What would it cost to ‘fix’ Obamacare?


If Obamacare is truly here to stay, it's going to need some fixes. (Andrew Harrer/Bloomberg)

Welcome to Health Reform Watch, Jason Millman's regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Jason with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, or sign up here to receive it straight from your inbox. Read previous columns here.

You can't find an Obamacare supporter anywhere who thinks that the massive health-care law is problem-free. Any major law regularly gets fixed through the legislative process after it's passed, but the politics surrounding the Affordable Care Act has pretty much made this impossible so far.

Democrats on the campaign trail have often talked about the need for fixing and improving Obamacare without really getting into specifics. That prompted conservative policy expert Chris Jacobs of America Next to recently wonder what these fixes would cost and how they'd be paid for.

So I thought it would be a fun and useful exercise to round up Obamacare "fixes" that have garnered the broadest support and look at what they could potentially cost. How to pay for them — well, that's another story.

Boosting the tax credit for small businesses: $14 billion

Since the ACA passed in 2010, small employers could qualify for a tax credit if they had fewer than 25 employees earning, on average, no more than $50,000 per year. Starting in 2014, however, small employers will only be able to receive the tax credit if they purchase health insurance through Obamacare's health insurance marketplaces.

The tax credit has had limited reach, so far. Just 170,300 small employers claimed the tax credit in 2010, even though anywhere between 1.4 million to 4 million businesses were thought to be eligible for it, according to a 2012 Government Accountability Office study.

Given that small impact, a number of Democrats, including former President Clinton, have called for expanding the small-business tax credit. A group of centrist Democrats recently suggested broadening the tax credit eligibility to businesses with up to 50 employees. That's the same recommendation President Obama made in his 2013 fiscal year budget (along with some other tweaks), which pegged the cost at $14 billion over 10 years.

The employer mandate: A $130 billion mystery

The Obama administration in the past year has twice delayed the requirement for businesses of 50 or more employees to provide health insurance to their full-time employees. The  $2,000-per-employee penalty was originally supposed to take effect earlier this year, but the administration is still wrestling with how to define employer requirements.

The administration points out that most mid-sized and large firms already provide coverage without the employer mandate, and the delays have prompted some Obamacare supporters to question whether the provision will ultimately survive or if it's even necessary. But a major problem with eliminating the mandate is the fact that the penalty is supposed to raise $130 billion in revenue over the next decade — finding a budget offset for that wouldn't come easy.

The House, with almost only Republican support, agreed this year to change the employer mandate's definition of full-time employee from a 30-hour workweek to 40 hours, meaning fewer businesses would be subject to the penalty. That change, which has so far been ignored by the Senate, would also cost the federal government about $74 billion in revenue over the next decade, the Congressional Budget Office said.

Paying Medicaid doctors a better rate: $12 billion

Medicaid generally reimburses less than Medicare and private insurance, which is why doctors have been less willing to take new Medicaid patients. So to encourage doctors to accept new Medicaid patients as the program expands under Obamacare, the law gives a temporary bump in Medicaid reimbursements.

The two-year payment boost priced at $11.9 billion started last year, but a lot of states had trouble implementing it right away. With the bonus payments set to expire at the end of the year, doctors groups have recently recommended a two-year extension and extending the payments to obstetricians and gynecologists. There's not much data yet on whether the bonus payments are encouraging more doctors to take Medicaid patients, but Connecticut a few months ago reported a 37 percent increase in Medicaid doctors since January 2013.

Expanding subsidized coverage to families: Billions, probably

A quirk in the ACA could leave up to 460,000 kids without coverage because of how the law defines insurance affordability. The ACA allows employees to seek out subsidies on health insurance exchanges if they don't have an affordable health insurance offer from their employer, set at 9.5 percent of annual income.

But under the so-called "family glitch," the affordability test applies to only individual coverage and ignores the cost of much more expensive family plans. So, even if a family plan is actually unaffordable, it doesn't matter as long as the employer's individual plan meets the affordability test — family members then can't get subsidized exchange coverage.

Consumer advocates pushed for the Obama administration to undo the family glitch through regulation, but the administration said the ACA wouldn't allow it. Sen. Al Franken (D-Minn.) two weeks ago introduced a bill that would close this gap, but advocates for the bill and Franken's office said they don't yet have an estimate of what it would cost. According to a 2011 study from the University of California at Berkeley's Center for Labor Research, eliminating the glitch could cost between $380 million and $820 million in just 2019.

A new coverage tier: Cost unclear

Some Democratic senators and health insurers have suggested that the ACA needs a new, lower-cost coverage tier to attract people who find health insurance options unaffordable. An individual can currently pick five different types of coverage under the ACA: catastrophic, bronze, silver, gold and platinum. The lower-tier plans, starting at catastrophic, feature more affordable premiums but have higher out-of-pocket costs.

The main lobbying group representing health insurers last week formally pitched a new coverage tier that would be priced just below the catastrophic health plan — and have broader appeal than the catastrophic option. Just about 2 percent of people choosing plans on the federal exchanges this past year chose catastrophic plans, which are only available to people under 30, those who struggle to find another affordable option or had their existing plan canceled. People also can't get federal subsidies for catastrophic coverage, but the insurers' proposal for a lower-cost plan would allow subsidies to make plans more attractive to cost-conscious consumers.

Top health policy reads from around the Web:

D.C. residents are still waiting on insurance coverage. "Consumers who signed up for private health insurance through the District’s new insurance marketplace are experiencing lengthy delays in getting coverage, in some cases two to three months long, because of problems processing their applications, according to residents and enrollment assisters. In some cases, it is forcing those without insurance to postpone doctor and dental visits." Lena H. Sun in the Washington Post.

Problems are happening elsewhere, too. "Obamacare's enrollment glitches might have been fixed long ago, but they're still causing headaches at doctors' offices and clinics around the country. Patients and health care providers, in a series of interviews with The Huffington Post, complained that they are having trouble confirming that patients are insured, working out what their plans cover and figuring out which plans doctors will accept. These complaints are signs that the Affordable Care Act ... is suffering growing pains more than six months since its insurance policies took effect." Jeffrey Young in the Huffington Post.

Lawmakers back costly cancer test for Medicare. "More than 130 lawmakers are urging the Obama administration to expand coverage for a lung cancer test under Medicare that could cost the program billons, calling the screening important for vulnerable seniors. The US Preventive Services Task Force last December recommended the test for people ages 55 through 79 who smoked a pack of cigarettes a day for 30 years, or the equivalent. The low-dose CT scan will be covered by private insurance as required by the Affordable Care Act with no copays, beginning Jan. 1.But the new health care law does not require Medicare to cover the screenings, which cost $100 to as much as $400." Hope Yen for the Associated Press.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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