

AHIP contrasted the cuts against the projections for medical cost increases of 3 percent.

“This is the lowest growth rate in the history of the Medicare Advantage program, and it is far below the 2.8 percent increase in payment rates for 2013,” AHIP stated.

“The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare,” said Karen Ignagni, AHIP president and CEO.

However, CMS is expecting per-capita plan medical costs to fall 3.2 percent, CMS officials said in a 199-page description of the 2014 Medicare plan bidding methods.

Oliver Wyman also projects that individuals with lower incomes and those more likely to need medical services will be particularly adversely impacted by these cuts.

The new report follows a previous analysis by AHIP which found that low-income and minority Medicare beneficiaries continue to rely on the high-quality health care coverage provided by Medicare Advantage plans.

CMS stated recently that since the Affordable Care Act was passed in 2010, Medicare Advantage premiums have fallen by 10 percent and enrollment is expected to increase by an estimated 28 percent through this year. In addition, costs of the defined standard Part D plan will be lower in 2014 than they are in 2013.

“The Affordable Care Act helps us strengthen Medicare Advantage and Part D,” said Jonathan Blum, CMS acting principal deputy administrator and director of the CMS’ Center for Medicare in a statement last week. “We are working to ensure that people with Medicare have affordable access to health and drug plans, while making certain that plans are providing value to Medicare and taxpayers.”

*Modified from a LifeHealthPro.com article

0

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, 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

0

Anthem Agrees To Reduce Rate Hikes for Individual Policyholders

Anthem Blue Cross has agreed to lower premium rate hikes for about 630,000 individual policyholders in response to pressure from California insurance regulators, the Los Angeles Times reports.

Background

On Feb. 1, Anthem Blue Cross enacted premium rates increases that averaged 18% for certain individual policyholders. In a rate filing last fall, Anthem said certain medical costs have increased by nearly 11%, while the price that the insurer actually pays is rising by 13.5% after adjusting for customer deductibles.

According to Anthem, the profit margin on its individual insurance plans in California was less than 1% in 2012. The insurer said it expects to lose money in the individual market in 2013 even with the rate hike. The state Department of Insurance deemed the premium hike excessive, saying that the rate request included unsubstantiated estimates of expected medical costs. While the agency can review rate filings, it does not have the authority to reject them.

Details of New Rate Increase

On Thursday, Insurance Commissioner Dave Jones (D) announced that Anthem has agreed to reduce the average premium increase to 14%. The decision will save consumers an estimated $54 million.

The Times reports that even with the lower rate hike, some individual policyholders still could see their premiums increase by as much as 25%. Anthem plans to provide refunds or premium credits to policyholders who already paid the higher rates this month.

Comments

In a statement, Jones said, “Health insurance has become unaffordable for far too many Californians.” He added, “I appreciate that Anthem Blue Cross has agreed to lower these rates.”

On Thursday, Darrel Ng — spokesperson for Anthem — said that the agreement between Anthem and California regulators still reflects rising health care costs.

*Modified from a California Healthline and Los Angeles Times articles

 

0

California Sets Benefit Standards for Health Plans in Exchange

On Wednesday, California became the first state to set benefit standards for health plans offered through its state health insurance exchange.

Background

The Affordable Care Act requires states to launch online insurance marketplaces by 2014. California’s exchange — named Covered California — primarily will serve individuals and small businesses. The exchange is expected to open for registration in October.

In January, exchange officials told Gov. Jerry Brown (D) and the Legislature that health plans offered through Covered California will be classified by “metal ratings” — including platinum, gold, silver and bronze — based on the coverage they offer.

  • Platinum plans will offer 90% coverage
  • Gold plans will offer 80% coverage
  • Silver plans will offer 70% coverage
  • Bronze plans will offer 60% coverage

Plan members will have to pay out of pocket for the percentage not covered by the plan.

Details of Standardized Rates

  • Platinum and gold plans will have no annual deductibles and will charge as low as $25 for physician office visits
  • Silver plans will have $2,000 in annual deductibles and will charge $45 for physician office visits
  • Bronze plans will have $5,000 in annual deductibles and will charge $70 for physician office visits

Monthly premiums will vary, based on the plan chosen and the income level of the policyholder. For example, a family of four with an income between $22,000 and $35,000 annually would pay between $39 and $118 each month for a silver plan.

Tax credits are available for individuals and families who meet certain income requirements and do not have access to affordable health insurance through their employer or another government program.

There are some key facts about tax credits.

