This was the year that millions of Americans learned that health insurance is complicated. The landscape they discovered is ugly.
Paying a premium doesn't mean your costs are over. Lower premiums mean higher deductibles, higher fees at the doctor's office, higher prescription costs. You may have to pay more to see a certain doctor or go to a certain hospital.
After New Year's Day 2014, the discoveries will keep coming, when many of the newly insured use their policies for the first time. They may wonder, Why am I getting a bill? And, Why is it still so high?
And many may blame this curious, largely mythical beast called Obamacare, even though these features have been baked into the American healthcare system for years, even decades.
What they will be discovering is that the American way of health coverage is close to the worst and costliest in the developed world. The Affordable Care Act puts a dent in both those features, but doesn't eliminate them. During 2014, the country will finally start coming to grips with what to do about the features of American healthcare that haven't been measurably improved by the new law. And at the same time, the process of fixing the act's existing flaws will begin — or rather, continue.
"It's important that people realize this is a multi-year process," says Timothy S. Jost, a healthcare expert at Washington and Lee University. "I feel we're bottoming out this year in terms of the disruption of change." The hard work, he says, still lies ahead.
It's crucial that Americans don't allow the disruptions to obscure the positive changes already wrought by the Affordable Care Act, including access to insurance for as many as 20 million people previously locked out of the system by high costs and medical conditions.
Last month, Harold Pollack of the University of Chicago tried to tote up the number of people with a stake in the success of healthcare reform, using statistics from the U.S. Centers for Disease Control and Prevention. He counted 1.8 million uninsureds who had received a cancer diagnosis, 2.8 million suffering from diabetes, another million or more diagnoses with stroke, emphysema, heart disease or another serious chronic condition.
Throw in an additional 4.6 million with asthma or other pulmonary condition or liver and thyroid disease, and you've got 10.3 million uninsured Americans with "significant physical health issues." Prior to Obamacare, a huge percentage of these people, perhaps almost all of them, would have been unable to find affordable coverage at all. Now none of them can be excluded or socked with inflated premiums.
That's a population that easily swamps the number of those who are made worse off by the act. That latter figure, moreover, has been systematically overstated, due in part to confusion by customers and lazy news reporting.
There's no question that some people may face higher premiums for equal or lesser benefits than they have enjoyed in the past. That's because providing subsidies for the poorest and sickest Americans requires some policyholders — typically those who are healthier and more affluent — to pay more.
But even those who are griping about higher bills may be better off than they think. Those pre-ACA policies may have been cheap, but the coverage provided by many of them was often so threadbare as to be practically worthless, leaving policyholders one serious illness away from bankruptcy. And many may not realize that they are eligible for government subsidies or Medicaid.
Earlier this month, the Obama administration estimated that the wave of cancellations of pre-ACA plans that caused so much panic in Congress a month or two ago had actually left 500,000 people without coverage. That's a lot in absolute terms, but it's a bit more than 1.5% of the entire estimated market for individual insurance exchange plans, and a far cry from the tens of millions who were predicted not so very long ago to be standing at the edge of a coverage cliff. Under a government initiative announced earlier this month, those who still can't find affordable plans will be offered a "hardship" out, allowing them temporarily to purchase cut-rate plans.
The complexities of health insurance weren't exactly a secret to most Americans — more than 80% get their coverage from employers, and many of them face choices between high-premium (but low cost-sharing) and low-premium (but high cost-sharing) plans at open-enrollment periods every year. They have understood the cost trade-off, at least in the abstract, and know that the premium won't be the last check you write to your doctor or hospital, even with a good health plan.
But the sign-up process for individual and family policies has placed those choices in front of millions of Americans with unprecedented intensity and urgency. The wretched performance of the federal website, HealthCare.gov, and some state websites, heightened the confusion and anxiety of the process by leaving so many people without basic information or expert counsel just at the point they were needed most.
A trouble- and error-filled rollout of a significant new program is not unprecedented — and the ACA has so many moving parts, necessitating a high level of cooperation among the insurance industry and the federal and state governments, that problems were inevitable.
