Some call it an "exchange." The federal government prefers the term "marketplace."
But whatever you call it, an online site for people to shop for health insurance under the Affordable Care Act is scheduled to be up and running Oct. 1. Like a bargain travel website, the exchange will offer shoppers a choice of plans and levels of coverage from different insurance carriers. For low- to middle-income earners, subsidies will be available to make the premium affordable.
Put simply, the exchange will be a way for working- and middle-class people to buy coverage if they don't already get it from an employer or Medicaid. It will be mandatory for the 1.3 million currently uninsured Pennsylvanians. Those who don't enroll will be fined — $95 the first year and nearly $700 in 2016.
With little more than two months before the exchanges open, technical and logistical challenges abound, leaving some to wonder if they will be ready to go by the deadline.
While insurance shoppers in New York, Massachusetts and some other states are already mulling over premiums, Pennsylvanians will remain in the dark about the costs until the program is unveiled in October. The state is among 27 that decided not to create their own systems but to rely on the federal government to set them up.
Joanne Grossi, the regional Health and Human Services Department director, said consumers need not panic. They'll have 10 weeks, until Dec. 15, to choose a plan if they want coverage to start on Jan. 1, 2014. They'll have six months, until March 31, 2014, before enrollment closes. And enrollment will reopen on Oct. 15, 2014.
For insurance and government officials, the pressure is on. For the exchange to work, a number of things have to happen in the next 10 weeks:
•A critical mass of insurance companies need to offer coverage to make the marketplace competitive. The Obama administration isn't saying how many companies are enough, just that the exchange promotes more choices through better competition.
•A host of government and business computer systems have to be able to talk to each other. The government is still testing a "hub" that is supposed to direct a consumer's application for insurance to a number of agencies including the Internal Revenue Service, the Department of Homeland Security, the Social Security Administration and others to verify the applicant's status and information.
• A mix of government leaders, insurers, agency workers and volunteers need to educate as many of the 26 million Americans — including about 900,000 Pennsylvanians — who are required to buy insurance and qualify for help. Those seeking insurance will need to know about options and penalties for not signing up.
Behind the scenes, a political power play has Obamacare opponents pledging to continue efforts to derail the law. Last week two votes were taken in the House of Representatives to suspend the requirement to buy insurance. The votes are essentially symbolic, since House members know the Democrat-controlled Senate will not take them up.
The federal government is striving to make the process seamless. It has set up a 24-hour "health insurance marketplace" help line. It also is hiring navigators who will provide information on choices and encouraging human service agencies to hold programs in libraries, community centers, hospitals and other places where consumers can get one-on-one help to pick a plan.
MIT economics professor Jon Gruber advised the government on the writing of the Affordable Care Act as well as its forerunner, the Massachusetts health insurance law signed by then-Gov. Mitt Romney. He predicts most people using the system will be satisfied, but that problems are inevitable.
Glitches are most likely to occur in the subsidy program, he said, which is what happened when the government implemented Medicare Part D, the program covering seniors' prescription drugs, nearly 10 years ago. When that program rolled out, seniors experienced widespread trouble with computer glitches and improper denial of benefits. With that experience in mind, Gruber said he expects it will take a year to work out the kinks in the exchanges.
If consumers have an unpleasant buying experience because they don't understand the process or encounter glitches, they may back out and not try again, said Jennifer Tolbert, director of state health reform at Kaiser Family Foundation, a nonprofit focused on health care. That would be problematic since the more consumers in the marketplace, the more successful it will be.
A little help
Depending on their income level, some shoppers will qualify for benefits to subsidize the cost of insurance. Obamacare provides two types of subsidies: a tax credit to lower the cost of the monthly premium payment, and a cost-sharing program to help pay for out-of-pocket charges such as deductibles.
To be eligible for subsidized coverage, a consumer's income has to be between 100 and 400 percent of the federal poverty level, $11,490 to $45,960 for a single person in 2013. The closer to 100 percent of the poverty level, the greater the subsidy.
The subsidies also will cause confusion because of another part of the health care law involving Medicaid, the state-federal health insurance program for the poor, the disabled and children.
The Affordable Care Act was written anticipating that each state would expand its Medicaid program, with the help of federal money, for individuals and families with incomes up to 138 percent of the poverty level. But the U.S. Supreme Court ruled last year that states could not be required to expand Medicaid.
Pennsylvania so far has declined to expand Medicaid. Gov. Tom Corbett has said he's opposed to expanding Medicaid unless the federal government gives the state more flexibility to operate the program. The state Senate voted to expand the program but House Republicans stripped Medicaid language from the budget that passed last month. The issue may resurface when the General Assembly reconvenes in September.
Expansion would cover an additional 465,000 Pennsylvanians, according to a report released last week by the Kaiser Family Foundation.
