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Troubles Ahead, Troubles Behind on ObamaCare

Now that the election is over, the prospect of “repeal and replace” of ObamaCare is virtually nil. But that was never the greatest threat to the law anyway. The real threat lies in implementation.

I said well before the law was enacted that is was so poorly conceived and so poorly written that it could never be implemented. That is even more evident today.

Sure, a few things were easy, like the slacker mandate, the elimination of benefit maximums, and the requirement to pay 100% for preventive services. But those were just a matter of telling the insurance companies what to do, and they did it.

But everything the government itself was supposed to do has failed. Everything.ObamaCare_Implementation

 These include:

  • The CLASS Act. This feeble attempt to create long-term care insurance was thrown overboard by the administration itself after it became apparent it would be impossible to do.
  • The 1099 provision. This requirement that businesses issue a 1099 to any vendor from whom they purchased $600 of goods and services in a year was repealed after business owners explained what an impossible burden it would impose.
  • Federal high risk pools. These pools were created and well-funded, but hardly anyone enrolled due to the complexity and cost.
  • Retiree health subsidies. This had the opposite problem. Large corporations and unions were more than happy to accept free money to do what they were doing anyway (provide health benefits to retirees), but all the money ran out in about a third of the time expected.
  • CO-OPs. Once again, Congress put so many restrictions on what was supposed to be a non-profit health plan in each state that none have come into being even though billions were spent.
  • Small employer tax credits. The complexity and confusion of these credits deterred all but a handful of companies from applying.
  • Medical Loss Ratios. The MLR requirements have had the very predictable effect of discouraging innovation and higher-deductible or “mini-med” health plans.
  • Medicaid expansions. The Supreme Court made these expansions voluntary for the states and it currently looks as though fewer than half will do it.
  • Health IT. The HITECH bill was enacted separately from ObamaCare, and many billions have been spent on it, but reports from the field indicate the top-down efforts result in lower quality and less efficiency.
  • Limits on FSA funding. It is cruelly ironic, but the families most disadvantaged by the new $2,500 limit on FSA funding are those with special needs children.
  • Limits on the Medical Expense Deduction. Beginning in 2013, a taxpayer will be able to deduct only those medical expenses that exceed 10% of income, up from the current 7.5%. Once again it is the sickest families that will be hurt.

This porridge of screw-ups resulted in thousands of waivers from compliance being issued to selected companies and unions. What were the qualifying standards for issuing these waivers? There were none. They were issued based solely on the whim of Kathleen Sebelius.

We have written extensively about most of these problems. John Goodman wrote about more of the upcoming problems including the lack of adequate funding here.

But this abysmal track record is only setting the stage for the big failures to come — the Health Insurance Exchanges and the Individual Mandate. We’ll discuss exchanges here and then come back to the individual mandate next time.

The Health Insurance Exchanges

These are supposed to be operational by October, 2013 — just eleven months from now, but virtually nothing has been done to create them. We have written before about how unlikely this is.

Back in August Robert Pear wrote in the New York Times that only 13 states had applied to create their own, leaving the rest for HHS to do. But as Pear wrote at the time, although the Feds require full transparency from the states, they are conducting all of their work in secret:

By contrast, federal officials have disclosed little about their plans, are vague about the financing of the federal exchanges and have refused even to divulge the “request for proposals” circulated to advertising agencies.

Michael Cannon and Jonathan Adler have discovered the ACA Law does not allow federal exchanges to provide subsidies to enrollees. Apparently this was done to coerce the states into creating their own exchanges. It never occurred to them that some (many) states would refuse. So now CMS has extended the deadline for states to state their intentions by one month — from November 16 to December 14.

But all of this only scratches the surface of the upcoming problems in creating the exchanges. As Sarah Kliff wrote for the Washington Post:

After people become aware of benefits, the health exchange faces its biggest challenge: Figuring out who is eligible for what. In many states those who earn less than 133 percent of the Federal Poverty Line are eligible for Medicaid — except if the state has already extended benefits to an even higher level, as 35 states have for children.

“There may be different family members eligible for different programs,” says Sam Gibbs, vice president of sales at eHealthInsurance. “There needs to be a technology system that can support that activity, and look at multiple programs for multiple people.”

A state can’t figure out how much an individual earns on its own. For that, it needs to ping a federal data hub that does not yet exist.

Actually, it is far worse than that. The exchange subsidies will vary by income and family size, but there is no agency in existence that has the slightest idea what a family’s current income is. The closest is the IRS that must wait until April of the following year to know what the previous year’s income was.

People’s income can vary substantially from year to year. But here people will have to pay premiums based on what they earned over a year ago. Someone might have been unemployed last year but making good money today, or the inverse — someone with a great job last year might be unemployed this year. How will the exchange reconcile these situations?

The Republicans may have lost this election, but a year from now millions of people may be begging to be freed from the scourge of ObamaCare’s exchanges.

Greg Scandlen is the founder of Consumers for Health Care Choices, a non-partisan, non-profit membership organization aimed at empowering consumers in the health care system.

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