Looking Ahead: More Hurdles for ObamaCare
By Ronald Bachman
Last week’s commentary, “ObamaCare Implementation Stumbles Along,” focused on the confirmed challenges in implementing the Affordable Care Act. Based on the already-checkered if brief past, the federal health law can expect even more implementation struggles moving forward.
Health insurance exchanges: 27 states declared they would not establish a state run health insurance exchange. These states have defaulted to federally facilitated exchange. Will the Department of Health and Human Services (HHS) be ready to implement these exchanges that are required to go live on October 1, 2013? There are serious doubts. In fact, Michael Cannon of the Cato Institute made a prediction earlier this week that an announcement will come this month:
Health exchange subsidies: The law seems to establish that individual subsidies are available only through state-based exchanges and not through federally facilitated exchanges. However, HHS has declared by fiat and the Treasury Department has pronounced that they will provide subsidies through both exchanges. Can this hold up in court or continue with subsequent administrations?
Individual subsidies: Individuals are eligible for subsidies if their employers of 50 or more employees don’t offer qualified insurance. With the one-year delay in reporting requirements, how will the Treasury know who qualifies in 2014 if they lack the information that businesses are supposed to provide? Will systems linking health insurance and tax records be ready and accurate? Will anyone trust the Internal Revenue Service to maintain privacy of health information?
Individual mandate: Citizens must pay the individual-mandate tax if they decline coverage offered by their employer. With the employer mandate delayed for one year, can the individual mandate be far behind? How will the Treasury Department verify these offers?
Definition of dependents: In a surprise HHS regulation, spouses do not have to be provided insurance under the law for an employer to meet the standards of insurance for “essentially all” employees and dependents. Many non-working spouses (or spouses working for small employers) could lose existing coverage and either become uninsured (and pay a penalty) or seek expensive individual coverage through an exchange.
There are implementation struggles, funding questions and increasing costs. Already, Georgians see the unraveling of the exchange implementation deadline: State Insurance Commissioner Ralph Hudgens made an emergency request this week (July 29) to delay the startup of Georgia’s federally facilitated exchange. He sought a 30-day extension to review the health plan rates submitted by seven insurance companies wanting to participate, citing “massive rate increases” – up to 198 percent higher than existing individual plans in Georgia.
Just this week, the Congressional Budget Office announced that the law’s projected net cost to the federal government – aka the taxpayers – has increased. In May, CBO projected a cost of $1,363 billion over the 10-year period from 2014 to 2023. However, “As a result of the Administration’s announcement and recently issued final rules [no penalties on employers and no reporting requirements], the net cost is now estimated to be $1,375 billion – $12 billion more than previously estimated.”
It’s worth reiterating: Government failures usually result in more government solutions to fix the problems created. Many are already pointing political fingers of blame. As the saying goes, “Every system is perfectly designed for the outcomes achieved.” If the outcome was designed to be failure, the Affordable Care Act is well on its way to achieving that outcome. Perhaps it’s time to start worrying what “solution” government will propose then.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (August 2, 2013). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
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