Wednesday, October 30, 2013

Canceled policies, or better policies?

First, critics of Obamacare cited the troubled launch of the  Obamacare enrollment site to make the case that the law is a “train wreck.”  Now, they are citing the health insurance cancellation notices that have gone out to hundreds of thousands of policyholders.  

But these are two very different things.  The technical problems with the enrollment portal are not evidence of any inherent problem with Obamacare itself.   Quite the contrary: the subsidies to help people afford coverage, the ability for consumers to shop and compare health plans in a competitive marketplace, the bans on insurance companies excluding people with pre-existing conditions or charging them more, an end to annual and lifetime limits on coverage, and the requirement that all plans offer “essential” benefits—all of these, and more, are necessary and desirable changes created by Obamacare.   The problem with the website is that people have not yet been able to fully avail themselves of these benefits—yet. 

The insurance cancellations are another thing altogether, because they are the direct result of changes mandated by Obamacare, not unintended mistakes in its execution.  But are the cancellations really evidence of Obamacare imposing “bad” policy on the American people, as the critics argue? 

Let’s walk through what is happening, and why. 

First, President Obama’s repeated assertion, that if you like your plan, you can keep it, is misleading.  While this is true for the vast majority of Americans who get their coverage from a large employer, or from a government program like Medicare, Medicaid, and the VA, there is a relatively small subset of the population (more on this later) that are now finding that they can’t keep the policies they purchased on the individual insurance market.  This may be a surprise to people owning those policies, but it couldn’t have been a surprise for the administration, since the law itself—and the administration’s own regulations--require people who have substandard health plans  (plans that do not comply with federal benefits  requirements) to switch to plans that meet federal standards.  It also wasn’t a surprise to me, and others who really understand how the Affordable Care Act is supposed to work.  

Second, the number of people getting the cancellation notices is very small relative to the overall population.  About 15 million people—five percent of the population—get their coverage from the individual insurance market, explains the Washington Post’s Sarah Kliff, and seven to 12 million of them may get cancellation notices because their current plan doesn’t measure up to the ACA’s requirements.  (Put another way, 95% of us will not be required to change our insurance plans.)  And constant turn-over in the individual insurance market is common, pre-dating Obamacare.  “Most individuals don't stay in the individual market very long” writes Kliff. “One study, published in the journal Health Affairs, found that 17 percent of individual market subscribers purchased the same plan for two straight years or longer.” 

Third, many of the plans being cancelled are previously “grandfathered” plans that were in place before Obamacare became law but no longer meet the ACA’s benefit requirements, explains Kliff.   “These cancellations are, essentially, a lot of grandfathered plans exiting the insurance marketplace. From an insurance company's vantage point, grandfathered plans are a bit of a dead end: They can't enroll new subscribers and are really constrained in their ability to tweak the benefit package or cost-sharing structure. There's not a whole lot of business sense, for a managed care company, in maintaining a health plan that doesn't meet the health law's new requirements.”

Fourth, no one is actually losing coverage—people who get the cancellation notices are being given the opportunity to enroll in health plan offered through the Obamacare marketplaces, or to buy another plan in the individual insurance market that meets the law’s requirements.  Many of them will be eligible for income-based premium subsidies to help them buy a new plan (sliding scale subsidies are available for people with incomes up to 400% of the federal poverty level, approximately $94,000 for a family of four).  If there incomes fall between 100 and 250% of the poverty level, their deductibles and co-payments will be capped at an even lower level then the standard cost-sharing levels that apply to people who earn more. 

Fifth, the substandard, cancelled “grandfathered” plans are being replaced with ones that generally offer better benefits and consumer protections.  Kliff again: “There are lots of insurance policies, especially on the individual market, that are really bare bones. Some argue they shouldn't even be called insurance coverage, because their coverage is too sparse to insure against financial ruin. One report from the Obama administration, issued in 2011, found that 62 percent of individual market plans don't offer maternity care. Eighteen percent do not cover mental health benefits and 9 percent do not pay for prescription drugs . . . insurance companies cannot, under the Affordable Care Act, keep selling the plans that they used to sell -- the ones that don't cover prescription drugs and maternity care. And that means that some people who liked purchasing coverage without maternity care and prescription drugs won't be able to keep those plans. The cancellation notices are a feature of the Affordable Care Act, not a bug. The idea was to make insurance coverage more robust -- and that means cancelling policies that offer less thorough coverage.” 

Georgetown University’s Health Policy Institute agrees that, “For most people shopping on the marketplace, the policies available there will be a better value than anything they have been able to buy on the individual market. First, they will no longer have to worry that if they get sick, their insurer will jack up their premium – that’s prohibited under the ACA. Second, many will be eligible for premium tax credits to make their plan more affordable. And, as noted above, all the plans will meet minimum standards for benefits and cost-sharing – no more swiss cheese coverage.”

Now, none of the above explanations change the reality that some people are very (and understandably) unhappy about losing their current individual insurance plans.  If you were one of the lucky ones who benefited from insurance company cherry-picking—the industry practice of selling low cost health insurance to healthy and young people, while excluding those who are older and sicker--you are not going to like the fact that you may now have to pay more for insurance.   (Even though the result also is that your neighbors with pre-existing conditions will now be able to afford health insurance.)  If you had a low-cost, bare bones policy that suited you just fine, you won’t be happy about having to pay more for one that offers better benefits and consumer protections.  (Even though you might have found out later, once you got sick, that your bare-bones plan didn’t cover the medical care you needed—shifting costs onto the rest of us.)  And if you earn too much to benefit from the income-based premium subsidies, you won’t be happy that you’ll be paying more, albeit for a plan with better benefits and consumer protections, without any financial help from the government to make it more affordable.  (Even though your less well-off neighbors will benefit from the subsidies.) 

I fully sympathize with people who find themselves in the situation of having to replace their current coverage with a more expensive (but better) plan.  For some of them, the higher premiums will be a stretch. 

But the bottom-line is that the overwhelming majority of Americans won’t have to change their health insurance plans; those that do will be getting a plan with better benefits and consumer protections (and many of them will qualify for premium subsidies to bring down the cost), and people who are older and sicker in particular will benefit from reforms that prohibit insurance company cherry-picking.  As the Washington Post editorialized today, “Reform still might not sound like a great deal to people who are young, feel healthy and don’t want to pay for coverage. Yet having lots of healthy people paying into the new system on its terms will not only limit their financial risk, but also their participation will allow others who have been priced out of the health-insurance market — those with serious preexisting conditions, for example — to obtain good coverage. They deserve compassion, too. None of this is an outrage. It’s the predictable result of a defensible policy choice embedded in the reform.”

Today’s question:  What is your take on some people being required to replace their substandard plans with insurance that meets the new federal standards?

Tuesday, October 15, 2013

An Honest Assessment of Obamacare: Week Two

If House Republicans hadn't shutdown the government over a futile campaign to defund or delay the Affordable Care Act, today's headlines would be about the troubled launch of the government's enrollment web portal.  And the headlines would be ugly, very ugly, for the Obama administration.

Actually, they already are--it is just that the message has been overtaken by the government shutdown and debt ceiling debacle. Just take a look at what is being said about the Obamacare launch--by well-respected people who usually are supportive of the Obama administration and the ACA. The Washington Post's Ezra Klein calls it a "disaster" :

"So far, the Affordable Care Act's launch has been a failure. Not 'troubled.' Not 'glitchy.' A failure. But 'so far' only encompasses 14 days. The hard question is whether the launch will still be floundering on day 30, and on day 45." 

Former Obama press secretary Robert Gibbs called the launch "excruciatingly embarrassing" and suggested that someone should be fired:

“When they get it fixed, I hope they fire some people that were in charge of making sure that this thing was supposed to work,” said Gibbs. “We knew there were going to be glitches, right? But these were glitches that go, quite frankly, way beyond the pale of what should be expected.”

The Daily Show's Jon Stewart mocked the "team incompetent" responsible for the website and grilled HHS Secretary Kathleen Sebelius on why the ACA's individual insurance requirement shouldn't she be delayed. 

Ouch, and this is from the administration's friends!

Mainstream press reports also have reported that the administration knew, or should have known, about the technology problems that have plagued the enrollment hub.  The New York Times reports that in March, 2013 "the chief digital architect for the Obama administration’s new online insurance marketplace, told industry executives that he was deeply worried about the Web site’s debut. “Let’s just make sure it’s not a third-world experience,” he told them.

So here it is, just the 15th day of the launch of an unprecedented national effort to expand health insurance coverage to tens of millions of uninsured persons and to protect the rest of us from being dropped from insurance coverage or from going bankrupt because we get sick, and some already are ready to declare the ACA's launch a failure?  Really?

