ObamaCare: Watch For Five Land Mines
ObamaCare: Watch For Five Land Mines
Young may stay away, small firms may exit, key paperwork missing
BY JOHN MERLINE
INVESTOR’S BUSINESS DAILY
With support for ObamaCare hitting all-time lows, the administration continues to cling to one bit of good news — the federal exchange website is working better than before.
Healthcare.gov is “night and day compared to where we were back in October,” Health and Human Services Secretary Kathleen Sebelius told a House committee last week. And the insurance industry — which didn’t want to send people to a bugfilled website — is starting to unleash various ad campaigns.
But getting people to enroll is just one of many problems facing ObamaCare. Several other land mines could cause further damage over the next year. The big ones looming ahead:
Coverage isn’t there. Recent reports indicate that while the front end of the exchange website is working better, the back end continues to be error-prone, meaning insurers will have a hard time processing applications by Jan. 1.
The Washington Post reported this week that thousands of enrollment forms didn’t make it to their insurers, and there’s still a huge backlog of paper applications waiting to be processed.
State-run exchanges are having problems, too. Many Californians who signed up say their insurers never got those records. As a result, they can’t pay their premiums to make sure their coverage starts in two weeks.
Sebelius tried to downplay any such problems at last week’s hearing. “People will be enrolled,” she said.
The young stay away. While the administration and state governments aggressively promote ObamaCare to young people, early results show that exchange enrollment is skewing decidedly older. That will drive up insurance costs for those buying an ObamaCare plan.
In California, just 21% of signups through Nov. 30 were 18-34 years old, although this group accounts for 39% of the state’s ObamaCare-eligible population. In contrast, 35% were 55-64, more than twice their share of those eligible to enroll.
In addition, ObamaCare’s requirement that plans cover dependent children up to age 26 will deter many from buying coverage on their own.
People game the system. Industry officials warned the administration late last year about another, little noticed, land mine — people who game the new insurance rules. Healthy people could, they noted, “float” uninsured until they get sick, and only then sign up, knowing they can get coverage guaranteed and at subsidized rates.
Insurers also warned that, under the law, someone could sign up, fail to pay premiums, and then simply re-enroll — even with the same company — at the next open enrollment.
“ACA does not include a provision to allow issuers to refuse to cover individuals with a history of non-payment,” Howard Shapiro, public policy director at the Alliance of Community Health Plans, told regulators.
Small businesses escape. Looking for ways to sidestep ObamaCare’s costly rules and regulations, small companies are increasingly exploring self-insuring — something that had been the province of larger companies.
Self-insured firms pay their employee health costs directly, and usually buy stop-loss coverage to protect vs. massive health bills.
Insurers are more aggressively marketing this option to small companies. Some 40% of staff at small firms could end up in selfinsured plans due to ObamaCare, an Urban Institute analysis concluded.
ObamaCare advocates fear that if companies with young, healthy employees self-insure, the remaining exchange pool will be older, sicker and more expensive.
“It would undermine key protections for small-business employees and increase costs for other small businesses,” warned the liberal Center for American Progress. It wants the government to cut off this escape route.
Employers dump plans. Companies are already dialing back health coverage by shifting workers to below 30 hours per week or cutting back staff, as IBD has been cataloging.
These trends are likely to accelerate next year as companies face the employer mandate, now set to go into effect in 2015. At the same time, ObamaCare will cancel coverage for many smaller firms, forcing them to choose between buying costly approved plans or dropping health benefits.
The result could be waves of workers pushed into the government-run exchanges next fall.
President Obama has said often since Oct. 1 that ObamaCare “is more than just a website.”
That’s true. But so are the problems facing the law.