Obamacare in Need of a Remake
Summer is blockbuster movie season, a time when Hollywood releases its biggest productions.
In our nation’s capital, the political version of a blockbuster, “The Affordable Care Act: Obamacare,” is now making its debut. But early previews suggest it’s not quite ready for the big screen.
Case in point: In regulations quietly released on Friday during the July 4 holiday, the Department of Health and Human Services (HHS) informed 16 state exchanges and the District of Columbia that they need not confirm that people seeking taxpayer subsidies for health insurance premiums actually qualify. This only serves to undermine the financial integrity of the Affordable Care Act.
The rules say state exchanges may do only random income checks. In fact, comprehensive income eligibility checks are prohibited — banned — until 2015. In addition, states are not allowed to determine whether applicants already have coverage through their employer until 2015.
Critics say the rule is designed to bring large numbers of people into the program without confirming their eligibility and, once onboard, it becomes politically difficult to later remove them.
Unfortunately, by not confirming eligibility, HHS is opening the door to rampant fraud and abuse that will greatly increase costs for U.S. taxpayers. It also means those most in need of health care may come up empty-handed if the system is overloaded with requests from unqualified applicants.
The questionable HHS rule comes on the heels of a decision by the Obama administration to delay until 2015 implementation of the employer mandate, a central feature of Obamacare. The law requires that employers with 50 or more employees must provide government-approved health coverage by Jan. 1, 2014.
However, implementing the mandate promised to cause widespread confusion and disrupt the health plans of approximately 85 percent of Americans covered by their employer. The delay is widely seen as an attempt to avert a voter backlash in the 2014 mid-term elections.
Some in Congress say the administration doesn’t have the legal right to change the law, but what Congress can – or will – do about that remains to be seen.
As things stand, individuals will still be required to enroll by Jan. 1 or pay a penalty. But even that may be difficult.
UnitedHealth Group, the nation’s largest health insurer, announced it is leaving the individual insurance market in California — the second major insurer to exit the market in advance of Obamacare. Last month, Aetna Inc., the nation's third-largest health insurer, made a similar move affecting about 50,000 existing policyholders in California.
Some insurers are having a difficult time getting individual coverage to “pencil out” because the bulk of new enrollees are expected to be people with pre-existing conditions who could not previously obtain coverage. The cost of their care was supposed to be subsidized by premiums from younger, healthier enrollees — but that logic may be flawed.
The Wall Street Journal found that premiums for healthy individuals could double or triple under Obamacare, making it unlikely that younger, healthier people will sign up. For example, the Journal reports that a 40-year-old male nonsmoker in Richmond, Virginia can currently get a bare-bones plan online for $63 a month. But Obamacare outlaws such plans, replacing them with more comprehensive — and costly — coverage. The least-expensive plan under Obamacare for a 40-year-old nonsmoker in Richmond will likely cost $193 a month, according to filings submitted by carriers.
Analysts think that younger, healthier people will opt to pay a small penalty rather than sign up for what they view as expensive, unnecessary coverage.
As the inherent weaknesses of the Affordable Care Act become increasingly clear, Congress needs to revisit the legislation. Either fix it or replace it. Because as things look now, this blockbuster is in need of a remake.
About the Author
Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 8,000 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.