Obamacare Exchanges to Start as Questions Persist: Q&A

Photographer: Patrick T. Fallon/Bloomberg

The health insurance exchanges are at the heart of the Affordable Care Act’s efforts to cover more of the 48 million uninsured Americans. Close

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Photographer: Patrick T. Fallon/Bloomberg

The health insurance exchanges are at the heart of the Affordable Care Act’s efforts to cover more of the 48 million uninsured Americans.

The countdown to the Oct. 1 debut of the Obamacare insurance exchanges has looked a lot like a political race, with dueling TV ads, door-knocking volunteers and a focus on swing-state targets.

Just don’t expect the usual ending to a campaign: a clear winner at the end of the day.

While the exchanges are expected to open on time, that milestone is unlikely to settle the 3 1/2-year grudge match over the Affordable Care Act. Technical limits and a long enrollment period mean it may be as late as April before it’s clear how many uninsured Americans sign up under the law.

“Is it going to be a train wreck, a complete failure? The answer is no,” said Dan Schuyler, a director at Leavitt Partners, a Salt Lake City-based health-care consultant. “Is it going to be completely seamless and instantaneous? No. It is going to be somewhere in between.”

The exchanges are at the heart of the law’s efforts to cover more of the 48 million uninsured Americans. About 7 million people will use the system to buy subsidized insurance by the end of the first open enrollment period on March 31, according to congressional projections.

Republicans will spotlight any problem as proof the law is a disaster. Democrats say they’ll overcome technical glitches and the law will sell itself as the uninsured gain benefits. Polls show most Americans side with the skeptics.

The Breakdown

Here’s a primer on what to look for, based on interviews with consultants, insurers, analysts and state and federal officials:

Q: Who runs the exchanges?

Fourteen states have their own online exchanges, with the rest run in whole or part by the U.S. government.

Q: Who will use them?

A: The exchanges are open to people who buy coverage on their own and employees of businesses with 50 or fewer workers, as well as those currently shut out of insurance because of cost or a medical condition.Subsidies are available, on a sliding scale, to those making as much as four times the poverty level, which is $11,500 for a single person and $24,000 for a family of four. Those making less than 138 percent of poverty will be eligible for Medicaid if they live in one of the 26 states set to expand the program.

Q: What happens if the federal government shuts down?

A: The exchanges will march on. That’s because the 2010 law relies primarily on mandatory spending, which congressional inaction can’t stop. It’s the budget category used for benefits such as Medicare, the U.S. health plan for the elderly and disabled, and Social Security.

Going Online

Q: How do you access the exchanges?

A: If all goes as planned, those not covered through work will be able to go online or dial a call-in center, learn if they’re eligible for tax credits and choose from a menu of private plans. The exchanges can be found at www.healthcare.gov.

Q: Who won’t use them?

A: Most of us. People who have insurance through their jobs, about 55 percent of Americans, aren’t directly affected by the law and are automatically in compliance with its mandate that everyone be insured. So are older Americans covered through Medicare.

Q: Do I have to buy insurance?

A: Yes, or pay a fine. The law requires that most Americans be insured starting Jan. 1. That can be through work, a government program like Medicare or Medicaid, or by buying on the exchanges. Those who opt out face a penalty starting next year at $95 or 1 percent of household income, whichever is higher. By 2016, it rises to $695 per individual or 2.5 percent of household income, whichever is greater.

Technological Challenge

Q: Is the technology for the exchanges in place?

A: Building the exchanges has been a massive technical lift, requiring computer systems with real-time connections among dozens of state and U.S. agencies and private carriers. The administration says the system is ready to go, albeit with delays and reduced capabilities in some cases. In Oregon, for instance, people won’t be able to buy a plan the first two weeks unless they go through a broker or designated nonprofit.

Glitches are inevitable; the question is how serious they may be and how long it takes to fix them.

Q: Has anything else been delayed?

A: The law requires that large companies offer benefits to anyone working more than 30 hours a week. In July, that rule was postponed until 2015 to ease the burden of compliance.

This past week, officials said a Spanish-language version of the federal website won’t be ready until mid-October and an exchange for small business workers won’t take enrollments until November. Nevada and California also won’t transmit names of new customers to insurers for about a month, Schuyler said.

