For Obamacare, four more (uncertain) years

January 21, 2013

If all goes as planned, 28 million more Americans will have health insurance by the end of President Obama's second term.

Obama signs his health-care reform bill into law. (Marvin Joseph-Washington Post)
Obama signs his health-care reform bill into law. (Marvin Joseph/The Washington Post)

It will be an unprecedented expansion of private health insurance, the likes of which the federal government has never attempted. Over President Obama's second term, the White House is likely to face significant challenges in implementing the Affordable Care Act. Overhauling the health-care system, after all, isn't an easy task.

For most of Obama's first term, universal coverage was held in limbo. It survived a heated congressional debate and a Supreme Court challenge. Obama's reelection secured the Affordable Care Act's future, and kicked implementation into full gear. But that poses its own challenges.

The health-care law’s requirement to buy health coverage — and the insurance subsidies for millions of Americans — roll out Jan. 1, 2014. The list of what needs to happen between now and then is massive.

The federal government will need to set up as many as 25 health insurance exchanges in states that have not decided to take on the task themselves.

These are systems that industry experts say usually take about two to three years to build. They have to figure out who is eligible for which federal programs, ideally in real time. The Obama administration has nine months left, as the exchanges launch for open enrollment Oct. 1,  2013.

The coverage expansion will kick off after already suffering a significant blow: The Supreme Court ruled in June that the federal government could not require states to expand Medicaid up to 133 percent of the federal poverty line. Now that it's optional, only 22 states have committed to moving forward with that provision, which was meant to expand insurance to 17 million Americans.

The Internal Revenue Service must start administering the individual mandate, which begins as a $95 fine for not carrying coverage in 2014 (it rises to $695 over the course of three years). There's already some worry that the individual mandate may not be strong enough: Healthy Americans could decide to forgo coverage and pay the fine, leaving only the sick purchasing coverage.

A similar mandate worked well in Massachusetts: The state now has a 98.1 percent insurance rate. Will it work in Oklahoma, where a quarter of the residents don't buy the required auto insurance for driving? Some experts are skeptical.

There's huge work to be done to let people know that these new benefits — and requirements — even exist. As of November, 78 percent of the uninsured Americans likely to qualify were unaware of their new options. Nonprofit groups are putting millions of dollars into campaigns to make sure Americans know about the health-care law.

"I truly believe there’s nothing more important for the president’s legacy than the number of people this law impacts," Anne Filipic, a former White House official who now runs the nonprofit Enroll America, told me in a recent interview. "It’s an enormous task. When you look at every piece of what we need to do and the fact that nearly three-quarters of the uninsured aren’t aware, that obviously means we have a lot of work to do."

That all happens in the coming year. At this time next year, the publicity blitz will be well underway, the health exchanges up and running and the insurance subsidies heading out the door. By this time next year, it will be illegal not to carry health insurance coverage.

The longer-term test for the health-care law will have less to do with extending coverage and more to do with another key health-care challenge: Costs have grown faster than the rest of the economy for decades. They wiped out the past decade's worth of wage growth and present a huge challenge for the federal budget moving forward.

Get health-care costs under control and you get the debt under control. (Bipartisan Policy Center)
Get health-care costs under control and you get the debt under control.  (Bipartisan Policy Center)

Lately, though, health-care cost growth has slowed to an all-time low, rising at the same rate as the rest of the economy. The health-care law includes 45 changes to how doctors get paid for delivering health care, largely aimed at reducing the rate of cost growth. These include everything from flat reductions to Medicare reimbursement rates to new payment models that try to reward doctors for the quality of care they provide, rather than the quantity.

There's some early evidence that these changes are working: Hospitals and doctors describe the Affordable Care Act as a catalyst, one that has sped up their efforts to deliver high-quality health care at a lower cost.

These are mostly experiments. At this point, nobody quite knows the best way to reduce health-care cost growth. The hope is that, by running all these experiments, the Obama administration will get a better sense of the most promising approaches.

These changes were just getting underway as Obama's first term ended. As his second term begins, so do two huge efforts to expand health insurance coverage and reduce health-care costs.

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