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Health care exchanges have arrived: Are they ready?

Health care exchanges have arrived: Are they ready?

By Irma Romero

In the weeks leading up to today’s launch of the health care exchanges, questions have been flying about whether they are ready, whether they will be successful and whether they will face more delays in the future.

Legal experts and Capitol Hill staffers addressed these concerns last week during sessions at the American Bar Association’s 24th Annual National Institute on Health and Welfare Benefit Plans.

Yvette Fontenot, who helped craft the health care law as a Senate Finance Committee aide and later worked on implementing the law at the Obama White House, expressed optimism about the exchanges.  

“This is change. Change is hard, but we will get through this change, and eventually this will all pay off,” said Fontenot, who is now a partner at lobbying firm Avenue Solutions.

She said the health care exchanges are critical to achieving the three main goals of the Affordable Care Act: expanding coverage, improving quality and cutting costs.

“When we started debating heath reform for the umpteenth time about five years ago, everyone agreed that the marketplace needed an overhaul,” Fontenot said. She noted that the individual and small-group markets were the most dysfunctional parts of the old system and that comparing individual insurance plans in that system was basically impossible to do.  

“The market reforms that we’ve put into place in the Affordable Care Act make shopping based on price and quality possible,” Fontenot said.

The health care exchanges will show set pricing, networks and formulary information. They will also be responsible for determining eligibility for tax credits and cautionary subsidies, enrollment, consumer assistance and outreach, plan management and financial management.

“The effectiveness of the ACA coverage expansion is really dependent on how efficiently and effectively the exchanges perform those functions,” she said.

Martin Reiser, a Republican professional staffer on the House Ways and Means Committee, took the opposite stance from Fontenot, saying he believes the administration is not prepared to properly implement the health care law.

“While others may disagree, I think Republicans strongly believe that what we have said about the readiness of the exchanges has come to pass,” he said.

Reiser expressed doubts that the exchanges would be able achieve the enrollment numbers that the administration is hoping for. “People probably will not flood to them because there are still numerous questions, and they are not going to be able to get all the answers they need,” he said. 

He also cited problems with reporting requirements, noting that the individual mandate is essentially unenforceable for 2014 because the Internal Revenue Service will not have the data it needs. And even if it was enforceable, he was skeptical that the penalty of $95 would be effective in getting young, healthy people to buy insurance.

Fontenot admitted that, at the outset, she expected to hear numerous “horrible process stories” about problems with the exchanges.  However, she said she had “no doubt” that the issues would be worked out.

Fontenot and Reiser also took divergent views on a report released last Wednesday by the Obama administration.

The report showed that nearly all consumers in the 36 states with partially or fully federally facilitated marketplaces will have average premiums lower than earlier estimated. “This is a clear win for consumers,” Fontenot said. “This means that the competitive marketplace is working.”

Reiser pointed out, however, that just because the premiums are lower than the administration originally estimated doesn’t mean the vast majority of people won’t be paying more.

“At the end of the day, Republicans can’t spin and Democrats can’t spin the premium numbers,” he said. “It’s going to be decided on an individual basis — whether the individual believes he or she is paying more for health care than they did last year.”

Helen Morrison, who played a lead role in the Obama administration’s tax-related initiatives on health care reform and the Treasury Department’s implementation of those provisions, said the health care exchanges raise many questions for employers. Now that their employees have an alternative for health care, will employers terminate their coverage? Will that help employers manage their costs? How will their employees react?

Morrison, now a principal in the National Tax Department of Ernst & Young LLP, said she had yet to see a trend of large employers terminating coverage.

However, Reiser said there is bipartisan concern about a provision in the ACA that requires employers to offer health care coverage to any employee who works more than 30 hours a week. Because of this rule, employers such as Trader Joe’s and Home Depot are moving employees below this threshold, causing a shift to part-time workers.

“That is a trend that is undeniable and is going to accelerate,” Reiser said. He added that a number of bills have been introduced in Congress to address this issue, but they have stalled for now because of the one-year delay of the employer mandate that was announced in July.  

Drew Crouch, formerly tax counsel for Democratic staff for the House Ways and Means Committee, said he expects the debate over the health care law to keep coming back. He cited attempts by House Republicans to defund and delay the health care law by attaching it to a continuing resolution to keep the government funded in the new fiscal year, which also starts today, and he said there is talk on Capitol Hill that the GOP might try to attach a one-year delay of the law to the debt ceiling vote, expected to be held later this month.

“This whole issue of linking federal government spending and defunding the ACA will only return in the next several months,” said Crouch, now director of government relations, Buck Consultants.

“It’s stormy skies ahead for the Affordable Care Act,” he added. “This will be a contentious fall, and I think it will only sharpen next year because next year is the midterm elections.”

Looking forward, Fontenot said the administration will eventually need to change or add requirements for the health care plans to update the essential health benefits benchmarks and quality standards. The plans have minimal requirements at the start in order to get the insurance companies to come join the health marketplaces, she said.

Crouch said that while he doubts the ACA will be repealed, he also thinks any ACA corrections or modifications bill will have to wait until the 114th Congress, after the midterm elections next year.

Morrison said all parties involved in health care reform need to realize that "we're in this together."

“This isn’t just about the government setting up this new health care system," she said. "It really is a transformational change for health insurers, for employers, for individuals, and if we all work together, I think we can make this work.”

 

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