As Pear reports elsewhere, these exchanges may not even be up and running by the estimated January 1, 2014 implementation date. At this point, only 13 states have signed up to establish the exchanges. Other states, many with Republican governors or legislatures, have signaled that they don’t want to enter into this business at all. The final count of federal exchanges won’t be known until after the November presidential election, adding further uncertainty to the issue, which is likely to be mired in litigation for years. No one can even begin to speculate on how this program will run in the event of a Romney/Ryan victory in November.
This complex set of circumstances puts the unenviable task of setting up these exchanges into the hands of the federal government. Without the benefit of any road map, legions of federal officials will be required to set rules for widely divergent market settings, all in the face of underground resistance from many state officials who would rather see the ACA repealed. To cloud matters even further, through a glitch in the ACA’s statutory language, it appears that individual enrollees in the federal plan are not eligible for the federal subsidy, which can only complicate the administration of the law.
The problem with state-created exchanges
A similar pall of confusion is cast over the state-created exchanges, albeit for different reasons. Most state insurance offices are smallish operations that tend to operate on an informal basis in collaboration with their own elected officials. They have no experience in running virtually all of their decisions through the Department of Health and Human Services and the other federal agencies that, by law, oversee their operations.
All state-created exchanges operate under federal oversight, which puts cooperative states in the impossible position of not being able to proceed until they receive federal guidance or approval for key steps. Yet that approval may be long in coming because federal officials, out of a commendable sense of prudence, don’t want to commit themselves to a decision for one state without knowing how it will play out with other state exchanges that have yet to address similar problems.
These logistical difficulties are especially hard to master because the ACA does not contemplate a set of garden-variety state exchanges where potential healthcare insurance providers can just show up to sell their wares. Given the ambition to provide not just coverage, but good coverage, extensive federal regulations specify the kinds of coverage that any health insurance carrier has to supply. The ACA lists a set of “essential healthcare benefits” that must be covered under its set of “metallic” plans (platinum, gold, silver, bronze) with their different levels of copay for those insured.
The act itself identifies the many areas in which this coverage must be supplied: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, chronic disease management, and pediatric services.
The drafters of the statute showed as much restraint as the proverbial kid in a candy store. The elusive reference point for such generous coverage is the “typical employer plan” within the state, which, even if identified, may not offer some of the goods and services included in the essential benefits plan. The scope of coverages under each of these headings must be determined by regulations, which are apt to contain as many surprises as the IRS’s regulation on coverage. As Paula Stannard and I have written at great length, it is not possible to assess the budgetary implications of the act until the regulations are finally resolved. But one point is clear: The ACA cannot reduce costs by simultaneously increasing the level of coverage and the number of individuals covered.