Without it, there will be two classes of poor people: The working poor, who will be able to buy insurance because they'll qualify for subsidies; and even poorer people, who will be left uncovered because they won't qualify.
The political fight over Obamacare isn't helping consumers, said Sabrina Corlette, a professor at Georgetown University Health Policy Institute and a proponent of the law.
Opponents to Obamacare have caused some of the confusion by spreading "misinformation," she said. And the Obama administration has also muddied the waters.
"I think there was a long lag time in the rule-making and I do think that every time they change a requirement … it does sow more confusion."
For example, one initiative that was set to start in January has already been postponed for a year. The government said earlier this month that employers now have until 2015 to offer health care benefits to employees who work at least 30 hours a week or be penalized.
In addition, the administration made a late change to its plan for a second type of exchange specifically for small businesses. Under a new rule issued last month, the administration delayed by a year a provision requiring small businesses to offer employees a choice of plans selected through the exchange. Small businesses only have to offer a single plan next year.
Jennifer Stefano, an Obamacare opponent who runs the Pennsylvania chapter of Americans for Prosperity, said the problem has been too little guidance from the Obama administration about how the exchanges will work.
"Just as you saw them panic in the face of the 2014 election by delaying the employer mandate, I believe you'll see them do it for individuals," Stefano said. "None of this is going to work, it's all theory. And everything we said was going to fail about this is failing."
Since the law's inception, the mixed narratives have made it difficult for a consumer to know what to believe. Is the law an epic failure, or will it provide an opening to health care that tens of millions of Americans have been unable to afford?.
The closest model to the federal law is in Massachusetts, where Romney worked with a Democratic Legislature to create the Health Connector in 2006. Like Obamacare, the connector features an individual mandate and an exchange. Under it, more than 98 percent of Massachusetts residents have health insurance, 5.5 percent more than before the law.
"I think they figured out a successful formula up there," Corlette said, "but it remains to be seen if it's replicable."
"Romneycare" faced challenges similar to what Obamacare faces — minus the strenuous political opposition, she said.
"It was a full-court press with pretty significant financial and human resources to get the word out," she said. "I am hoping that just as Massachusetts did, the administration is nimble, practical, pragmatic and flexible, because problems are inevitable."
Like Gruber, she noted that when Medicare Part D debuted, it was plagued by confusion and technical challenges. But today, Part D is an established element of seniors' health care and serves 35 million people, more than those who would be served by Obamacare's exchanges, Corlette said.
Young, healthy need apply
Robert Zirkelbach, spokesman for the lobbying group America's Health Insurance Plans said the law hinges on the affordability of the plans, which is determined in part by how many people enroll. Young, healthy people need to participate to offset the costs of health services.
Those who have purchased minimal health insurance to cover catastrophic care only will see their premiums go up because Obamacare requires that plans cover 10 basic health services: emergency care, hospitalization, maternity and newborn care, mental health services, prescription drugs, pediatric care, laboratory work, rehabilitative care and devices, preventive, wellness and chronic illness care and ambulatory patient services.
Shoppers will have a choice of plans — bronze, silver, gold and platinum. The cheapest plan, bronze level, will cover 60 percent of health care costs. The plans will become more expensive as shoppers buy more comprehensive coverage up to platinum, which will cover 90 percent of costs.
"Right now people have a lot of flexibility, you have a lot of young healthier people, they've chosen a low-premium policy to protect themselves [and] there will be a much bigger impact on their premiums," Zirkelbach said.
As developments last week showed, the impact will vary by state and market. On Wednesday, New York Gov. Andrew Cuomo crowed that premiums there will fall on average by 50 percent next year, thanks to competition on the exchange. The same day, The Boston Globe reported that a study sponsored by the insurance industry predicted that Obamacare would add 3.7 percent to premiums for small businesses and individuals.
But the cost of premiums is only one part of an equation that will include the subsidy, the number of buyers and insurers and the level of coverage, so declaring success or failure at this point is like judging a baseball game on one pitch.
The government has met its deadlines so far, the Government Accountability Office said in a report last week, but much work remains before Oct.1, along with the potential for a bumpy start.
"Whether [the federal government's] contingency planning will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined," it concluded.
Estimated monthly premium for a 25-year-old, single, non-smoker making $25,000 a year: $289
Estimated subsidy: $145
Individual monthly cost: $144.
Estimated monthly premium for 40-year-old non-smoking couple with a 12-year-old child and household income of $50,000: $1,285
Estimated subsidy: $942
Family monthly cost: $343
Estimated monthly premium for a 60-year-old non-smoking couple with a household income of $40,000: $1,564
Estimated subsidy: $1,288
Family monthly cost: $276
*Maximum contributions to premiums will be based on modified adjusted gross income. Sample is based on national estimates from the Congressional Budget Office for silver, or mid-level, plans
Sources: Kaiser Family Foundation and University of California at Berkeley Labor Center