Monday, September 30, 2013

Obamacare Arrives

Obamacare begins tomorrow. The Exchanges open, although benefits won't start until January 1. What should we expect to see?

Not very much, really. People will begin the process of application, which the Massachusetts experts tell us will take 5 or 6 site visits before actual sign up commitment takes place. Signups will start slowly; hit a peak before January 1; run strong through January and February; and then peak again as we approach the March 31 end of the open enrollment period.

Many people are utterly confused about the law, and will have to be walked through the process by a Navigator, a friend, a member of a community organization or church. The process will not be quick.

Additionally, there will be variations by state - blue states are expected to outperform red states, most of which have bitterly resisted the ACA. Twenty six (mostly red) states are not opening a state-run Exchange, leaving the job to the Federal Government. As for the Medicaid expansion, here's the map as of September 17:

20 states have signed up for sure; 15 have definitely opted out. Florida and Texas together have almost 20% of the country's uninsured, about 40% of whom would be eligible for the Medicaid expansion - so it's easy to see what these state's decisions (and others like them) can do to blunt the impact of the ACA. Here are some of the key questions and my take on their answers:

  • Will there be fireworks? Yes, but less than expected. Website overload will, in some places, be a problem. Subsidies will probably be incorrectly calculated in other places. But more or less, overall, the complex database systems will talk to each other, and will compute eligibility, subsidies and required individual payments. System managers will probably give a B grade, that will move up to A- by the January 1 benefit start day. Not too shabby!
  • Will folks sign up at target levels (7 million on the Exchanges, of which 2.7 million will be under 35)? This is the heart of the entire argument: if people signup, and enough of them are in the lower health-risk, under 35 age group, Obamacare will work. The marketplace will render a verdict, as it always does, and very (if not perfectly) efficiently at that. If the uninsured buy in, particularly the younger folks, it means the value equation works: the price-value relationship is right - the prices charged (net of subsidies) are seen by those buying as fair, in relationship to how they feel about the value of the insurance product they are buying. If this happens - and I am confident it will - most of the Conservative arguments are out the window: prices will not have ratcheted up too much; young and healthy folks will mostly choose the insurance path over the penalty route, because having solid insurance is more valuable to them than any conservative analysts could see; and this is neither "crappy insurance" nor more coverage than they really wanted.
By Christmas we will have a huge policy and implementation success on our hands. Combine this with the then developing peace and disarmament agreements emerging with Syria and Iran plus the now practically inevitable GOP humiliation in the budget and debt ceiling fights, and our President and his Party will be in a strong position going into 2014.

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