Rising to Meet the Challenge?

If you think getting to the end of your renewal each year always feels like a race to the finish line, the Federal Government has that issue times 13 million citizens expected to enter the exchanges starting in the fall of 2013.

The Federal Government has a massive undertaking to create and implement Federal Health Exchanges by October of this year.   IT architecture, community outreach, educating the public about coverage and how it will work, and – last but not least – creating a working relationship with insurance carriers who will operate the insurance plans must all be mastered, tested, and ready to roll by October 1, 2013.

Health Insurance's Biggest Issues

Owners, human resource professionals, chief financial officers, and benefit consultants alike are no stranger to the challenges that are faced every year regarding benefits – cost and education.  The Federal Government will have these challenges as well, along with a number of other issues.

1. Cost For some citizens, entering the exchange may provide some cost relief depending on the amount of subsidy received.  Regulations call for a sliding scale on premium subsidy with a person at 133% of the Federal Poverty Level (FPL)  (approximately $11,500 per year) receiving the greatest subsidy while a person at the 400% of FPL (approximately $46,000 per year) receiving the least amount of subsidy. 

At the government level in managing subsidies and the cost of managing exchanges, the estimated costs continue to grow.  The Congressional Budget Office now estimates that the subsidy costs will be 39% more than originally estimated.  With upcoming budget debates scheduled in Congress, the overwhelming cost of Affordable Care Act will not be missed in these discussions.  Most recently, $450 million was transferred from other programs not allocated to health care reform to cover portions of it.

2.  Education A 21-page application (currently in draft form) to determine a person’s eligibility for a subsidy has been created.  Navigators will be on hand to help people in the completion of such an application.  Despite this assistance, health insurance has never been very easy for people to understand.  Some have cited that the application for insurance through the exchanges will be more complex than the current tax code.  At the very least, the addition of applying for and being eligible for subsidies adds a layer of complexity that will need to be addressed. 

The Kaiser Family Foundation reports that a good majority of citizens don’t know much about the Affordable Care Act and what citizens do know, they do not understand.  Understanding what the benefits are and how to obtain them will be critical in gaining appeal from the public. 

The Affordable Care Act will mainly be successful in providing access to care for all.  In states where Medicaid Expansion was not elected, however, there is a gap in coverage for people that earn between 100% and 133% of the FPL.  Medicaid exists for many (but not all) of those who earn under 100% of the FPL.  Subsides will exist for citizens between 133% and 400% of FPL if the individual elects coverage through an exchange.  Everyone has to elect coverage or pay the penalty.  What happens to those that fall in the 100%-133% gap?  For this segment of the population, the government has a public relations issue and a gap in coverage to solve.  Citizens in this sub-set will certainly have a voice and hospitals weigh into the equation because they are looking for reimbursements rather than having to write off providing services to those that do not have coverage.

Potential Outcomes

What happens if there are delays with the October 1, 2013, deadline?  Included among the potential after-effects are:

  1. If the Federal Government delays implementation it will prove embarrassing for those that supported it and give fighting power to those that oppose it, citing that it is too complex to implement and is doomed to fail.  With mid-term elections on the heels of such a decision, the consequences for Affordable Care Act could be grave. 
  2. If the Federal Government goes forth with implementation as scheduled and the output to the consumers is poorly orchestrated, this could also prove disastrous.  As Jay Rockefeller, a retiring senator and also one of the architects of the Affordable Care Act recently stated, “If (the Affordable Care Act) is not implemented correctly from the start, it will only get worse.”

No one knows the exact future of health care reform but Caravus will continue to provide updates as the regulations continue to roll-out.  No matter what the course, we are committed to providing clients with compliant, accurate information as it becomes available.  Let’s hope for the best.