The first two weeks of October have been difficult for supporters of the Patient Protection and Affordable Care Act. The health insurance exchanges opened for business Oct. 1, and in most cases they were not ready. The federal exchange website seemed to have the most serious problems, passed off by the administration as “glitches” caused by an overwhelming number of people trying to buy insurance. Add more computer capacity and problem solved.
Sounds simple, but after a week of ongoing computer failures, HHS Secretary Kathleen Sebelius admitted, “We're working, really, around the clock. Today is better than yesterday, and we're hoping in the near future to have a seamless process.” Not only are people having trouble getting into the system, but when they do, their insurance applications are likely to be garbled. That means some people who think they succeeded in enrolling for coverage could get a nasty surprise months from now.
Let's get serious. The insurance exchanges are still not ready for prime time. This is not simply a matter of failing to test computer systems or tracking down a few bugs in the software.
The website crashed because the administration did not understand how consumers think. Most people like to kick the tires before they buy the car. They want to look at their health plan options without having to give their names or any other personal information.
HealthCare.gov does not permit anonymous browsing because the administration did not want consumers to be scared away by high insurance premiums. The website is designed to fully verify whether a consumer is eligible for a subsidy, and if so, how much it will be. The cumbersome verification process, which is not necessary to give individuals a good idea what their premium is likely to be, caused the traffic jam.
The health insurance exchanges could not deliver the easy online shopping experience that many expected. That will not change, even with a great deal more work and money spent patching up the computer systems. The problem is more fundamental. The ACA created an extraordinarily complex set of subsidies and rules, and no amount of computer programming can cut through the resulting confusion and inefficiency imposed on the health sector.
Other disappointments await those who are counting on the ACA to solve their health insurance problems. Millions of people who previously could not buy insurance because of pre-existing conditions are now able to do so. But they are likely to find that the coverage they want is very expensive.
That's because the subsidy, which cuts the premium to $55 a month for someone with an annual income of $17,000, is tied to the second-lowest cost “silver” plan. Such a plan generally has a narrow provider network and a substantial deductible that must be paid before insurance kicks in.
Better plans cost more, and the consumer is responsible for the full difference in cost. In New York, that $55 monthly premium can easily triple just to enroll in an average-cost silver plan.
A fixed subsidy that does not increase for more expensive health plans creates strong incentives for plans to offer better coverage at lower cost. If you are trying to promote efficiency in healthcare delivery, it's an effective tool. Nonetheless, it invariably draws hostile fire when Republicans (who call it premium support) propose it for Medicare.
The ACA's primary goal is to expand health insurance to the 15% of Americans without coverage. But it has serious consequences for the rest of us who already have coverage and would like to keep it.
The coverage that employees have today will soon be a thing of the past. Employers have already begun to change their health plans and restructure their workforces to avoid some of the higher health costs arising from the ACA. United Parcel Service will exclude from their health plan 15,000 working spouses who could buy insurance at their own jobs. The trend is clear: Workers will pay more for less generous employer coverage.
The ACA remains an unpopular law. Fortunately, for the administration, the battle over the government's partial shutdown has distracted public attention from its disastrous first weeks. By late October, the ACA will be old news and news coverage will fall off sharply. That gives the president a free hand to continue implementing his reform. The delay in the employer mandate proves that the administration does not need Congress to ratify regulatory actions that in an earlier era would have required legislation.
Republicans are up against the wall. They can expect only modest concessions on the ACA. But over the long term, the reality of exploding budgets and a weak economy will bring the debate back to the fundamental question: What is the role of government in healthcare?
Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute