The fate of Obamacare hinges on the success or failure of its new online shopping centers where people can sign up for coverage, dubbed Health Benefit Exchanges by the 2010 Affordable Care Act and Health Insurance Marketplaces by the Obama administration. The idea was to create an Expedia for medical coverage instead of airplane tickets, where insurance companies compete to offer affordable plans, mainly to those who don’t get insurance at work. The big question has always been whether the exchanges will attract enough healthy young people to offset the cost of older or sicker enrollees — even though for months that was put on hold as the government struggled to get the botched federal website to work.
Obamacare supporters were dumbfounded — and its opponents gleeful — over the utter mess revealed when the federal exchange, healthcare.gov, went live on Oct. 1. Anxious and embarrassed Obama administration officials soon announced a “tech surge” to fix the site. President Barack Obama came under sharp criticism, first for the website and then for the cancellation notices received by hundreds of thousands of people in the individual-plan market, which contradicted his pledge that people who liked their coverage could keep it. Obama apologized. By Dec. 1, the federal website had substantially improved, and on Jan. 1, the day new coverage went into effect, officials said that about 2.1 million people had signed up for private insurance through the federal and state sites — fewer than had originally been hoped, but far more than many would have predicted a month before. In addition, about 3.9 million people had newly been determined to be eligible for Medicaid. In January, the pace of enrollment picked up, with participation by young adults jumping 65 percent from the month before, officials said.
The exchanges are just one part of the law’s approach to bringing coverage to many of the 50 million Americans who lack it, but they are its main tool for reaching those not covered by their employer or a government program. The idea behind the exchanges was simple: bringing together the millions relying on individual policies would lead to larger risk pools, more competition and lower premiums. That depends on enrolling enough healthy people to offset the cost of sicker customers — otherwise costs could rise, especially for young adults. Congress expected each state to create and manage its own exchange, but only 14 (plus Washington, D.C.) agreed to do so. The rest, reflecting hostility to Obamacare or concerns about the technical hurdles, opted to let Washington do all or part of the job. Before the kickoff, Congress had estimated that as many as 7 million people would sign up through the exchanges.
Republicans, whose original goal in the fall budget battle was to defund Obamacare, said the technical mess at the site’s launch vindicated their calls for a delay. Some Democrats saw hypocrisy at work, since House Republicans blocked $1.5 billion in funds for the exchanges and other parts of the law. The argument took a new turn when the cancellation notices went out, as Republicans assailed Obama’s credibility and sought to tie what they called a lie to a broader critique of his presidency. Democrats were thrown on the defensive. Even as the administration scrambled for solutions, it continued to say the exchanges will ultimately offer consumers more choice and security and that premiums on the exchanges are lower than expected, offering a good deal. When the site began to function close to normally, Republicans changed course, drawing notice to people who will pay more or lose access to their doctor under Obamacare.
The Reference Shelf
- A Bloomberg Visual Data chart tracks state-by-state enrollment in Obamacare.
- Read the Affordable Care Act here. The section on exchanges begins on page 55.
- The U.S. government has a calendar of key dates while the Kaiser Family Foundation is tracking state progress.
- A compilation of new health law regulations published by the Health and Human Services Department.
- A book by the former Obama adviser David Blumenthal covers the contentious history of health reform in “The Heart of Power.”
- PriceWaterhouseCoopers reports on how the insurance industry is affected by the exchanges.
- Bloomberg Visual Data has a chart with a state-by-state rundown of premiums.
- Bloomberg News “Prognosis for Obamacare” coverage index.