Obamacare Keeps Getting Worse
With cringe-worthy memories of the disastrous launch of the Obamacare exchanges a year ago, the Obama administration is trying to delay another catastrophe until after this fall’s elections. That has done nothing to stop the tide of painful headlines and bad news. Here are 10 things we learned about the president’s health care law over the past month.
1. Premiums Are Increasing
As key Obamacare mandates and regulations took effect, insurance premiums went up dramatically for millions of Americans in 2014. The same general pattern has been holding as companies continued to release their preliminary premiums for 2015. According to the latest figures from the consulting firm PricewaterhouseCoopers, covering 31 states and the District of Columbia, premiums in exchange plans will increase by an average of eight percent next year. There is likely to be a lot of volatility in premium changes, and some of the large insurers, like many Blue Cross plans, have requested steep increases. Florida Blue, for example, expects to raise its rates by an average of 17.6 percent for 2015. In Alaska, the state Division of Insurance says people can expect an increase of more than 30 percent on average.
2. Provider Networks Are Getting Narrower
In an analysis by the Associated Press on August 17, patient advocacy groups complained that the operation and transparency of exchange plans have fallen far below what the Obama administration promised. By mandating a uniform benefit package, Obamacare reduced the ways insurers could compete for business. As a result, many insurers structured exchange plans with narrow networks of doctors and hospitals. The narrow networks have spurred investigations and lawsuits over issues like inaccurate provider network lists given to consumers prior to the start of open enrollment. Nearly half of all plans offered in exchanges feature narrow networks. In California, more than half of doctors are only available in a single plan sold on the state exchange. Some of the nation’s most prestigious hospitals are being excluded from networks to keep premiums lower.
3. Obamacare Putting Employer-Based Coverage at Risk
According to an August 4 report by the Indianapolis Business Journal, many small businesses offering coverage through the insurance company WellPoint are dumping their group health plans and moving their workers to the Obamacare exchanges. In the first half of 2014, businesses cancelled WellPoint policies that enrolled 218,000 members, a 12 percent drop. The company had expected some of that, but not so much so quickly. A poll reported by the Morning Consult on August 19 found that a majority of people are worried about employers moving them to the exchanges, with 63 percent expressing this concern. If they were shifted onto an exchange, 52 percent said they would seriously consider looking for another job.
4. Exchange Enrollment Has Likely Dropped … a Lot
Several recent reports indicate that the Obama administration was cooking the books when it claimed in May to have reached exchange enrollment of eight million people. That number reflected only the people who selected a plan, never the number who actually paid their premiums and enrolled. According to a report in the South Florida Business Journal on August 29, the number of Florida enrollees in exchange plans in June was 760,000 – 220,000 fewer people than HHS reported in May. By the end of June, net enrollment in Aetna plans was already 17 percent lower than the number of people who had signed up for coverage as of May 20. Aetna expects 30 percent total net attrition by the end of this year. If the experience of Aetna and insurers in Florida is representative of nationwide trends, enrollment in the exchanges is far lower than the bogus milestone the administration bragged about.
5. Exchange Eligibility Still Not Verified For Many
In mid-August, CMS sent letters to about 310,000 people, telling them that they needed to submit proof of their citizenship or immigration status by September 5 or their insurance would be canceled. Anecdotal evidence indicates that problems with HealthCare.gov have prevented some of these people from submitting the appropriate documentation. USA Today reported on August 28 that the HealthCare.gov website “remains so glitchy” that some people are being forced to send their information multiple times and that many can’t access their accounts at all. As of September 2, HHS said that 239,000 of the original 310,000 were receiving final notices because they failed to submit proper documentation.
6. Concerns about Subsidies
Supporters of the president’s health care law have touted the new subsidies to buy insurance as one of its best features. In addition to the $1 trillion cost of these subsidies over the next decade, many people will face hours of frustration understanding IRS’s complicated subsidy paper work. During July and August, the IRS released the draft forms necessary for the subsidy payments to be reconciled. The Associated Press reported on August 30 that some tax professionals are worried the new forms will not be sent out in time and may delay tax refunds for millions of people. One told the AP: “It’s very unrealistic to expect that they would be able to implement a process that distributed these forms in the middle of open enrollment, and on time.” In addition to this problem, millions of people are likely to learn that they have to repay excess subsidies when they file their income tax returns. Repayments are generally capped between $300 and $2,500, depending on family size and income. People who earn more than four times the federal poverty rate must pay back any subsidies in full. It is still not clear whether the caps apply to people who received subsidies but were later deemed ineligible.
7. Concerns about Open Enrollment
Open enrollment for Obamacare’s exchanges begins on November 15 and closes on February 15, 2015 – a period only half as long as the 2014 open enrollment period. In order for people to be covered by January 1, 2015, they must enroll by December 15, 2014. HHS has not yet provided details of the upcoming enrollment process, and there has not yet been any testing of changes to the enrollment system. The New York Times reported on September 2 that “insurance executives and managers of the online marketplaces are already girding for the coming open enrollment period, saying they fear it could be even more difficult than the last.” People who fail to select a plan by December 15th will be automatically re-enrolled in the same plan, or a similar plan if their current plan is no longer offered.
Many enrollees who decide to keep their current coverage or who are re-enrolled by CMS will face significantly higher costs. These payments can increase even if an insurance company doesn’t raise rates since the price of the second-lowest silver plan offered in an exchange, which is the benchmark plan for calculating the size of the law’s premium tax credits, may decline as more insurers enter the exchanges. As a result, many people’s subsidies will be automatically reduced, and they will need to switch plans in order to keep their share of the premium from rising. Switching plans can mean changing doctors and adjusting to higher out-of-pocket costs. Moreover, the website is still not equipped to help make important parts of the enrollment process any easier for people. As one industry analyst told National Journal in August, “the majority of 2014 enrollees are going to be impacted pretty substantially.”
8. HealthCare.gov Hacked
On September 4, 2014, the administration informed Congress that a hacker uploaded malicious software on HealthCare.gov in July, though HHS failed to discover it until August 25. Investigators attribute the hack to a basic security flaw. According to an August 19 Fox News report, CMS continues to suppress information about the security of HealthCare.gov, denying a media request last month for documents about the kinds of security software and computer systems behind the website. The network reported: “Disclosing some types of information could help hackers formulate break-in strategies, but other facts, such as numbers of break-ins or descriptions of how systems store personal data, are commonly shared in the private sector.”
9. More Troubles at HealthCare.gov
Four years after the initial work began on HealthCare.gov, the administration finally put someone in charge: Kevin Counihan, who had been the chief executive of Connecticut’s health insurance exchange. Counihan told the New York Times on September 3 that the 2015 open enrollment period may be a difficult one. “In some respects, it’s going to be more complicated,” he said. “Part of me thinks that this year is going to make last year look like the good old days.” As a reminder of the good old days, the HHS inspector general released a report on August 26 that detailed soaring costs for the site. In total, the government was obligated to pay nearly $800 million for 60 contracts related to HealthCare.gov. The department paid at least 20 contractors more for their work related to the website than was originally estimated.
10. IRS Having Trouble with the Medical Device Tax
Another government watchdog, the Treasury Department’s Inspector General for Tax Administration, reported on August 19 that the health care law’s medical device tax is raising roughly three-quarters of the revenue originally expected. TIGTA identified several mistakes when it came to collecting money owed the government, including that the IRS is having a hard time ensuring those who owe the tax are paying it correctly. IRS agents were having trouble determining what medical device manufacturers were subject to the tax. The tax is a bad idea and should be repealed, but the IRS’s incompetence in handling it just raises more concerns about the agency’s central role in Obamacare.
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