The same thing happened with the 2005 rollout of Medicare's Part D prescription drug program, even though it was far simpler. As the Robert Wood Johnson Foundation reported in June, the launch of Part D also required intensive education of its target market and imposed complicated decisions on whether to enroll and with which plan. A majority of the public was skeptical before the launch, and once enrollees started to use their plans, more problems surfaced — pharmacies didn't recognize their enrollments, prescribed drugs weren't covered by certain plans, etc., etc.
But as the foundation observed, "when things went awry, federal and state officials were often able to identify problems and work with stakeholders to develop policy and operational solutions, so that consumers could obtain the promised benefits." Eight years later, "many of Part D's initial difficulties have been forgotten, and the public generally views the program as a success."
That cooperative spirit is lacking this time around, however. In 25 states, the expansion of Medicaid — a crucial piece of the ACA program to widen access to healthcare for low-income people — has been blocked by Republican governors or legislatures. That has left roughly 5 million of their citizens trapped in the "coverage gap": they don't qualify for Medicaid under their state's existing rules, they don't qualify for government subsidies aimed by the ACA at higher-income workers and they can't afford even the cheapest plans offered by insurance exchanges.
Meanwhile, the hostility to the ACA among House Republicans has made it all but impossible to arrange legislative action to fix what does need fixing in the law. Some issues, including the difficulties faced by individuals and families whose policies have been canceled, are being addressed by executive action.
Others involve drafting errors in the original bill or unanticipated problems that require legislative surgery. One is the "family glitch." Because of imprecise draftsmanship, the ACA requires employers over a certain size to provide "affordable" care to their employees, but not to the workers' families. In practice, the affordability test means a health plan costing no more than 9.5% of the household's annual income or covering less than 60% of average medical expenses.
But what if an employer offers affordable individual coverage to the worker and "unaffordable" coverage for his or her family? Then the entire family is ineligible for any government subsidies. The glitch could put good health coverage out of reach for some families. That's an obvious error that could be easily remedied on Capitol Hill, if the House GOP would get out of the way.
Then there are the flaws in the U.S. healthcare system that the ACA doesn't adequately address. Among the most important is administrative costs imposed on hospitals and medical practices. These are artifacts of our reliance on commercial health insurers, all with different claims and payment systems and coverage rules. According to an estimate from the National Academy of Sciences, the average industry employs fewer than 50 administrative workers per $1 billion in revenue. The healthcare field employs 810 workers per $1 billion in revenue.
The healthcare law may have shaved away some of these costs by standardizing benefits across all individual plans. But it also cemented commercial insurers into the center of the healthcare system, with few incentives, much less mandates, to reduce the administrative burden. That's still very much a work in progress.
Some taxes and fees enacted to help pay for the ACA's costs might need to be reconsidered. These include a steep tax on high-benefit and high-cost "Cadillac plans," which starts in 2018 and has produced protests from employers and unions alike. But the tax is designed to reduce the general taxpayer subsidy to employer health plans, which are tax-deductible, and to raise $15 billion to $20 billion a year. Any change will have to provide a different way of reaching those goals.
Many healthcare experts hope that the new year will bring a better understanding by the public that there's no such thing as Obamacare. There's a raft of policies, provisions and programs that will work together and separately to bring more coverage at lower cost to tens of millions of beneficiaries.
Those include the elimination of lifetime or annual caps on health benefits; requirements that children be permitted to remain on their parents' health plans until the age of 26; the reauthorization of the Children's Health Insurance Program, or CHIP, under Medicaid; cost-saving provisions for Medicare; and, of course, the outlawing of exclusions for preexisting conditions. Repeal Obamacare, as some conservatives say they want to do, and you'll have to explain why all these improvements in the system have been knocked back to Square One. Repeal may be an effective ideological rallying cry, but it's no longer practical, if it ever was.
Then there's the bottom-line rationale for the Affordable Care Act, from its inception. As Aaron Carroll of Indiana University pointed out in a recent blog post, "reducing the number of uninsured is a good thing, not a bad thing." And that hasn't changed.
Michael Hiltzik's column appears Sundays and Wednesdays. Read his new blog, the Economy Hub, at latimes.com/business/hiltzik, reach him at firstname.lastname@example.org, check out facebook.com/hiltzik and follow @hiltzikm on Twitter.
iltzik and follow @hiltzikm on Twitter.Copyright © 2015, The Baltimore Sun