Welcome to another edition of “What’s the Deal?”, the blog that attempts to confuse its readers with its post titles, but then rationally explains them contextually.
In this four part blog series, we’ll review an important and controversial piece of legislation you may have heard of: the Patient Protection and Affordable Care Act, better known as “ObamaCare.”
This week, not only did I bring home the 955 page legislation for a bit of light reading, but it so happens that a crucial piece of the bill is being ignored or delayed from being implemented by several state Governors at the moment.
These Governors wish to wait for the Supreme Court Ruling on June 28th, or some even until the November elections, before voting or implementing the item in question: the set up of an Insurance Exchange, an insurance market run by state corporations or non-profits. The Exchange is one of the vital pieces to the Affordable Care Act instituted to bring about coverage for the 30 million+ Americans without health insurance. Part One of the series “What’s the Deal With Ensuring the Uninsured are Insured” focuses on the delay on implementing insurance exchanges.
Now upon reading the Governors’ decisions, you might be saying, “Oh, well that sounds reasonable, I mean, why waste time and money setting up a program that may be struck down by the courts, or disbanded by executive order?”
Why this is a big deal, and the reason it is gaining news coverage of late, is that if states choose to wait (for the aforementioned events) to implement the Health Insurance Exchange, they will have very little time to develop a comprehensive plan and infrastructure before the January 1, 2013 deadline. If states cannot show that their exchange will be viable by January 2014 (the implementation of most of the Affordable Care Act), then the Federal Government will set up an exchange in the state as mandated by the law of the land. This would be highly objectionable to say the least in many states.
To give readers a better sense of how the Exchange fits into the health care reform, we’ll discuss some history of health care coverage in the U.S. to show why the Exchange was enacted in the ACA. Reading through all the arguments and looking past the politics of this contentious issue is important, and we all tend to lose sight of the main goals that health care reform seeks to address – fixing problems that are agreed upon on both sides of the aisle:
- that over 30 Million Americans lack health care, and suffer the lack of coverage or ability to pay for coverage.
- that the cost of health care for individuals and businesses has skyrocketed in the past 2 decades.
- that many insurers use unfair “business” practices that leave out the most vulnerable
How the History of US Health Care Shows the Need For an Exchange
One of the easiest ways to think about the structure of health care in the U.S. over the years is to look at development in medical technology and the struggle to match development with coverage. Another important factor to remember is the combined effort by what I like to call “The Coverage Team”, comprised of the private insurance sector, and the Federal government; the entities who currently provide health insurance.
We really don’t have to cover too many decades in medical development; after all, the era of antibiotics really began just after the 2nd World War. The exponential development of medical technology from the beginning of the 20th Century brought the capability to provide effective care for more people. New technology also brought higher prices for treatments, and so a rise in private health insurers to cover these costs coincided. By the 1920s, two points became apparent: That all Americans could theoretically be covered for basic treatments by modern medicine, and that the private sector was not going to profitably do this.
You don’t have to have an MBA to realize that providing insurance to the poor is not profitable and so there were clear segments of the population who from the beginning of private insurance that did not have health care. This population had employers who did not provide insurance and couldn’t afford individual coverage or direct medical costs. For people who worked for large employers in the 1940s and post-war period (most of the working class) health care worked very well; employers were given tax breaks to provide health care coverage, and it was easy for private insurers to cover more people, and indiscriminately.
For the gap in coverage for those outside the main workforce, the Federal Government took an initiative, enacting Medicaid and Medicare as part of the Social Security Act Amendment in 1965. So, insurance suddenly became accessible for a great majority of the population: both the healthy and the vulnerable. Further, costs of health care were managed by the employer system and by the Federal Government. Between the Feds and large employers, the “Coverage team” was able to “tag team” the lack of insured (but not completely of course).
So what changed? Why has “the Coverage team” failed to keep health care costs down?
In general, the landscape of the American economy and business changed from the early 1970s to the present, a well known phenomenon. The large manufacturing employers lost jobs overseas and to improved technology and business culture vaulted away from investment in employees to investments in exponential profits. With individuals no longer staying at one employer for most of their careers, health care coverage for the “working class” no longer was secure. Here we have the break in the “Coverage Team” where employer coverage no longer was interested in providing for employees, or employees no longer had the security health care that came with their job, as now the worker had become “disposable.”
On top of the change in business culture, the meteoric rise of the pharmaceutical industry and improved medical technology increased costs of health insurance. Individuals and the federal government have born the brunt of the increased costs, and this is a major argument for why most people feel health care reform is necessary.
What the Health Insurance Exchange Does:
“Exchanges are intended to simplify and structure health insurance choices for individuals, families, and small businesses, while they will be the exclusive mechanism for people to apply their federal premium assistance tax credits toward the cost of insurance coverage.”
- Provides a streamlined marketplace for individuals and employers to purchase or enroll in insurance plans.
- Ensures a quality health plan for everyone by certifying health plans and providers.
- Reaches out to everyone; especially the uninsured through an extensive marketing/advertising program
- Makes choosing health plans clearer
So, the Exchange was implemented as part of the Affordable Care Act to make health care accessible and affordable for those individuals who can’t afford it and to streamline the health care choice process for both individuals and small businesses.
So, why should the Governors of those states start working on implementing those exchanges?
Well, it turns out that there are many things to prepare for for an exchange to comply with the provisions of the Affordable Care Act. After reviewing the steps and planning that several states who have began their Exchange programs (Oregon, Washington, Colorado, Nevada, etc.), it is quite clear that states will have a very difficult time getting the necessary planning done by the State Exchange for federal certification on Jan. 1, 2013.
States have to set up, among other things:
- Legislation that actually passes through the government
- An Insurance Exchange state run non-profit w/ Board and support staff
- IT infrastructure to create a website with a huge capacity
- A customer service hotline
- A marketing and outreach campaign
- Financial Management: the exchange must pay for itself by 2015
- An eligibility web portal to certify customers
- A system to rate and certify health plans as “Qualified Health Plans”
So you can see, that there’s a lot of work to do (Don’t worry, there’s a lot more to implement beyond these items listed) to even just make a plan to organize the financials and operations for the exchange. Most states have estimated that the whole process will take at least a year. For states to pass a law, and implement a comprehensive plan that will be certified by the Fed on 1/1/2013 in 6 months (if Governors wait or the Supreme Court ruling) or 3 months (if Governors wait for the election) is almost impossible!
Knowing all this should really be a wake up call, no matter what the Governors actually think about the Affordable Care Act. Furthermore, even if the Supreme Court overturns the individual mandate, the Affordable Care Act will still go into effect. It also is looking increasingly unlikely that President Obama will be defeated in November’s election (and even smaller likelihood that Obama will repeal the PPACA). So, states who haven’t passed their exchange legislation should pass it ASAP, and those obstinate Governors are just digging a deeper hole for themselves and their citizens; just start some sort of planning at least!
Ensuring the uninsured are insured starts with getting the insurance exchanges set up. Otherwise, states will be left with the federal government actually entrenching on their rights (by setting up federally mandated exchanges).
Stay tuned for Parts 2, 3, and 4 soon!
Your Faithful Historian,
Eric G. Prileson
Sources and further reads:
Patient Protection and Affordable Care
Act ‘‘PPACA’’; Public Law 111–148 (you know you want to read it).
Alan Weil, Adi Shafir, and Sarabeth Zemel, Health Insurance Exchange Basics, 2011 (Portland, ME:
National Academy for State Health Policy)
http://nchc.org/ (National Coalition on Health Care)