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One of the best headlines of the health reform saga came from the USA TODAY editorial page in July 2013: “GOP poisons ObamaCare, then claims it’s sick.” The Gannett Company’s ubiquitous Main Street news vehicle continued, “Having lost in Congress and in the court, they’re now using the most cynical of tactics: trying to make the new law fail.” The immediate inspiration for the statement was a dust-up between Sen. Mitch McConnell (R-KY) and Sen. John Cornyn (R-TX) and the National Football League over reports that the league might help in publicizing insurance exchanges. The editorial cited repeated Republican references to the illusory “death panels” allegedly looming in the law, and the party’s Congressional opposition to expenditures supporting administration of the law’s provisions. The policy goal: ignorance; the resulting outcome: human misery, continued the USA TODAY opinion page.
The debate was still months short of ObamaCare’s self-inflicted wounds from a failed launch of the healthcare.gov website. But the opposition politics of 2013 continued the message of the three preceding years: This creature must die.
Now, still alive in May 2014, the Affordable Care Act (ACA), as ObamaCare is more officially known, has experienced the infusion of eight million enrollees, and while still nervous every time Dr. McConnell, nurse Cruz, or aide Ryan enter the recovery room, the patient is off the critical list, moving toward a more stable condition.
Two months ago we reported that total enrollment through the health insurance exchanges was trending above five million, a welcome recovery from the ACA’s near death experience in October. In the recesses of the mind was a comment from a colleague who had led the implementation of the Massachusetts RomneyCare “connector” in 2006 that enrollment would surge as final deadlines approached. The simple observation was that people tended to put new choices off for a while.
Jon Kingsdale, Ph.D., who deserves much credit for Massachusetts’ success, offered an even more precise insight, that health insurance is essentially a “grudge purchase.” Look at it from the consumer perspective, he says. In addition to administrative hassles, the consumer must reach into his pocket, even with subsidies, to spend his limited resources on a purchase which only offers a contingent future benefit and even then only in the case that the consumer faces illness, injury, even death. Add to that the complexity of choices, the “rules” of how to seek health care, and the certainty of additional out-of-pocket costs, and health insurance isn’t a consumer favorite even under the best of circumstances. No surprise that people would wait until the last minute to make the purchase, which is exactly what they did.
On April 17, with the benefit of a two-week extension on the original end-of-March deadline, President Obama, announced that more than eight million Americans had signed up for coverage through the federal or state marketplaces. Writing in early March, we saw totals heading toward five million, which more immediate data could have estimated as high as six million. On April 1, the real number was over seven million. Incredibly then, 900,000 more people enrolled and chose a health plan in the two weeks before the President’s mid-April announcement. Total enrollment after March 1 almost matched the numbers achieved in the first four months of the process. An extraordinary, but predictable, late surge in enrollment had occurred, but in numbers which even brought smiles to the White House.
While younger enrollees — those in the 18-34 age group — totaled twenty-eight per cent of overall enrollment, they accounted for one–third of the final six weeks’ tally. A rule of thumb, which we have discussed in earlier commentaries, was that exceeding thirty percent of enrollees in this younger category serves as a proxy for estimating the health status of the applicant pool, a key variable in limiting future premium growth. The next open-enrollment period, from November 2014 through January 2015, will again focus on younger enrollees, encouraged by the late-decision trend in the first round. Using the age variable, the initial applicant pool doesn’t come close to demographic collapse, but future enrollment cycles will focus both on size and balance of those who join.
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The next data reports will include the share of applicants who not only chose an insurance plan, but also proceeded to pay a premium. Dead-end critics of the law will seize on these “failure to pay” numbers, probably in the twenty to twenty-five percent range when finally reported, as yet another sign of systemic failure. An alternative view is that total enrollment above eight million leaves room for some slippage. ObamaCare might not be running wind sprints in the hallways, yet, but it is out of the ICU.
Moving beyond metaphor, the ACA’s insurance expansion will best be evaluated after at least three annual enrollment cycles. In addition, just as with individual state resistance to the law’s Medicaid eligibility expansion, there was state-by-state variation in the success of private enrollment. California and New York reported predictable success under aggressively supportive state leadership. That much was not a surprise. Yet, when new enrollment figures came in for politically hostile states such as Florida (one million new enrollees), or Texas (three-quarters of a million) a number of both Republican and Democratic heads turned in either shock or glee. In other states where success had been predicted (Oregon and Maryland, for example), the numbers were a disappointment. Such states are moving to alternative structures for the next round and should be able to learn from their earlier missteps.
