Historic coverage expansion to test promise of health plan

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

WASHINGTON — After three months of turmoil surrounding the rollout of President Obama's health care plan, the country faces a historic turning point on Jan. 1.

From emergency rooms to pharmacies to company human- resources departments, changes will unfold within the U.S. health-care system as the nation guarantees insurance coverage to all Americans for the first time, a goal that has eluded presidents and lawmakers since the end of World War II.

Beginning with the New Year, insurance companies can no longer refuse to cover people because of sickness, charge them more than healthy customers or drop them when they fall ill. In return, most Americans are required to have a health plan. Some of the 19 million Americans who buy insurance on their own will find their new plans are more expensive with fewer treatment options than before as insurers seek to contain costs.

"Millions of people will now be covered for the first time. Benefits will be expanded," Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the insurance industry's Washington lobby group, said in a phone interview. "But these new benefits bring new costs."

About 1.1 million people selected health plans in time to have coverage in January using the federal enrollment system, which covers 36 states including Texas, Florida and Illinois, the Obama administration said Sunday. The government didn't say how many people paid for their plans, the final step to complete their enrollment.

Hospitals and doctors have been preparing for the insurance expansion promised by the Patient Protection and Affordable Care Act since its passage in 2010 by merging into larger institutions and redesigning the way they deliver care to take advantage of incentives in the law. The government has designated about 360 medical systems as "accountable care organizations," entitling them to a share of any savings they can produce by streamlining care for patients in Medicare, the U.S. health program for the elderly.

Better coordination for elderly patients, the government hopes, will translate to a more efficient health system for all Americans as insurance coverage expands. That proposition is about to be put to the test.

Beginning Jan. 1, the law bars insurers from rejecting consumers who are sick or charging them more. In fact, companies will no longer ask about prospective customers' health beyond the question of whether they smoke. It will be illegal for insurers to impose annual dollar limits on care, and they must cover a standard set of benefits nationwide.

People who are entering the market for the first time also will gain benefits required since 2010, including access to many preventive services without any out-of-pocket expense and full coverage of costly procedures such as colonoscopies and mammograms.

While the number of people initially affected by the expansion will be small, the law promises that Americans no longer need to fear losing health coverage should they leave their jobs.

"Having a safety net is a momentous thing; the fact that you can get insurance and you're not left out," Princeton health economist Uwe Reinhardt said in a phone interview. "We've allowed a fair amount of suffering at the fringes of our society and this is designed to mitigate that pain."

In 26 states, Medicaid programs for the poor will be expanded to cover people earning wages near the poverty level. In all states, tax credits will become available to defray the cost of insurance for people earning from the poverty line to as much as four times the poverty level, or about $94,000 for a family of four.

"Americans across the country will begin new health plans and can have the peace of mind of knowing that if they want to change jobs or start their own business, they will have access to affordable health insurance for their family," Michael Hash, the director of the health reform office at the U.S. Department of Health and Human Services, said in a statement.

By 2016, about 34 million people are expected to gain coverage by private health plans sold through the law's government-run marketplaces or by expanded Medicaid programs, according to the Congressional Budget Office. If those projections prove accurate, despite sluggish enrollment so far, the sheer size of the Affordable Care Act's constituency may secure its place in American society for decades to come.

For all its promise, the law's future remains uncertain. It was upheld by the Supreme Court as constitutional in a 5-4 ruling in June 2012 and faces further court challenges. The House, where Republicans took control in 2010 after campaigning against the law, has voted more than 40 times to repeal or limit the statute. Twenty-four states haven't expanded their Medicaid programs, which leaves a gap in coverage for Americans with incomes under the poverty line.

Public support for the law has plunged as the Obama administration fumbled its rollout, introducing an enrollment system on Oct. 1 anchored by a broken website,, that remains balky even after a six-week repair effort.

A portion of the population that may number in the millions, meanwhile, faces higher prices for health care because insurance companies can no longer provide them a discount on premiums for being young or healthy. People with no health benefits from their employers who earn more than four times the poverty level, about $46,000 for an individual, aren't eligible for any government assistance for their insurance premiums.

The government's requirements that insurance plans provide generous benefits and a new tax on plans to help finance the cost of expanding coverage have contributed to premium increases, said Zirkelbach of the insurance lobbying group.

Obama's political opponents predict further snags will emerge as the law takes effect.

"Obamacare's problems are deeply rooted in its DNA and are far bigger than just a website," Senator Orrin Hatch, R-Utah, said in a Dec. 20 speech.

Notably, Hatch said, the law won't tame U.S. health-care spending, which at 17.9 percent of gross domestic product in 2012 — $2.8 trillion — is the highest in the world. Growth of U.S. health spending has slowed since 2009, and the Obama administration has claimed the law is, in part, responsible. The government's own health actuaries said costs slowed because of the recession that began in December 2007 and the slow economic recovery, not the health law, and that the pace of growth will quicken next year.

Additionally, more Americans will lose insurance coverage when their employers drop health benefits in response to the law, Hatch said. Unless many young and healthy Americans sign up for coverage through the new exchanges, insurers are likely to exit the markets or face bankruptcy as the costs of covering the sick soar out of control, he said.

Hatch's party hasn't agreed on an alternative approach to guarantee health insurance for most Americans, and he didn't offer one in his speech. Instead, he said, Obama and congressional Democrats should work with Republicans to replace the Affordable Care Act "with something that has a real chance of success."

There's not much evidence yet that many employers plan to drop health benefits for their workers, Larry Levitt, a senior vice president at the Menlo Park, Califo.-based Kaiser Family Foundation, said in a phone interview. That may change as the Obama administration enacts a requirement, delayed until 2015, that companies with 50 or more workers provide health insurance, he said. Premiums for exchange plans in 2015 also bear watching, he said, as insurers assess the health risks of their new customers.

"We're going to keep reforming reform," Levitt said. "My guess is this will be close to the top of the policy agenda for quite some time."