November 07, 2012:
It has now survived two near-death experiences. The Supreme Court could have struck down the law, but it didn’t. And with President Barack Obama in the White House for four more years, it’s not going to be repealed — or even gutted. Now it has to work. If it does, more Americans might come to accept it — and even be glad it passed. If it doesn’t, Obama’s legacy will be tarnished. And Republicans will say “we told you so” for years to come. Either way, Americans will now see what the law — the Affordable Care Act — is supposed to look like. The big pieces, including coverage of pre-existing conditions and the hated individual mandate, won’t kick in until 2014. Until now, all Americans have seen are the warm-up acts — like letting young adults stay on their parents’ plans — that aren’t really central to the law. “We’ll have a real-world test of the Affordable Care Act and whether employers accept it, whether the public accepts it,” said Drew Altman, president and chief executive officer of the Kaiser Family Foundation. “That will change the entire discussion about the Affordable Care Act, because up to this point, it really hasn’t been a discussion of what the Affordable Care Act really does.” Here’s what is supposed to happen in 2014: Everyone will be able to get health insurance, even if they have pre-existing conditions. Most people will have to be insured, unless they really can’t afford it. Subsidies will help many people pay. Every state will have a health “exchange” — a marketplace run by either the state or the feds or both — where people can get coverage if they don’t have it through the workplace or a government program like Medicare. Medicaid will expand to cover more low-income people. What are the odds that everything will go according to plan? Pretty close to zero. If the price of health coverage in the exchanges is too high, for example, conservative critics expect a backlash.“I think people will be in for serious rate shock, especially in those individual markets that have been relatively lightly regulated,” said Douglas Holtz-Eakin, president of the American Action Forum. Democrats, however, are sticking with the theory they’ve had from the beginning: that Obamacare will become broadly accepted, and politically untouchable, once Americans experience the benefits. “Once people get the benefits, you can never take them away,” said longtime Democratic strategist Bob Shrum. “This will go well beyond a 50-50 issue.” Here are some potential land mines to watch for over the next two years: What else will opponents do to fight the law? Republicans and other opponents aren’t just going to wave the white flag. They’ll still try to repeal parts of the law, ramp up investigations and target sections they see as legally vulnerable. One fight already under way centers on whether people will be able to get subsidies in health exchanges that are run by the feds, or only when the states themselves run them. There’s also a pending legal challenge from Liberty University against the requirement that would make most businesses with more than 50 workers provide health coverage or pay a fine. Liberty says that requirement is unconstitutional — and yes, it has vowed to fight all the way to the Supreme Court. The lawsuits against the Obama administration’s contraception coverage requirement, issued under the health law, are also piling up. They wouldn’t take down the whole law, but they remind people of things they don’t like about a big government health care law. How many states will set up their own health exchanges? We should know quickly. States are supposed to tell the Department of Health and Human Services by Nov. 16 whether they will set up exchanges in time for the January 2014 launch, apply for “partnerships” in which the feds and states will divide up the exchange functions or let the federal government step in with a fallback. So far, 13 states and the District of Columbia have said they’ll definitely set up their own exchanges, and there are “somewhere between 20 and 30” states that could either build them or seek partnerships, according to Joel Ario, managing director of Manatt Health Solutions and the former director of the HHS Office of Health Insurance Exchanges. The rest will let the feds do it. The Obama administration would like to keep the number of federally run exchanges low because it’s a strain to run too many. Ario predicts HHS will look the other way if some states need time to finalize their applications. Will the subsidies be cut? Before we get to 2014, there’s a fiscal cliff to be avoided and a deficit reduction deal to be cut. One obvious place lawmakers could go for savings — and a concession Republicans might demand — would be the tax credits that will help people pay for coverage. Right now, the law will give subsidies on a sliding scale to people with incomes up to 400 percent of the federal poverty line. This year, that’s $92,200 for a family of four. Most Republicans think the subsidies are way too generous, another expensive entitlement the nation can’t afford. But “if you cut the subsidies too much, you start to play with the effectiveness of the law,” Ario said. Without help paying for insurance, fewer healthy people would sign up for coverage, so premiums could rise for everyone else. Will the exchanges work? To be successful, the health exchanges have to attract a mix of healthy and sick people so that the costs balance out. There’s a risk that some won’t attract enough healthy people. That means the people who do join will be those with health problems — leading to high premiums and the “rate shock” Holtz-Eakin warned about. That didn’t