Will the Individual Mandate be Delayed?
Affordable Care Act (ACA) officials surprised everyone when they announced that the employer mandate to provide health benefits for their workers would be delayed until 2015. Another shocking announcement followed shortly thereafter: The information people give to purchase insurance on the health insurance exchanges, scheduled to be operational October 1, will not be verified. Immediately, cries called out that the mandate requiring individuals to purchase health insurance should be delayed as well. It wasn’t fair, they said, that employers should be let off the hook and not individuals. This argument was strengthened by those who saw widespread cheating if applications weren’t scrutinized. Will the individual mandate be delayed? Don’t count on it
To me the big surprise is why anyone is surprised. I saw this coming earlier this year in a February blog about the new insurance exchanges. Despite statements to the contrary, federal as well as most states development efforts to set up the exchanges and the necessary communication routes looked shaky and way behind schedule. They still do.
Reasons given by the government for this inability to implement the law were “legislative and operational barriers” and left at that. What they didn’t say was that these barriers were of their own making. The legislative barriers were there when ACA officials couldn’t get the legislators who vehemently voted against the law to give them any more money to implement it. Operational barriers came up because the lawmakers who wrote the 2,700 page law failed to let IT professionals tell them what it would take to make it happen. That was just asking for trouble.
In order to qualify people to purchase health insurance from the exchanges and determine what, if any, tax credits or subsidies they’d receive, the government needs to have certain information from employers they do not now have. This includes employee Social Security numbers, hours worked and health benefits taken and rejected. They also must list all the other health insurance benefits available to employees, detailing the coverage and costs for each.
A process must be created by the government to collect all this information from employers on a monthly basis, store it in a secure database, make it easily accessible to the online exchange systems, and develop software to analyze the data collected. No one knows how far the government has gotten in developing this part of the system. As far as the employers are concerned, they still have not received the government’s instructions necessary to develop the systems needed to enter, collect and deliver this information to the government.
But if the government has no record of employees’ health insurance coverage or lack of it, why should people be forced to buy insurance no one can presently prove they don’t have?
The fact is, the whole ACA stands or falls on that question. The health care reform law stipulates that, beginning January 2014, insurance companies must accept all people regardless of their physical condition, their sex, age, occupation, health history, or even credit worthiness. To cover the added risk, companies have to either charge a lot more for premiums or enroll many more healthy people who won’t need much health care. To keep its promise of more affordable health care, the ACA had to force everyone to buy health insurance, whether they felt they needed it or not which is why the individual mandate is here to stay.
But for the ACA officials, this wasn’t enough. They added even more mandatory benefits to all the health insurance sold on the exchange and to private individuals, benefits most health insurance plans don’t ordinarily cover, This will jack up the cost of health insurance still higher, making it less affordable, not more.
To forestall that, the government is offering substantial subsidies and tax credits for health insurance bought through the exchange. People can qualify who make as much as 400% of the Federal Poverty Level. That’s $94,200 for a family of 4 or $45,960 for an individual. Subsidies will vary by region but average about $5,290
However, subsidies won’t be enough if healthy people are not willing to buy this health insurance. If only the neediest people enroll, the price of health insurance will go up still higher. And so, ACA officials are making every effort to sell the public on the ACA and its health insurance exchanges, even hiring public relations strategists to get the word out. Private support groups are spending literally millions in ads alerting people to the new insurance marketplaces and the subsidies available and the insurance companies, themselves, are doing everything they can to inform the public. But some of these marketing strategies are running into trouble. High profile public figures, sports and media personalities and their organizations are not enthused about selling expensive health insurance to their healthy fans.
Given the critical need to get people, many people, enrolled in health insurance plans on the exchanges, cynics see the employer mandate delay and the enrollment verification waivers as additional ploys to beef up enrollment at great cost to taxpayers. Without the employer mandate, an estimated 10 million workers will become potential exchange customers and most of these will qualify for generous subsidies and tax credits. Activists are being hired to help get these people enrolled in exchange health plans and will be paid for each enrollee.
Originally, the employer mandate was put in place to ensure that millions of workers wouldn’t be forced onto the exchanges to purchase government subsidized health insurance. Now, thanks to the employer mandate delay, these people are about to do just that. On top of that, millions of others will “adjust” their salary, or the cost of their employer’s offered health benefits to get government aid they wouldn’t otherwise receive. This because information given by enrollees on the exchanges will not be checked. Tens of billions of dollars of federal tax credits and subsidies are being put on the honor system.
Are there any other surprises out there? I’m betting there are.