To be clear, I share the frustration over the technology issues that are making it difficult, if not impossible, for people to sign up for coverage from the ACA's government portal.  I think the administration's unwillingness so far to be forthcoming in explaining why the problems occurred, and what they are doing to fix them, is inexcusable, because it adds to the perception that they have something to hide or even worse, have no idea or plan to make the web portal work as intended. And, as I blogged last week, the technology problems--if not fixed soon--will pose a much bigger threat to the ACA than conservative Republicans' ham-handed efforts to defund or delay it. 

So yes, it is concerning that the administration embarrassed itself by launching a not-ready-for-prime-time web portal.  And yes, they got some explainin' to do.  And yes, they need to have a clear and transparent plan, with clear deliverables, to fix it.  And yes, the people in charge should be held accountable. 

But let’s get real, the tech problems do NOT mean that the ACA is a failure.  Not after just two weeks and one day from the date that the marketplaces opened.  And not when there is almost six months left to go before the marketplace open enrollment period ends.  Not when the problem isn't with the ACA itself--the subsidies, the guaranteed essential benefits, the price competition it creates between competing health plans, the limits on annual and lifetime limits on coverage, the benefits for preventive care at no cost to the patient, all of these are good and necessary reforms.  Now we "just" need to get the technology fixed so the millions who will benefit from such reforms can avail themselves of them. 

Today's question: Do you think after only 15 days, it is time to declare the ACA a "failure" because of the tech problems with its enrollment site?

Friday, October 11, 2013

Failed Technology, not Congress, Is the Biggest Threat to Obamacare

Remember when House Republicans were insisting that they would not agree to re-open the federal government unless Obamacare was defunded or delayed?  Well, that was then, this is now.  Ten days into a partial government shutdown that was caused by the GOP-controlled House passing a funding extension that also delayed Obamacare, and just a week from when the Treasury Department says that the debt ceiling will be breached, the GOP leadership seemingly has dropped changes in Obamacare from its list of demands.

 Instead, as Roll Call’s David Hawkin’s notes, House Budget Chairman Paul D. Ryan has, “come out with a roster of proposals on which he thinks both sides can come to agreement — and none of them has anything to do with limiting or altering Obamacare.”   Politico reports that, “The emerging House GOP plan would come with some conditions, although not the kind of sweeping demands to defund or repeal Obamacare. Republicans would vote to lift the debt ceiling until Nov. 22 — just before Thanksgiving — while prohibiting the Treasury Department from using extraordinary measures to lift the borrowing limit.  Boehner said Republicans would also demand a formal House-Senate conference on larger budget issues, a process Senate Republicans have been blocking since their Democratic counterparts approved a budget resolution earlier this year.”

 It remains unclear if the House leadership would be able to get restive Tea Party conservatives behind such a temporary increase in the debt ceiling without requiring other cuts and/or changes in the Affordable Care Act, or whether President Obama and Senate Democrats will agree to it.  And a temporary increase in the debt ceiling would not end the government shutdown itself—the House, Senate, and White House would still need to come up with a bill to restore funding to federal agencies, and Senate Majority Leader Harry Reid (D-NV) reaffirmed today that the Senate will not negotiate with Republicans until they re-open the government. But a temporary debt ceiling would (for now) avert the economic calamity that would occur if the U.S. Treasury can no longer borrow money after October 17.  

So it is looking now like the GOP fight to use the debt ceiling and the shutdown as leverage to delay Obamacare will end not with a bang, but a whimper, paraphrasing T.S. Elliot.   That the GOP lost the fight to defund or delay Obamacare was entirely predictable: they never had the votes.  As John McCain told CNN’s Wolf Blitzer last night, “We started this on a fool’s errand, convincing so many millions of Americans and our supporters that we could defund Obamacare…[That] obviously wouldn’t happen until we had 67 Republican senators to override a presidential veto.”

