10 Things you need to watch as the Affordable Care Act is implemented
Everyone needs to be watching 10 critical implementation components of the Affordable Care Act implementation that will impact our lives. Over the next 6 months, poor planning, absence of research, and lack of fundamental business knowledge will become abundantly clear as the administration implements key provisions of the ACA. Below are 10 things to watch as your lives are about to be significantly impacted.
HHS start up funding for Federal run insurance exchanges:
33 States have thrown wrenches in the implementation of state run insurance exchanges. All states were expected to opt for partnerships with the HHS or run their exchanges independently within the state. As 33 states said no thank you to the Administration, they quickly realized that there is no funding in the healthcare law to create the federally run exchanges.
The HHS is already going back to congress requesting an additional 1.5 Billion to fund the poor planning. If the HHS cannot secure the additional funding, they will have to cut programs and scrap together necessary funding. This will also impact the quality of the exchange operations ultimately impacting their effectiveness.
Implementation of all insurance exchanges by October of 2013:
Insurance exchanges are to be ready for enrollment by October. Everyone knows that they are likely behind schedule and the need to create a federal model is complicating the ability to hit that implementation date.
It is critical for the HHS to have the exchanges operational by October. Employer penalties, individual penalties, and insurance company fees to participate in the exchanges are significant “second tier” revenue components of the healthcare laws sustainability. These revenue streams can only be realized by successfully operating exchanges. Move that date, and the spending continues with no revenue. The healthcare law will bleed funding.
Additional costs of operating insurance exchanges:
The cost to set up exchanges has doubled. The cost to operate them is likely to trend accordingly. If the Administration is able to establish the insurance exchanges, the next big question will be their sustainability. This is critical as the only way to increase revenue is to increase the revenue streams. Insurance company fees and penalties will be the largest contributor. As these costs will be passed on to the private insurance premium costs we will want to watch this closely. Employer penalties and individual penalties will also need to increase if operating revenue is needed.
Insurance offerings through the exchanges:
We will find out in the next few months what insurance packages will be offered through the exchanges and the cost of the premiums. If the HHS punting on the SHOP offerings for small business is any indicator, options may be limited. The insurance companies are scrambling and have teams of actuarial geniuses trying to figure out how to create affordable insurance package offerings after mixing risk pools and expanding coverage. There must be appealing offerings through the exchanges to facilitate enrollment.
Enrollment numbers through the exchanges:
Insurance exchanges need one thing to sustain them and provide the ability to offer affordable options (Numbers). Large Corporation’s access better health insurance options for their employees because the insurance companies are more likely to collect more in premiums than pay out in claims. More people mean reduced risk as the healthy offset the health risks.
The exchanges need big numbers to sustain. It will be easy to get unhealthy and poor people to enroll in the insurance exchanges. Without quality affordable health insurance packages, It will prove to be more difficult to enroll the other side to offset the unhealthy and subsidies.
Impact of individual penalties on enrollment through the exchanges:
The individual mandate and penalties were created to push everyone to the exchanges. Penalties are expected to push healthy young people to enroll for health insurance through the exchanges. If this doesn’t happen, it will create a big problem for the actuarial teams. With a 2014 penalty of $95.00 for the individual and employers reducing hours to avoid employer penalties, this could be a real challenge for the health benefit exchanges. If the young and healthy opt to pay the penalty, this will be a problem as cost skyrocket for the insurance carriers.
Increased health insurance premiums:
Insurance companies do not discriminate between private policies and those offered through the exchange. If the exchanges don’t accomplish what they are supposed to, we will all pay for it through our premiums. Simply mixing risk pools and expanding benefits have initial estimates of 20%-100% increases in premiums headed our way. We will pay more in 2014 for our health insurance.
Out of pocket medical costs:
Watch your benefit packages closely. The insurance industry and the administration are about to play the shell game with us. They will likely try to mask absorb skyrocketing premium increases by adjusting coverage levels to private and exchange offerings. We’ll likely see it from both ends. Research your options when they become available to minimize the impact on the cost of your healthcare.
Affordable Care Act employer penalties:
Business is creating their strategies to minimize their exposure to employer penalties or their shared responsibility to provide health insurance or face penalties. This is already impacting the employment landscape and big changes will happen to the economy as the penalties kick in next year. Watch the cost of goods and services, unemployment rates, and the number of hours offered by employers as employers begin incurring additional costs.
Sustainability of funding for the Affordable Care Act:
In classic government fashion, virtually everything that has been implemented is costing double the original estimates. The latest to raise the price tag are the subsidies offered through the exchanges. This will be a critical component of the sustainability of the exchanges. This is worthy of watching as it will be a big funding drain if the subsidies cost increase dramatically.
The Affordable Care Act is like a bad movie with a monster that eats itself and everyone around it. Stay informed as the Administration implements this “what if” healthcare law that plays with the real lives of hard working Americans. The next 6 months are going to be very interesting and costly.