KEITH CHROSTOWSKI

Obamacare’s uncertain prognosis

Updated: 2013-04-17T04:03:26Z

By KEITH CHROSTOWSKI

The Kansas City Star

After the difficult conception of the Affordable Care Act, it’s not surprising it’s suffering a painful birth.

Problems and potential problems are bedeviling administration officials trying to get the act up and running. Worse still, the more-worrisome wounds are or will be self-inflicted:

• The administration is delaying one feature of the act aimed at helping small businesses and their employees shop for insurance on an exchange.

The Small Business Health Options Program, or SHOP, was supposed to offer small business employees multiple plans starting in 2014. But for the first year it will offer only one option, selected by the employer.

• Fears are rising that the exchanges the feds are setting up for the states won’t be ready by the Oct. 1 deadline.

A survey at the 2013 Healthcare Mandate Summit found that 71 percent of the 125 senior health care officials attending thought the deadline would be missed.

The administration didn’t even know until mid-February how many states it would have to set up exchanges for — 33.

And now it has to put together a system that works with multiple insurers, the IRS, the Health and Human Services Department and other agencies, and the 33 state government systems. All in a secure network that safeguards privacy.

Megan McArdle, the economics columnist at The Daily Beast, thinks the government’s contracting procedures, designed to avoid corruption, make this an impossible task.

If the exchanges aren’t ready, the individual mandate might have to be delayed past its Jan. 1 start date, which might require congressional action.

• Applying for a subsidy and benefits is shaping up as a complicated maze. An article by The Associated Press last month reported that “the idea that getting health insurance could be as easy as shopping online at Amazon or Travelocity is starting to look like wishful thinking.”

The Health and Human Services description of the online application for a subsidy to buy insurance runs 60 pages. The draft application for a three-person family is 15 pages. Filling out the online version takes 21 steps.

And then you still have to pick an insurance plan.

Ron Pollack, executive director of Families USA, which supports the health care law, says the benefits form “will be difficult for many people to complete.”

He wants the government to simplify it and wants thousands of counselors hired to help people fill out forms.

• Pollack is also concerned about what he calls “the family glitch problem.”

In a decision last month, the IRS drastically limited tax credits for people with modest incomes who cannot afford family coverage from their employers.

The IRS said the credits, averaging about $4,000 apiece, should be based not on the overall costs of family coverage, but strictly on individual costs.

A policy is “affordable” so long as the worker’s part of the premium does not exceed 9.5 percent of household income. By not letting workers claim the total cost of family coverage in that calculation, the tax credit will be available to fewer workers. They will have to use more of their incomes to cover dependents.

• The 2.3 percent tax increase on medical devices such as artificial joints, pacemakers and wheelchairs appears to be in danger. The tax was expected to raise $29 billion over 10 years to help expand coverage to the poor. But the Senate recently voted 79 to 20 to repeal it, with the vocal support of 34 Democrats including Al Franken and Elizabeth Warren from states that are home to medical device makers.

It was a non-binding vote to indicate the sense of the Senate on a budget resolution, but still....

• And then there’s the administration’s two-step over Medicare Advantage, insurance offered by private companies under contracts with Medicare. Democrats would rather see everyone inside a government program. So under the Affordable Care Act, Medicare Advantage payments to insurers were to be held down.

But Health and Human Services earlier this year proposed an actual cut of 2.2 percent, leading to benefit reductions or premium increases for seniors. Now the administration has backtracked. Under pressure from insurers and members of Congress including Democrats, it agreed to a 3.3 percent increase.

As we approach full implementation, these issues are intensifying the uncertainty over the act and its impact. Cost projections are still all over the map.

And the Federal Reserve’s March Beige Book report noted that employers in several of its reporting districts “cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.”

The difficulty of enacting huge change is certainly understandable. But the administration and Kansas’ own Kathleen Sebelius as HHS secretary must do all they can to cut down on confusion and complexity. Educating consumers and business about the act will be crucial.

The worst enemy of the law won’t be those who want to kill it. It will be poor implementation by government.

To reach business editor Keith Chrostowski, call 816-234-4466 or send email to chrostowski@kcstar.com. Follow him at Twitter.com/keithc3.

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