The Affordable Care Act (ACA) rollout continues and every few weeks another problem arises seemingly without warning. However, those who follow health policy closely aren’t too surprised because every system is perfectly designed for the result you get. Unfortunately, it’s not always the result you want. The glitches and gotchas are largely the foreseeable result of the convoluted process that created the ACA in the first place.
The ACA (aka Obamacare) builds on the existing private health insurance system but bans egregious practices such as charging more or denying coverage for pre-existing conditions and risks; canceling policies just as the bills add up; and capping lifetime payouts. The goal is to let people keep policies that meet acceptable minimum standards and give those who want or need new insurance affordable options. In practice, this hybrid amalgam needs complicated rules to ensure people don’t game the system or get taken advantage of. The simpler alternative of just canceling all health policies and enrolling everyone in standardized plans (single payer) was never given serious consideration.
So far, two inevitable complications have come to light, and a third’s about to.
First, there are the website issues. The Healthcare.gov design goal was to allow the direct comparison of various plan features, costs and subsidies using the applicant’s own information and one-stop enrollment. This is a lot more complicated than buying a pair of socks on Amazon unless Amazon has to verify your identity, income, citizenship, family status, etc. with a dozen or so government and private databases before sending you the new argyles.
Deliberate foot dragging by some states—“maybe we’ll run our own exchange, maybe we won’t”—significantly delayed the development effort. Since the law’s authors never anticipated total non-cooperation by so many states, the federal exchange effort was woefully underfunded. Throw in a detour through the Supreme Court that made the Medicaid expansion optional as well as restrictive government contracting rules, and it’s clear that things were not likely to go well no matter who was in charge.
Glitch number two. Some folks are getting cancellation notices because their current policy doesn’t meet the ACA minimum standards for complete health coverage. In all but a small percentage of cases, the new option is a much better value. But, like Wile E. Coyote, who doesn’t fall until he realizes he’s got nothing beneath him, people don’t know what’s missing in their coverage until they need it. Insurers have piled on by blaming the ACA for any changes they make to their offerings. Since you can’t fix bad insurance by allowing bad insurance policies to be sold, this was totally predictable, despite what the President said.
The next shoe to drop is a big one: restricted provider networks. Since, the traditional means of reducing payouts are prohibited, insurers are negotiating deeply discounted contracts with smaller networks of providers trading lower rates for greater volume. Not knowing much about these newly insured people, providers are also waiting before signing onto exchange-offered plans. As a result, patients are less likely to find all their providers and top hospitals in the networks of exchange plans. The danger is that better-off healthy people will buy plans with broader provider networks outside the exchange, leaving exchanges—and their subsidies—for sicker and poorer people, driving up premium and subsidy costs.
This last glitch can be fixed by new regulations setting standards for provider network size or forcing companies to limit the differences between exchange and non-exchange plans. Of course, this will add one more layer of complexity to an already complex system.
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