The stories you’re hearing about lamp-lit, midnight pow-wows taking place in state offices are true. The states are working around the clock at a feverish pace to meet the Health Insurance Marketplace go-live date of Oct. 1, 2013. From conversations with my counterparts who are leading the marketplaces, I understand that some of the most significant concerns include:
System of Record: For states building their own marketplaces, the first design decision is around the system of record. Some states are electing to use the HIX itself as their eligibility system of record, funneling all eligibility determinations – tax credits, cost-sharing reductions, Medicaid, Children’s Health Insurance Program (CHIP) and Basic Health Plan – through one platform. Other states are designing their marketplaces as entry points, from which eligibility decisions flow to a legacy system for determination decisions. Either way, states are finding that the project is akin to remodeling a 747 while it’s in the air. The legacy systems need to be updated so they can coordinate and speak to the HIX. That’s a massive undertaking on its own, but it also has to be done while the HIX is still being designed.
The Federal Hub: State marketplace leaders are also considering the readiness and functionality of the federal hub. States will be required to check in with the federal hub for applicants’ immigration status, income level, etc. The federal hub is being built and rolled out at the same time that states are designing the rules for how their marketplaces will speak to and integrate with it. Again, it’s a bit like remodeling an airplane mid-flight.
As a confident critic of ObamaCare from its genesis, I’m impressed that the law remains unpopular and that the American people appear ready to scrap it and start again. Last March, a senior bureaucrat in charge of rolling out ObamaCare fretted about a “third-world experience“.
ObamaCare’s opponents have managed to keep Republican politicians unified against the law. The only tactical question is whether the GOP can credibly threaten to “shut down the government” during the forthcoming debate over the Continuing Resolution (the legislation that funds the government in the absence of a budget).
It’s been a good three and a half years for ObamaCare’s opponents. Nevertheless, outside the political realm, businesses and investors are behaving as if ObamaCare is hardened concrete. Although ObamaCare’s opponents have overwhelmingly succeeded in convincing society of the law’s drawbacks, it is not at all clear that society is ready to accept a more free-market alternative reform.
Indeed, some of the approaches used against ObamaCare might have unintended consequences that will appear in 2014, the law’s first fully operational year, which would make repealing and replacing ObamaCare extremely difficult.
Here are a few friendly questions for ObamaCare’s opponents:
First: We’ve spend a lot of effort convincing people that state-based health-insurance exchanges will be a disaster, and succeeded in blocking their establishment in many states. To be sure, they are an unnecessary bureaucracy, but do we really believe that enrolling in the New York Health Benefits Exchange or Cover California will be the worst thing since unsliced bread? It won’t be like shopping on Amazon.com, but I’ll bet it will be easier than doing business with the DMV. The New York Times recently reported on exchange outreach efforts in Colorado (a pro-ObamaCare state) and Missouri (an anti-ObamaCare state). The take-away: In Colorado, it’s almost impossible for people to avoid learning how to enroll in the exchange, while in Missouri it’s been extremely difficult to get information. Most people will not be interested in how much it cost taxpayers to set up and operate the exchanges. Do we really believe that when ordinary Missourians learn from their Coloradan friends that their state government has helped them get federal tax credits for health insurance, that they will reward Show-Me state politicians for trying to block them?
With ten states and D.C. having reported preliminary information on the prices of plans in their new health insurance exchanges, partisans on both sides of the Affordable Care Act have pounced on the news to reinforce their preconceived notions.
But what do these numbers actually represent? Carriers submitting bids start with the prices of their current products and then adjust them for the myriad changes in the insurance market that go into effect on January 1, 2014.
Those changes include: elimination of health status underwriting, compression of rates by age, partial standardization (and in most instances significant expansion) of the benefit package, expansion of the market to a largely unknown population due to premium subsidies, effects of the “three Rs” (risk adjustment, reinsurance, and risk corridors), a completely new product distribution system, and a host of other changes in the health care and health insurance environment.
Needless to say, these many changes introduce a tremendous amount of uncertainty.
After months of speculation on just where the Obama administration is toward the development of the new health insurance exchanges, the Government Accountability Office (GAO) has issued a 48-page report complete with timelines and a detailed report on just where the Obama administration is––or at least was last month.