happen in Massachusetts, though, where the exchange that’s the model for the national law — the one created by Mitt Romney’s health care law — has a good balance. How it’s shaping up should be clear when enrollment opens next October. Kaiser’s Altman expects a mixed verdict, because states are so diverse. “There will be great success stories and there will be failures, and a lot of state exchanges that will fall somewhere in the middle,” he said. Still, he added, “It’s hard to imagine that the exchanges won’t be a vast improvement over the individual [insurance] market and the small group market that we have now. Both of those markets are completely broken.” Will the individual mandate work? And will people accept it? It was the big constitutional question that could have taken down the law in the Supreme Court. But it didn’t. So nearly all Americans will be required to have health insurance, whether Obamacare opponents like it or not. But the mandate is being phased in. The first year, the penalty for ignoring it is only $95, or 1 percent of income, whichever is greater. But the health plans have to start covering everyone with pre-existing conditions in 2014. The penalties rise by 2016, but that makes two years that the insurers have to take in everyone, before the higher penalties help bring more healthy people their way. There’s also, of course, the bigger political question: How many people will just refuse to get insurance, and pay the penalty, in protest? Just because it’s constitutional doesn’t make it popular. Massachusetts’s residents accepted that state’s mandate — but as Romney reminded voters at every opportunity, Massachusetts isn’t like the rest of the country. “There will be a point in time where we know how people are reacting to the mandate,” Altman said. “In Massachusetts, there was not an uprising. People did not run off to Rhode Island or New Hampshire. But we do not know what the reaction will be when it’s implemented nationally.” How much will the subsidies really cost? It’s a bit of a wild card, but it matters — because once the law is in place, it will be that much harder for Congress to cut subsidies if they become too expensive. The Congressional Budget Office has already raised its cost estimates by $112 billion — to $574 billion between 2012 and 2019 — before they even start. CBO noted that the total price tag for expanding coverage will drop, because some states might not expand Medicaid. But Holtz-Eakin predicts in a recent report that costs will soar as employers drop coverage and workers turn to the exchanges. Will the law control health costs? Remember the days when Obama was saying the health care law would save $2,500 per family? That hasn’t happened. Premiums are still going up, and they’re going to keep going up. But the health care law does fund experiments aimed at slowing the growth of spending by encouraging health care providers to coordinate better. The law also tests ways of paying to encourage higher quality care. But it’s too soon to know how well models like accountable care organizations will work — or even if they could backfire by spurring health industry consolidation that drives costs up, not down. Will employers drop coverage? Some employers will surely decide it’s cheaper to stop covering their workers and let them get coverage through the exchanges instead. The only question is how many — and whether it’s something that affects enough Americans to sink the law in the eyes of the public. Continue Reading But the private studies on this have been all over the place. Romney often used a worst-case scenario estimate from the CBO. But even the CBO says between 4 million and 6 million fewer people could have coverage through the workplace because of the law. And every time a business floats the idea of dropping coverage — like when Darden Restaurants announced it’s testing the use of more part-timers so it doesn’t have to give them health benefits — it generates damaging headlines. How many states will expand Medicaid? Thanks to the Supreme Court, states aren’t required to broaden their Medicaid programs for low-income people. They get a boatload of federal matching funds if they do, but there’s no penalty if they don’t. A handful of red-state governors, like Texas Gov. Rick Perry and Florida Gov. Rick Scott, have ruled out expansion. But a lot of the 26 states that went to the Supreme Court to prevent mandatory expansion are still weighing their options. Some have hinted that they might expand if they can do it on their terms, meaning a lot more state flexibility. “I think when the dust settles, you’ll have most states opting in,” said Ario. What happens when the Medicare cuts really kick in? You probably heard Romney mention the law’s $716 billion in Medicare cuts. That’s a major source of funding for the law’s expanded health coverage, and it comes mainly from trimming Medicare payments to providers and paying less to Medicare Advantage plans in high-spending areas. The catch is, about 70 percent of the first wave of Medicare Advantage cuts are effectively being masked right now through a separate program giving plans quality bonus payments, according to the Government Accountability Office. Over the next two years, the bonuses offset less of the law’s cuts. If the Medicare Advantage plans still do well a few years out, the Obama administration can breathe easier. But if enrollment drops, Republicans will be able to tell voters, “We warned you.” And if providers say their own Medicare payment cuts are too deep, and they go out of business or stop treating Medicare patients — Republicans will be able to say they sounded the alarm about that, too.