With less than 60 days before open enrollment is scheduled to begin, the implementation of the Affordable Care Act or ACA continues to be plagued with delays. While delays and government seem to go hand in hand, the ACA implementation slowdown is raising serious concerns about whether the October 1st implementation goal is realistic and if consumers will receive what they were promised. Why the delays? The main cause is due to the way the law was written. Instead of being a blueprint, the law was written as a vision or outline of how the health insurance market should function. The problem with this approach is it left the responsibility of developing the actual mechanics and implementation of the law to various government agencies. This approach is problematic because government agencies are not elected by the public but are run by appointed officials, agency officials are not necessarily experts in health insurance, and government agencies historically have difficulty communicating with one another.
EMPLOYER MANDATE DELAYED
One of the key reforms promised was the requirement that larger employers offer health insurance coverage for their employees. The Obama administration recently announced that this part of the law is being delayed by at least one year which means employees who may have been eligible to be covered by an employer sponsored plan, will now have to purchase an individual policy for 2014 and then reapply for coverage under an employer sponsored plan in 2015. Costs for these employees would be higher since there is no requirement for employers to contribute to the cost of insurance during the delay. Since the "individual mandate" is not being delayed, these employees will still need to purchase a health insurance plan or pay a tax penalty.
FULL IMPLEMENTATION OF SMOKER RATES DELAYED
Insurance carriers were supposed to be able to charge smokers up to 50% more for health insurance plans than non-smokers to help offset the cost of increased medical care associated with smokers. However, the government has been unable to modify computer programs that will be used to ensure compliance with "the rule of 3". Therefore, smokers will pay substantially lower rates than expected during 2014 which could result in health insurance carriers increasing rates overall for everyone regardless of smoking status.
THE RULE OF 3
Under the ACA, health insurance carriers have to follow "the rule of 3". This rule states that carriers cannot charge the oldest insured more than three times the premium of the youngest insured. Since carriers currently charge elderly members
more than this factor of 3, premium rates for younger insureds are expected to increase substantially which raises concerns that younger individuals will elect to pay the $95 tax penalty in 2014 instead of buying health insurance. Since one goal of the ACA was to get all Americans to purchase some form of health insurance and reduce costs associated with providing medical care for the uninsured, "the rule of 3" may undermine this goal.
SUBSIDY VERIFICATION REDUCED
Another area of concern is the administration's recent announcement that it would vastly scale back subsidy verification. Under the ACA, individuals with incomes equal to or less than 400% of the poverty level can apply for a government subsidy to help pay their health insurance premiums. Originally, the ACA required that all individuals applying for a subsidy would need to provide income verification to ensure that those making higher incomes were not abusing the system. Due to the
difficulty and costs associated with verification, the administration has decided to allow states to randomly select a small percentage of the total subsidy applications for verification instead of verifying all applications. Although the administration contends that non-qualified individuals who receive a subsidy will be penalized by the IRS when they file their income tax returns, many are skeptical about the feasibility of such a task without hiring an army of new IRS agents to contact health insurance carriers and verify individual enrollment.
Michael Lloyd