The key summary:
“Much progress has been made, but much remains to be accomplished within a relatively short amount of time. CMS’s timelines provide a roadmap to completion; however, factors such as the still-evolving scope of CMS’s required activities in each state and the many activities yet to be performed—some close to the start of enrollment—suggest a potential for challenges going forward. And while the missed interim deadlines may not affect implementation, additional missed deadlines closer to the start of enrollment could do so. CMS recently completed risk assessments and plans for mitigating risks associated with the data hub, and is also working on strategies to address state preparedness contingencies. Whether these efforts will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined. ”
Regarding the Data Hub:
“FFEs [the federal exchanges] along with the data services hub services are central to the goal under PPACA of having health insurance exchanges operating in each state by 2014, and of providing a single point of access to the health insurance market for individuals. Their development has been a complex undertaking, involving the coordinated actions of multiple federal, state, and private stakeholders, and the creation of an information system to support connectivity and near real-time data sharing between health insurance exchanges and multiple federal and state agencies. Much progress has been made in establishing the regulatory framework and guidance required for this undertaking, and CMS is currently taking steps to implement key activities of the FFEs, and developing, testing, and implementing the data hub. Nevertheless, much remains to be accomplished within a relatively short amount of time. CMS’s timelines and targeted completion dates provide a roadmap to completion of the required activities by the start of enrollment on October 1, 2013.
Last week, I received my weekly email update from the Maryland health insurance exchange:
Maryland Health Connection completed its Final Detailed Design Review (FDDR) live system demo on Thursday, May 30. The FDDR is a federal stage-gate required of all state-based exchanges. Maryland Health Connection successfully demonstrated end-to-end enrollment of a split family scenario including user log in, eligibility determination, real-time data verification through the Federal Data Services Hub, enrollment into plans, payment and file generation to be sent to an insurance carrier. This major information technology milestone received high marks by federal partners. We will continue with development of Maryland Health Connection over the next several weeks and begin user acceptance testing in July.
This report tells us a few things.
First, the Maryland health insurance exchange is on track to launch on time and ready to serve all comers. I continue to be impressed by how well this state-run health insurance exchange is working toward implementing the Affordable Care Act (“ObamaCare”) on October 1, 2013.
Second, apparently the Federal Data Hub is up and running. While that is what the Obama administration has been telling us, it has been hard to find anyone who has actually seen it or used it.
Third, Maryland has its system ready to exchange eligibility and premium information with the health insurance plans––perhaps the biggest challenge the new exchanges, state or federal, face.
Across the country, I am not so worried that consumers will have a website to go to on October 1 in order to shop for the new health plans as I am concerned with how things will go on January 1, 2014 when patients show up in a doctors office. If we don’t have a clean exchange of eligibility and payment information there are going to be lots of people who will have their doctor or hospital telling them they don’t know anything about their coverage.
Oct. 1, 2013 is a focus of increasing anxiety in this country. That’s the date when enrollments begin for the federally run health insurance exchanges, created under the Affordable Care Act (ACA). No one really knows what to expect, but it could be far worse than advertised —and for a reason that has more to do with the federal deficit than health care.
What’s anticipated is unsettling enough. President Obama speaks of inevitable “glitches and bumps” in the implementation. Senate Finance Committee Chairman Max Baucus (D-Mont.) sees the possibility of “a huge train wreck” if the public isn’t adequately educated and prepared. Supporters of the ACA, especially Democrats in the Congress, are nervous about taking the blame if the exchanges don’t unfold as intended.
Amid all these concerns and speculations, almost no attention is being paid to the opportunity that the ACA’s insurance exchanges could represent for state and local governments’ retiree health care programs. It’s time to think about it because the consequences could be far-reaching.
States in a deep hole
We already know that many state and local governments are in a financial hole that keeps getting deeper. A newly released report by the U.S. Government Accountability Office (GAO) makes clear that, absent significant reforms, the fiscal picture for most state and local governments will steadily worsen through 2060. A main cause, in addition to Medicaid, is the cost of health care for state and local government retirees. These largely unfunded obligations are similar to the pressures on the federal government to fulfill its unrealistic Medicare promises.
Doctors who contract with state health insurance exchanges next year might find themselves on the hook for treatment costs resulting from what many are calling a loophole in the Affordable Care Act.
Some say the provision might prompt doctors to avoid the exchanges altogether, while other experts say few health care providers are aware of the issue and likely won’t know about the loophole until it’s too late.
Provision Permits Care Without Coverage
Under the ACA, if families who obtain subsidized health plan coverage through the exchanges fail to pay their premiums, they have a three-month grace period before the policy is cancelled. However, insurers are responsible only for paying claims during the first month of that grace period.
During the other two months, families are asked to pay their doctor’s bill or their insurance premium if they seek health care services. However, if they do not pay either bill, physicians are left to cover the cost of the treatment.
Such families would face a tax penalty for missing payments, but they would not receive a fine, a premium rate increase or a repayment order. They also would not be barred from purchasing another subsidized plan during the next enrollment period.