Enrollment Pace

Q: How many people will sign up early on?

A: Call it lowering expectations or a realistic assessment: either way, supporters say they don’t expect a flood of enrollees this week. Insurance buyers have to pay their first month’s premium within 30 days of choosing a plan and the policies don’t take effect until Jan. 1. As a result, the Obama administration says most people will wait until late November or December. Another surge may come in March as the end of the enrollment period nears.

Q: Will the coverage be affordable?

A: It depends on who you are and where you live. Six in 10 uninsured people will find insurance for less than $100 a month because of subsidies and expansions to Medicaid, the administration said last week. Those who make too much for assistance may be in for sticker shock: the same report said even bare-bones coverage, known as a bronze plan, will average almost $3,000 a year for individuals.

Family Plans

For families, the cost of mid-level coverage, a silver plan, ranges from $559 a month to $1,216 a month in 36 states where the federal government controls the exchanges. Tax credits will reduce the cost for many: a family earning $50,000 a year may find the price of a bronze plan cut to zero in some states.

Q: How will insurers cover the costs for all those added sick people?

A: By signing up the young and healthy. The administration said it needs about 40 percent of new enrollees to be in this group to help balance costs from older, sicker customers and keep premiums stable.

Q: Do Americans understand what they’re getting into?

A: No. The polls indicate consistent confusion. Three in five say the law will raise medical costs, and more say they’ll be worse off under it than better, according to a Bloomberg National Poll conducted Sept. 20-23. Half also said Republicans should back off on demands to defund the law, a schizophrenic view that’s persisted for months.

Finding Support

Q: So does anybody like this law?

A: Yes. Sixty-one percent of Hispanics and 91 percent of blacks, according to a September poll by the Pew Research Center and USA Today. That could make the sales pitch easier because those two groups comprise the bulk of the uninsured in the U.S. -- 47 percent of the total, according to an analysis by the Kaiser Family Foundation. The law also is designed to benefit people with pre-existing medical conditions: insurers will no longer be able to deny them coverage.

Q: What’s happening in the big states?

A: Supporters have focused on states such as Texas, Florida, Ohio and New Jersey, where many uninsured live and Republican governors refuse to help in enrollment. California, which has the most uninsured, is spending $100 million to promote its exchange while New York plans to spend $27 million to train community groups and brokers to assist consumers.

Navigating Choices

Q: How much help do consumers get?

A: The administration is spending $67 million to train health workers, hospitals and other groups, called navigators, to help people enroll. Grants didn’t arrive until August, though, and many began a two-week training course this month. If they’re not up to the task, enrollment may suffer.

“You’re going to have tens of thousands if not hundreds of thousands of individuals who have never been exposed to health insurance before -- don’t know what a premium is, what a deductible is,” said Schuyler, the consultant.

Q: Do Democrats think the law needs to change?

A: Some have called for changes: Families of workers whose company plan doesn’t include dependents can’t get subsidies. A tax credit for small businesses has been criticized as ineffective. And there are bipartisan bills in Congress to change a provision that may encourage businesses to cut workers’ hours to avoid insuring them. A quick fix seems unlikely: Republicans say they won’t tinker with a law they consider fundamentally flawed.

Medicaid Expansion

Q: What’s happening with Medicaid?

A: While the government health program for low-income Americans is expanding under the law, about half the states have opted out. The Obama administration just days ago agreed to let Arkansas use the money to help poor citizens buy private insurance on its exchange. The deal could entice other states where Republicans have opposed the expansion.

Q: Is Obamacare making health-care more expensive?

A: Time will tell.

Medical costs have moderated in the U.S. the past three years, offering some relief to the public and private sectors alike. Prices for medical care rose 1 percent in July compared with a year earlier, the lowest growth rate since the 1960s, according to U.S. Commerce Department data. There’s a debate among economists about how much credit to give the health law compared with a weak economy and employer moves to curtail benefits. Obamacare supporters say at least some of the slowdown is thanks to regulations and pilot programs in the act aimed at reducing waste in the medical system.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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