Obamacare: Not ready for prime time
President Obama’s health care law goes into effect on January 1, 2014. The state exchanges where individuals would be able research and purchase health insurance plans are scheduled to be in place by October 1. But it seems certain that important elements of the law won’t be ready for on time, creating a PR nightmare for Democrats before the 2014 elections.
Many provisions of the law appear headed for serious problems or have already been set aside as unworkable in the existing time frame.
Around the July 4 holiday this year, the administration announced that the employer mandate would be postponed until January 2015. That has given employers with 50 or more employees a reprieve from the requirement to provide health insurance to employees or pay a $2000 per employee fine. The confusion and high costs associated with the mandate made implementing it on schedule impossible.
The President unilaterally set aside one major pillar of the law, with no legislative authority to do so.
At around the same time, it was reported that the Department of Health and Human Services (HHS) would not require states to verify the income of people who apply for a government subsidy to obtain insurance in the states’ exchanges. Systems could not be put in place fast enough to do the verifications, so millions of dollars in subsidies will be distributed on an “honor system” basis. The potential for fraud is enormous, with no way to compare income tax or other data with the applications for subsidies.
Another basic element of the law has been delayed until 2015: the consumer cost cap intended to protect consumers from sky-high deductibles or out of pocket limits. Actually, that provision was set aside in February; the public only heard about it in July.
The very sophisticated information technology needed to coordinate data between state and federal agencies and to operate the state insurance exchanges is a vital element in the Obamacare roll-out, and it’s nowhere near ready. Since February, administration officials have been reassuring Congress and the public that the technology for the state exchanges would be in place and secure by October 1. But in June, the HHS Inspector General issued a report showing that firewall and other security testing is behind schedule and may take place only days before the exchanges are set to open. The report also raises the possibility that the exchanges will open without appropriate user verification protocols, meaning that users would be open to identity theft and other abuse of their personal information.
It was not an encouraging sign last month when the web site to answer consumers’ questions about Obamacare went live and then crashed 2 hours later.
The human element of getting people signed up for the state exchanges opens up other serious security concerns. HHS has been forced to cut back the training of Obamacare “navigators” by 33 percent and background checks and other security processes in hiring these counselors will not be complete when the exchanges open. At the same time, HHS posted a notice in the beginning of August, looking for vendors to provide translation services for the exchanges. The government wants translators to support over 100 languages, as mandated in the law. The contractors must not only be trained in health care and health insurance terminology, but they will be trusted to maintain the security of the confidential personal information they will be handling.
Uncertainty about how and when Obamacare’s provisions would be implemented has already given rise to negative effects for the economy and for health care. For example, some major insurers have refused to join state exchanges and even stopped doing business in some states in order to avoid them. In California, Anthem Blue Cross, United Health Care and Aetna have pulled out. The second largest insurer in South Carolina has left the state. Aetna has also pulled out of Maryland.
Anxiety about the employer mandate has caused many businesses to reduce workers’ hours and hire fewer new workers to avoid Obamacare’s requirements and penalties. In addition to fast-food chains and small businesses, state and local governments have reduced staff and cut work hours. Adjunct professors in community colleges, local school district employees, city seasonal and part-time workers, and many others have seen their hours cut to prevent the $2000 per employee penalty from kicking in.
When October 1 rolls around, a huge, nation-wide system for purchasing health insurance and managing health care for every American will begin operations. President Obama’s claims about affordable insurance, greater fairness in the distribution of health care, and an improved economy will be put to the test.
Coming soon: we’ll examine Republican proposals for alternative ways to reform health care.
This article appeared in the July-August 2013 issue of the RJC Bulletin. The Bulletin is sent to contributing RJC members 6 times a year. To renew/upgrade your membership and receive the Bulletin, click here.