Tax credits lower the cost of your premium. Tax credits reduce the amount of the premium you will pay for insurance

Tax credits help low- and middle-income individuals and families. Tax credits are available to individuals and families who meet certain income requirements.

Tax credits can be used when you enroll. Tax credits can be applied to the cost of your health plan when you enroll – you do not need to wait until you file a tax return at the end of the year.

Tax credits are only available through Covered California. You must enroll in a health plan through Covered California if you want to use your tax credits.

Tax credits are paid directly to your health plan. These tax credits are paid by Covered California to your health plan to keep your costs low.

Tax credits will be adjusted at the end of the year based on your actual income. At the end of the year, the tax credits may be adjusted if your income is different than you anticipated. This means that you will want to notify Covered California if your income changes.

*Modified from a California Healthline and www.coveredca.com website

 

 

0

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

0

What is the Health Insurance Marketplace?

Recently, HHS re-branded health insurance exchanges as “Health Insurance Marketplaces”. Here’s an overview of the new Health Insurance Marketplace.

About The Health Insurance Marketplace

When key parts of the health care law take effect in 2014, there’ll be a new way for individuals, families and small businesses to get health insurance.

Whether you’re uninsured, or just want to explore new options, the Marketplace will give you more choice and control over your health insurance options.

The Health Insurance Marketplace is designed to help you find health insurance that fits your budget, with less hassle.

Get Ready to Enroll In The Health Insurance Marketplace

  • Enrollment in the Marketplace starts in October 2013.

Whether you’re uninsured, need insurance for your small business, or just want to explore your choices, the Health Insurance Marketplace can help you find a plan that’s right for you.

Get a Break On Health Insurance Costs

  • More people than ever will qualify for free or low cost health insurance in 2014. 

When key parts of the health care law take effect in 2014, more people than ever before will qualify for health insurance that fits their budget. You may be eligible for a free or low-cost plan, or a new kind of tax credit that lowers your monthly premiums right away.

Thanks to new rules and expanded programs, even working families will be able to get help through the Health Insurance Marketplace.

Most people will be able to get a break on costs through the Marketplace, even if you think your income is too high to get help. One application, one time, and you’ll see all the programs you qualify for.

Different financial assistance programs will be directly linked into the Health Insurance Marketplace when enrollment starts in October 2013. In the meantime, you or your child or teen may qualify NOW for no-cost or low-cost health insurance through Medicaid and the Children’s Health Insurance Program (CHIP).

Insurance Plans Run By Private Companies

When you shop at the Marketplace, everything you need is laid out for you. All your costs are stated up front, so you’ll get a clear picture of what you’re paying and what you’re getting before you make a choice.

Under the health care law, there will also be new protections for you and your family. Health insurance companies can’t refuse to cover you or charge you more just because you have a chronic or pre-existing condition, and they can’t charge more for women than for men.

Small Businesses

Today, small employers like you have a tough time finding and affording coverage that meets the needs of your employees. Starting in 2014, you’ll have more choice and control over your health insurance spending through the Small Business Health Options Program (SHOP), a new program designed to simplify the process of finding health insurance for your small business.

You choose the level of coverage you’ll offer, and define how much you’ll contribute towards your employees’ coverage.

You’ll also have exclusive access to an expanded Small Business Healthcare Tax Credit. This tax credit covers as much as 50% of the employer contribution toward premium costs for eligible employers who have low- to moderate-wage workers.

When you get insurance through the SHOP, it makes it easy for you take advantage of other tax breaks too including the chance for you and your employees to use pre-tax dollars to make your premium payments.

You and your employees will also benefit from new protections that help you get real value for your premium dollars. There are new limits on the higher premiums insurers can charge businesses with older employees, and an employee with high health care costs no longer increases your group’s premium. There are also new limits on the share of premiums going to insurers’ profits and administrative costs.

The health insurance plans available in the SHOP will be run by private health insurance companies, the same way small group plans are run now. All plans will offer the same benefits as a “typical” employer plan, including real protection against financial catastrophe.

Plans will present their cost and coverage information in a standard format, using plain language that’s clear and easy for you to understand. You and your employees will be able to easily compare plans based on price, coverage, quality and other features that are important to you.

You can use your existing insurance broker to access the SHOP, or you can shop for plans yourself, without a broker. You can review pricing and coverage in apples-to-apples comparisons, complete a single application, and choose the level of coverage that works for your budget, your business, and your employees.

*Modified from a Zanebenefits.com article

0

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

0

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.

0