On the federal level, there have been some strategic changes, as well. While ceding her leadership of the Department of Health and Human Services to Office of Management and Budget Director Sylvia Mathews Burwell under the glow, or cover, of the President’s victory lap, Secretary Kathleen Sibelius was able to announce almost five million people added to the rolls of Medicaid and the existing Child Health Insurance Program, the retention of three million young adults under age twenty-six on their parents’ policies, and up to “an additional five million people who have purchased coverage outside of the marketplace in Affordable Care Act compliant plans,” all in addition to the eight million total marketplace enrollment.
While information was not immediately available as to how many of those individuals were previously uninsured, a Gallup Survey in early April reported a remarkable decline in the rate of uninsured Americans overall. In the second half of March, with the ACA enrollment window still open as noted above, 14.7% of adult Americans were without coverage down from 18% in the last quarter of 2013. The Gallup report implies a net gain of eight million insured persons and aligns with other surveys. Compared to the early Obama years which inherited both an economic downturn and growing numbers of uninsured, indeed in comparison to decades of overall growth in the uninsured number, the turnaround reported by Gallup is startling.
The patient is taking in nourishment.
We’ve reported earlier that while coverage is the headline of the ACA, the potential for continuing long-term health-care cost growth was the underlying economic security threat which led the Obama White House, during the chaotic winter of 2008-09, to press ahead with the Democratic Party’s commitment to insurance expansion. Several analyses had pointed to the urgent need to “bend the cost curve,” as the predicted intersection between future health-care cost growth and the aging baby boom cohort in the population threatened a structural collapse of the nation’s economy. The administration reasoned that any effort to focus, over time, on health care costs required the participation of health care providers, insurers, employers and labor. The implementation would be staggeringly complex, but the underlying equation was simple: Reductions in cost growth to the health care industry would be offset by adding new paying customers to the marketplace. Cuts in future payment rates, especially in the Medicare program, new taxes targeted at segments of the health care industry, future limits on the deductibility of costly health plans, and myriad pilot projects to restructure care toward more efficient service delivery were all part of a broad consensus to move forward.
Greater consumer cost-sharing in new health plans, achieved through expanding the insurance pool, would complement the cost reductions in service delivery. From its Republican philosophical roots of the 1990s, ObamaCare was designed to bring both social equity through expanding the number of Americans with health care insurance, but equally important was the need to bring long-term economic discipline to the health care sector of the economy. Solving that problem was, and remains, an essential condition for future economic stability.
We’ve discussed at length the emergence of the movement of resisters who have seized control of conservatism, stating positions simply outside the bounds of earlier discourse. In the short term, surely through the Obama presidency, the intellectual formulation of the ACA’s framers will remain intact. When, in November 2013, the Council of Economic Advisors reported that health spending between 2010 and 2013 had dropped to an annual rate of 1.3%, there was evidence for affirmation of the ACA vision. This was the lowest rate of cost growth in forty years. The Congressional Budget Office reduced its 2020 spending estimates for Medicare and Medicaid by roughly 15%. Insurance coverage was heading up. Cost growth was heading down. Decades-long trend lines had altered direction.
Early 2014, however, brings caution to future cost estimates. Economists from both left and right attributed the historic lull in health care cost growth, in part, to a reduction in demand linked to the Great Recession. Between 2009 and 2012, we bought less of everything as the threat or indeed the reality of personal economic insecurity swept across the population. People who lost jobs often lost coverage. Fees charged by health providers reacted to soft demand. Unique conditions in the pharmaceutical industry, a dearth in new expensive medications, the strong use of generics, and especially the expiration of time-limited patent protections, kept costs down. While new “accountable care” arrangements were only in formative stages, a previously observed “anticipatory” effect put caution on industry spending. Even those with existing employer insurance plans found their out of pocket costs higher, reducing their use of non-emergency services.
As we move into the summer of 2014, new numbers have started to emerge. One analytical study found that prices for care and the rate of service-use grew steadily during 2013, perhaps an expected response to the early perception of economic recovery — I’ve finally got a steady paycheck, I guess it’s time to get that pain in my back checked out. Government statistics confirmed the trend. Health care spending grew 1.3% during the first quarter of 2013, but at 5.6% during the final quarter of the year. Higher spending continued into the first quarter of 2014, somewhat confounded by a flat, perhaps weather-induced economic freeze in January and February, but more robust economic growth in March and April.
