In November, The 2×2 Project published a commentary suggesting what health reform might look like under a Mitt Romney administration versus a second Barack Obama term. Romney had vowed to repeal the Affordable Care Act (ACA), but the president’s re-election virtually assured that health reform under the ACA would take effect in earnest beginning next year. Starting Jan. 1, 2014, Americans will be required to have insurance either through an employer or a subsidized health insurance exchange; in participating states Medicaid will be expanded to all individuals with income up to 133 percent of the poverty line; small businesses will be given two years of tax credits; a $2,000 per employee penalty will be imposed on businesses with 50 or more employees not providing insurance; and health insurance exchanges are expected to be fully operational. Given the breadth and complexity of the ACA, however, it is unclear how political opposition and bureaucracy will affect its implementation. The 2×2 Project sat down with Columbia University Mailman School of Public Health’s Dr. Michael Sparer, professor of health policy and an expert on the law, to see how it could all play out.
As a presidential candidate, Mitt Romney pledged to get the ACA appealed. Now that Obama’s won, how do you think the ACA will play out? What will the law look like in the next four-plus years?
Had Romney become President, his administration would have sought the repeal of the ACA. That ship has now sailed. The ACA is going to be implemented. At the same time, there are pieces of the ACA that will still receive some congressional attention and that may be amended in different ways. But the core of the legislation will stand.
In terms of the actual implementation of the law, I think you can break the discussion down into the different parts. The core of the law contains an effort to expand coverage to the uninsured. One way it seeks to do that is by dramatically expanding the Medicaid rolls. The original legislation required states to significantly expand their Medicaid rolls, so much so that there would be about 20 million new Medicaid beneficiaries as of 2014. The Supreme Court has subsequently, in effect, converted that mandate into an option, so that states are no longer required to expand their coverage. So one issue going forward is whether or not some conservative, Republican-led states are going to implement the Medicaid expansion. To be sure, the states have a significant fiscal imperative to adopt the expansion, because the federal government pays 100 percent of the costs the first three years and then at least 90 percent thereafter. In addition, the hospital community, physician community, and consumer advocacy community in states like Texas and Florida are pushing hard for their states to adopt the expansion. Yet, you do have some governors and some legislative bodies at this point that are still indicating that they might hold off. The politics here will be tough, but I think ultimately just about every state, if not every state, is going to adopt the Medicaid expansion. It may take a while to get there, and it also may happen following a series of negotiations in which states try to get waivers to permit them to do the expansion in slightly different ways. We’ll have to see how that plays out.
A second way that the law helps the uninsured is by encouraging, though not requiring, states to set up health insurance exchanges, through which millions are expected to purchase subsidized private insurance. If the state chooses not to do so, the federal government will run the exchange for them.
And many of the states are deciding not to do the exchanges at all, correct?
Correct. You have this ironic situation right now, in which the most conservative states are generally deciding not to adopt an exchange at this point. So in those red states, you’re going to have federally run exchanges, while in the blue states—the more liberal, Democratic states—you’re going to have state-run exchanges. This is ironic, because liberals, more generally, have said they prefer national, federally run health insurance and conservatives have said they don’t like that idea. These federally run exchanges could then potentially lead to an expanded national exchange to which these blue states will sign on.
A third coverage issue has to do with the requirement that employers with more than 50 employees provide health insurance to their employees or face a fiscal penalty. There are some companies that might classify more employees as part-time to evade the penalty.
The highly publicized employer that said it would take that tact was Papa Johns, correct?
Yes, Papa Johns was one. There were a few, primarily in the food industry, that I heard about. What will actually happen is unclear.
Then, of course, there are the federal regulations on the insurance industry, some of which have gone into effect and others that have not. There are a lot of young adults that are on their parents’ healthcare policies today because of the ACA. A fifth coverage issue has to do with the so-called individual mandate, which goes into effect in 2014. The primary target of the individual mandate is young adults. Why? Because insurance officials argued (and Congress agreed) that since the ACA requires them to cover higher-cost, higher-risk folks with pre-existing conditions, they needed an infusion of young healthy adults who will shoulder some of the premiums used to pay for sicker policy holders. The only way they’re going to get that is through the mandate requiring those young, healthy people to buy coverage.
Do you think the increasing penalties for not purchasing health insurance will be enough to incentivize young adults to buy insurance?
The penalties are relatively low; the insurance industry would have liked a stronger penalty for noncompliance. At the same time, Massachusetts implemented a similar mandate with similar penalties in 2006 and it has had pretty high compliance. I think there’s something about a legal command (to have coverage) that is likely to compel most to comply. Without doubt, some will prefer to pay the penalty but I think the number will be relatively small.
So there’s this expansion of Medicaid and the individual mandate, but there’s still a large pocket of the population that will not be insured under the ACA, correct?
Well, in theory, the only people without health insurance will be low-income, undocumented immigrants. There are several million of those. In reality, however, there are going to be a fair number of folks in addition to this population who will not have insurance. For example, there will be a significant number of people who are actually eligible for Medicaid who don’t know they’re eligible or who choose not to sign up for whatever reason. There will presumably be a fair number of people eligible for federal subsidies that will help them buy health insurance, who simply won’t bother going to the exchange to take advantage of the insurance.
Moreover, the individual mandate exempts those who cannot find affordable health insurance in their areas. Presumably that should be a relatively small number. But if you add up the undocumented, the eligible but unenrolled, those who don’t take advantage of the subsidies or those who simply don’t go to the exchanges, there still will be a not insignificant number of uninsured in the United States.
The number may go higher if, in fact, there are a fair number of states that don’t adopt the Medicaid expansion. If there’s no Medicaid expansion in Texas, for example, then there will be a lot of people not on Medicaid because its eligibility criteria right now are very low and cover very few people.
You had mentioned the state governors opposing the law. At this point, it seems like the fact that Obama was reelected and people are slowly—very slowly—learning about the ACA provisions, that there’s enough public awareness to offset these opposing parties.
Yes and no. Two factors remain the same, though. No. 1, a large majority of the population still does not understand what’s in the ACA. We don’t have a truly informed electorate about it, which is very unfortunate. In addition, we’re still very divided about the merits of the law. To be sure, following the election, the number of people who, at least in theory, support the ACA has gone up. But, there’s still a healthy chunk of the population who think this is government run amuck.
The lack of knowledge that some people have about how the law is going to affect them will presumably change as the law becomes implemented more thoroughly. At this point in January of 2013, there’s still far too little understanding of what the law says and a tremendous amount of rhetoric about the pros and cons. I think you saw the same dynamic in the recent debate about the so-called fiscal cliff. There’s a perception amongst many that the ACA is going to significantly add to the nation’s budget deficit. But it will not. Yet here again the politics are very difficult and very hard.
Do you see any other pertinent issues that will be problematic with implementing the ACA that we haven’t touched on?
We’re obviously debating the future of Medicare right now. We also are having an ongoing debate about how best to reduce the overall cost of health care. And of course there is a major effort in the ACA (and the market more generally) to reform the nation’s health delivery system (through the use of accountable care organizations and health homes, for example). Put simply, the debate over the future of the U.S. health care system is here to stay!
Edited by Jordan Lite. Additional Research by Lauren Weisenfluh.