When the state marketplaces created by the Affordable Care Act (ACA) went live on Oct. 1, the controversial law entered a new phase. After years of argument and counter-argument about what might happen when the marketplaces and premium subsidies are implemented, we now will be able to see what actually will happen.
This we know: Eligible persons, which generally means legal U.S. residents who do not have affordable health insurance from their employers and are not covered by Medicare, Medicaid, the Children's Health Insurance Program (CHIP), Veterans Affairs or another federal program, have from Oct. 1 until April 1, 2014, to choose from a menu of qualified health plans offered through the marketplaces. A qualified plan is one that meets federal rules on standard benefits, cost-sharing limits, underwriting, hospital and physician network adequacy standards and other requirements.
Once people sign up for a plan, their coverage—and income-based premium subsidies available to people with incomes from 100% to 400% of the federal poverty level—will go into effect on or after Jan. 1, 2014, depending on when they sign up. If they don't sign up by the open enrollment period that ends on March 31, 2014, and don't obtain coverage on their own from another source, they will be subject to a small tax penalty of $95 or up to 1% of their income, whichever is greater.
The administration hopes to enroll as many as 7 million uninsured Americans by the time the open enrollment period ends in the spring, and they expect the numbers to grow in subsequent years. By the end of the decade, the subsidized marketplace enrollment in qualified health plans, combined with the expansion of Medicaid in most states to the poor and near-poor, is projected to result in 27 million uninsured persons gaining coverage.
At least that is how it is supposed to go. It is way too early to know how things will really turn out. But I suggest that there are 5 key questions that may determine how successful the ACA will be.
Q: 1. Will the premiums offered through the marketplaces be affordable?
A: If premiums are too high, then the uninsured won't buy them, even with the federal premium subsidy. Fortunately, the initial indications are that most uninsured
Americans will have access to highly affordable plans through the state marketplaces. A report issued by the U.S. Department of Health and Human Services (HHS) just days before the marketplaces opened for business yielded the following findings.
- Individuals will have an average of 53 qualified health plan choices in states where HHS will fully or partially run the marketplace.
- Premiums before tax credits will be more than 16% lower than projected. Premiums tend to be lower in states where there is more competition and transparency.
- After tax credits are taken into account, 56% of uninsured Americans may qualify for health coverage in the marketplace for less than $100 per person per month, including Medicaid and CHIP in states expanding Medicaid.
Q: 2. Will young people in particular sign up for coverage through the marketplaces?
A: The ACA's effectiveness in keeping premiums affordable depends on having the right mix of enrollees—enough young and healthy to balance out the old and unhealthy—and enough health plans bidding for business to keep premiums competitive. If too many younger and healthier persons decide to forgo buying coverage and the people who do sign up are sicker and older, then premiums may skyrocket and health insurers may drop out of the marketplaces.
Again, initial indications are that most young people will be able to buy coverage they can afford. For example, HHS reports that in Texas, the state with the most uninsured, “an average 27-year-old with income of $25,000 could pay $145 per month for the second lowest cost silver plan, $133 for the lowest cost silver plan, and $83 for the lowest cost bronze plan after tax credits. For a family of four in Texas with income of $50,000, they could pay $282 per month for the second lowest cost silver plan, $239 for the lowest silver plan, and $57 per month for the lowest bronze plan after tax credits.” (The full HHS report is online. )
Q: 3. Will it be easy enough for people to sign up?
A: The marketplaces are supposed to provide a one-stop shop for people to choose a health plan and find out whether they are eligible for tax credit subsidy and what the cost will be after the subsidy is applied. If the marketplaces experience administrative problems that make signing up too difficult, many uninsured may not bother to try.
Q: 4. Will the states expand Medicaid?
A: Under the ACA, at least half of the uninsured were projected to get Medicaid coverage, and the other half were projected to get insurance through the marketplaces. But this can happen only if a state agrees to accept federal dollars to expand Medicaid to people with incomes up to 138% of the federal poverty level. A majority of states, including several with Republican governors and/or legislatures, have agreed to the expansion. But several states with disproportionately large numbers of poor uninsured, including Texas, are not on board. As a result, 2 out of every 3 Americans who were supposed to get coverage through Medicaid will initially be left behind.
Q: 5. Will the continued political opposition to the ACA bring about its failure?
A: Opponents know that if the answers to the first 4 questions turn out to be yes—if the uninsured and especially the young uninsured are able to find insurance they can afford, and if it is easy enough to sign up, and if the poor can get Medicaid—then the ACA's popularity will grow. So, in a last-ditch effort to ensure that enrollment doesn't go smoothly, some states with governors and legislatures opposed to the ACA are determined to make it as hard as possible for people to sign up by, for example, prohibiting state and local officials from assisting in the enrollment process and requiring that navigators meet the same training and certification requirements as insurance brokers. Physicians can be powerful counterweights to such obstructionism by helping patients sign up for ACA coverage, using the new resources available from the College.
The ACA isn't perfect, but it is the only pathway available to help get us to yes on the most important question, which is whether we as a nation can finally extend health insurance coverage to the millions who now can't afford it.