In time, certainly, reliable numbers will emerge, but — as is now the generalized condition of the public debate — cable news shouting will headline the return of cost growth as a yet another critical failure of the patient. Still, before rushing ObamaCare back into the intensive care unit, a bit of forbearance may be what the doctor actually ordered as we wisely consider three trends. First, a recovery in the economy will certainly increase service use. That is not, in and of itself, a bad thing. Second, the historic expansion of coverage will bring a short-term surge in total costs. But, third, the long game may still give us spending numbers, later in the decade, significantly below pre-ACA estimates. Remember, the previously uninsured in America did receive treatment, only they tended to access the system through the most costly portals and often with complications of their condition — then they left the bill to be picked up by insurance premium increases for those who dutifully purchased a plan. There is no free lunch, but costs can be contained more rationally when all factors within a system are taken into account.
Jason Furman, Chairman of the Council of Economic Advisors in the White House, takes that longer view. Douglas Holtz-Eakin, former Congressional Budget Office leader and senior economic advisor to Republican campaigns in 2008 and 2012, framed the news as no surprise, while maintaining his criticism that the ACA gave us too much insurance expansion and too little in the way of delivery-system changes. Regardless of shading, there is no denying that the recent enrollment numbers affirm that ObamaCare is on its way to bringing the United States closer to the insurance-coverage norm of other industrial nations. It offers major steps toward altering long-term cost growth, but with the outcome dependent on an agile, functioning government, much is still in the air. Maybe the most important question for the nation is if, in a post-Obama world, some sense of bipartisan maturity can be regained.
On that prospect, few policy observers would hazard a prognosis. In the short term, unless a strong and unforeseen political sea change hits the United States before November, Republicans will continue to control the House in 2014 and, it appears, John Boehner’s leadership role will remain intact. Voters in a small number of states will determine whether Harry Reid (D-NV) or the aforementioned Senator McConnell will lead the majority in the Congress’ upper house. In Kentucky, a favorable roll-out of the ACA and a Democratic governor, coupled with Tea Party opposition to McConnell in the Republican primary, could place his seat in doubt. Time will tell, but McConnell has gained traction and is a legendarily strong campaigner. Certainly, election night reports will focus on the fortunes of at least five Democratic Senators, Mark Pryor (D-AR), Mark Begich (D-AK), Kay Hagan (D-NC), John Walsh (D-MT), and Mary Landrieu (D-LA), all in states where denouncing the ACA could be used to motivate conservative voters. In addition, thirty-six governors will be elected in 2014, many in states where the potential for Medicaid expansion still remains undecided. May is simply too early for real electoral prognostication.
Control of the Congress will be important, of course, for the final two Obama years. Immunized by the veto pen from a death by repeal, our symbolic ObamaCare patient may still need to fight off the flare-ups of chronic illness should Republican majorities come to control of both legislative houses and introduce new wounds — or more likely reduce the oxygen flow of financial support for implementation and policy furtherance. Alternatively, a continued balance in partisan control of Congress could open the door to leaders of both parties adjusting the medications necessary to bring the patient to health. Calls for divine intercession are not unknown around hospital beds, after all; sometimes miracles do happen.
As our readers know, we follow the independent health tracking poll produced monthly by the Henry J. Kaiser Family Foundation. The April poll affirmed that strong majorities know the law had start-up problems, but it also reported that six in ten Americans want the Congress to work to improve the law. While age is very significant (younger people in favor and older opposed), partisan identification is still the most powerful predictor of opinion. Little has changed from reports of recent months. Yet, one observation caught our eye. In April, forty-six percent of respondents opposed the law and thirty-eight percent were favorable. This continues the eight percentage point “new normal’ difference which emerged last November after the website debacle, a doubling of the four point difference which had endured from the earliest days of the law. The poll, however, also reported fairly close attention to the new enrollment numbers announced by the President mid-month.
For some people, then, the enrollment news simply didn’t offset a belief that the law was falling short. Time may alter that perception. More troubling, though, is the possibility that millions of newly insured people simply don’t matter to a large segment of the electorate. That is troubling in a profound way, and indicates, potentially, a continuing open choice for our society.
As for the ACA, there will be tactical skirmishes in the 2014 election cycle, but how the law and the multitude of other factors at work in the United States and around the world will frame the next presidential election in 2016, will likely determine whether our “patient” comes home ready to help support the future of the family or discovers that, despite all the effort, not everyone will make it in the tough times ahead.
(Click here to buy the latest issue of La Cuadra Magazine, including the most recent commentary by Jim Tallon, for your eBook reader, iPad, or other hand-held device.)