So Obamacare will survive the current effort to kill it in Congress, just as it survived the Supreme Court and two elections.  Now, Obamacare’s biggest obstacle may be itself: the technical infrastructure that has performed so poorly in its first ten days that millions of people have been frustrated in their efforts to access information through the government’s enrollment website,  The New York Times reported that, “The technical problems that have hampered enrollment in the online health insurance exchanges resulted from the failure of a major software component, designed by private contractors, that crashed under the weight of millions of users last week. ”  Time magazine reports that if the problems persist into November, then, “the health law’s future could be imperiled, according to a former high-ranking health care official … ‘By November—certainly the middle of November—the sites have to be able to handle major traffic for people to be able to set up accounts and purchase coverage,’ says Joel Ario, who served as director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services (HHS) from August 2010 to September 2011. ” 

So the biggest threat to Obamacare is not the Republicans in Congress, or even the  Republicans in states that are resisting it—it is the administration’s own failure so far to fix what Time rightly calls “crippling computer glitches” that are frustrating the people who are trying to buy coverage.  The administration says that things are getting better day by day, as it has increased server capacity and fixed other “bugs” in the system.  Maybe they are, and I certainly hope so.   But until they can show that the system is working reliably and consistently, the Affordable Care Act is at risk, and for this, the administration has no one to blame but itself.

Today’s questions: What do you think of congressional Republicans apparently giving up on their efforts to defund or delay the Affordable Care Act?  And of the technical problems plaguing Obamacare enrollment?

Tuesday, October 1, 2013

Openings and Closings

Today is an odd day, even by the strange standards of American politics today.  At exactly the same time much of the federal government was forced to shut down over the Affordable Care Act (ACA)—12 midnight Tuesday morning—that last and most important big piece of the ACA went into effect, the opening of health coverage marketplaces in all 50 states and the District of Columbia. 

The shutdown was the result of House Republicans insisting on defunding or delaying Obamacare, a demand they knew Senate Democrats and President Obama would never accept.  So, when the President and Senate did what everyone knew they would do—rejecting GOP demands that Obamacare be traded away to keep the rest of the government open—there was no time left to reach an agreement that would continue to fund most federal agencies and functions when the end of the fiscal year was reached at midnight.    Immediately thereafter, federal agencies began to methodically close all but their most critical functions.   The CDC immediately terminated support for its annual flu vaccine program and scaled back surveillance of disease outbreaks, the NIH ceased enrolling people in new clinical trials, the FDA ended its routine food safety activities—as the nation’s largest employer, the federal government, furloughed millions of its employees without pay.  But other so-called mandatory programs and payments—including Medicare claims payments and Social Security checks—were unaffected by the partial shutdown, at least for now.

The government shutdown was a sad reflection of the ideologically-driven politics of today, and also a sad day for the country, which will now have to suffer the consequences associated with a suspension of federal programs that almost all of us want, need and depend on to one extent or another.  Our food may be less safe, and we may rue the day when the CDC shutdown left us unprepared for flu and other potentially lethal disease outbreaks.    Many of the poor will go without assistance.  Millions of our neighbors will be temporarily out of work, and because they will have less money to spend, their furloughs will hurt local stores, businesses and services that are still struggling to make it out of the last economic downturn.  The ripple effect, if the shutdown lasts for more than a day or two, could be very destructive to our fragile national economy. 

But for all of the bad news, there was also a reason to celebrate when the clock struck midnight.  Starting at midnight today, the last and most important elements of Obamacare opened for business.  The shutdown managed to shut down much of everything else, but it didn’t shutdown the ACA, which is funded out of “mandatory” dollars that are outside of the usual congressional appropriations process.

Today is a day to celebrate because the ACA, for the first time starting today, will begin to provide guaranteed access to affordable health insurance plans for millions of Americans who can’t get affordable coverage from their employers.  Today is a day to celebrate, because the ACA, for the first time beginning today, will open the doors for persons with pre-existing conditions, like heart disease or asthma, to get affordable insurance coverage. 

Today is a day to celebrate because the ACA, for the first time starting today, begins to put the United States on the path toward near-universal health insurance coverage.  It won’t all happen today or even during the six month open enrollment process that ends in March.  And especially in the first days and weeks, there likely will be marketplace glitches that may slow enrollment. (In fact, initial interest in enrollment today was so high, and so above expectations, that it caused federal and state enrollment websites to crash.)  It won’t all happen this year and next—it is projected that only about 7 million people will sign up for coverage in 2014.  But over the next months and over the next several years, as more Americans become familiar with and enroll in the marketplaces, and as more states accept federal dollars to expand Medicaid, the United States for the first time ever will come close to guaranteeing access to affordable health coverage to nearly all U.S. residents.

So yes, I am celebrating the fact that the Affordable Care Act (Obamacare) is open for business today—having survived the Supreme Court, two national elections, ongoing state obstructionism, and the unrelenting (but ultimately futile) continuing efforts by some in Congress to stop it. 

Today’s questions: What is your reaction to the government (mostly) closing, and Obamacare (mostly) opening today?