A ‘Laudable’ Design With Flaws
“I believe this part of the law was designed for logical and laudable reasons,” Lisa Folberg — vice president of medical and regulatory policy at the California Medical Association — said.
She explained that the three-month grace period was meant to ensure continuity of care for low-income families who might be between jobs and cannot afford to pay their premiums for a few weeks.
Robert Pear wrote in the Times that the refusal by “states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance…” Indeed, the refusals will do that, as well as worsen what instead should be remedied. In the following I present a graph of two chronic diseases over the 50 states. Those states which have opted out of the Medicaid expansion are identified. Additionally each state’s poverty rate is indicated. The take-away is that populations in greater need are being further disadvantaged. A conjecture is presented as to why.
Please understand that refusal to expand Medicaid is not about state expenditures. Over the ten years, 2013-2022, every state would gain far more than it would spend for expansion . Were all states to opt-in, the total ROI for the states combined would be almost 10,000% ($8 billion state expenditures in return for $800 billion federal).
Empirically health is associated with income, so if you’re poor you’ll likely have worse health. Also it’s well known that chronic conditions are often comorbid, that if you have a chronic disease, you probably have more than one. Additionally, chronic disease is a major contributor to total health care costs. Continue reading…
I have to say I was surprised with the press reports last week that there wasn’t “rate shock” in California when the California exchange offered preliminary information about their new plans and rates.
At least one prominent health actuarial group had predicted a 30% baseline increase in costs for California’s new health insurance exchange plans under the Affordable Care Act (ObamaCare”).
As the director of the California exchange put it, “These rates are way below the worst-case gloom-and-doom scenarios we have heard.”
But a few days later there is lots more information coming out and it would appear we have a case of apples to oranges to grapefruit. And, we have a pretty good case of rate shock.
First, the exchange officials pointed out that we have to be careful to compare apples to apples when looking at 2013 rates and comparing them to the 2014 exchange rates because the 2014 exchange plans have far more generous benefits.
Yes we do, particularly when the California exchange forces us to give up our apple and buy a more expensive orange.
One of the reasons health insurance in the exchange will cost a lot more in most states is because the new health law outlaws many of the existing plans now being offered and requires only those much richer plans to be sold.
Are people going to get more coverage for their money? Yes. Do they want more coverage if the premium costs for those plans is a lot higher? Likely yes if taxpayers are paying for most of it. If not, clearly they didn’t want to pay for it before. Come January, lots of California consumers in the small group and individual market are going to get a letter from their existing insurer telling them their current plan is no longer available and the cost of the new required plans will be a lot more.
Simply, the new law is taking plan design choices away instead of letting the consumer decide what is good for them. Does that matter in California?
Believe me, I’ve heard all the pot jokes, and some of them are true. Public support for legalizing marijuana use is at an all-time high. Some state-level marijuana laws are going up in smoke. And yes, Washington and Colorado are embarking on a historic joint venture.
Puns aside, discussions about marijuana legalization are getting serious. In November, voters in Colorado and Washington made the unprecedented decision to allow commercial production, distribution and possession of marijuana for nonmedical purposes. Not even the Netherlands goes that far.
Policymakers in both states are confronting some new and tricky issues that have never been addressed. For them, and for anyone else thinking about changing their pot laws, here are seven key decision areas that will shape the costs and benefits of marijuana legalization:
1. Production. Where will legal pot be grown — outdoors on commercial farms, inside in confined growing spaces, or somewhere in between? RAND research has found that legalizing marijuana could make it dramatically cheaper to produce — first because producers will no longer have to operate covertly, and second because suppliers won’t need to be compensated for running the risks of getting arrested or assaulted. After lawmakers decide how it will be grown, production costs will be shaped by the number of producers and other regulations such as product testing.
2. Profit motive. If there is a commercial pot industry, businesses will have strong incentives to create and maintain the heavy users who use most of the pot. To get a sense of what this could look like, look no further than the alcohol and tobacco industries, which have found ingenious ways to hook and reel in heavy users. So will private companies be allowed to enter the pot market, or will states limit it to home producers, non-profit groups or cooperatives? If a state insisted on having a monopoly on pot production, it could rake in a decent amount revenue — but for now, that possibility seems far off in the United States since marijuana remains illegal under federal law.
3. Promotion. Will states try to limit or counter advertisements in the communities and stores that sell marijuana? U.S. jurisprudence against curtailing what’s known as “commercial free speech” could make it tough to regulate the promotion of pot. While a state monopoly system could help control promotion, those advertisements you see for state lotteries should give you pause.