Affordable Care Act: Handicapping the Players

March 20, 2013

Peter_LeeCalifornia is set to be the flagship for the implementation of the Affordable Care Act (ACA). Our state has the largest contingent of about-to-be newly insured. Our state has gone all-in with regards to enrollment, technology, and spending. We are among the first states to establish our own Health Benefits Exchange. While red states with similarly huge numbers of uninsured – who could and should be among the soon-to-be newly enrolled such as Texas are dragging their feet to make further pointless political statements – California is moving full steam ahead to make the White House proud. At least we look like we are moving that quickly.

California certainly has plenty of fuel – $$$ – to make something happen. Covered California announced in January 2013 it had received $674 million in stage 2 funding to put the pedal to the metal and start enrolling the right persons beginning in October 2013. In the next 8 to 9 months Covered California – the administrative entity of the Health Benefits Exchange (HBEX) – will have developed and proofed an online enrollment site where individuals and companies will be able to choose their new insurance carrier. Covered California will also have handed out $43 million in Education and Outreach grants that will inform the public about their eligibility and what to do when they visit the site. For something that sounds so simple to understand we are certain things will not be that simple.

Here are our predictions about the Covered California rollout over the next 12 months.

1. The most widely used statement will be “This is the most significant and grandest law/movement/initiative since Medicare.” That is certainly true. Estimates are that more than 40 million uninsured persons in the USA will become insured. The California number s 5.3 million.

2. The enrollment website will not be fully functional by the Jan 1 2014 target date. The website is up and it is functioning a few steps beyond brochure-ware (see Health Insurance Calculator) . There are simply too many key items that need to be completed in time to test the site including (a) the site has to be able to process and discriminate the multiple levels of enrollment and assign subsidies as intended; (b) the HBEX has to approve site functionality no later than December 2013 which means the site has to be ready by November 2013; (c) the HBEX moves at a glacial pace – at the Jan 2012 meeting they were unable to act on one motion over the course of four hours; (d) the outreach and education grants must yield lists of potentially eligible enrollees in order for a smashing rollout in Jan 2014, and (e) small businesses which are key to Covered California implementation will wait a year to see what everyone else does.

3. The Department of Health Care Services (DHCS) will shrink as the Covered California entity expands its oversight powers. DHCS governs Medi-Cal enrollment and payouts. Under the new scenario Covered California must exercise important authority in order to ensure the newly insured Medi-Cal enrollees are processed and assigned to providers. Going through an added layer of state bureaucracy will cause delays. This seems obvious to us but there is little being discussed. For that matter the Department of Managed Health Care (DMHC) governs health plans with a Knox-Keene license and shall retain that governance role under the new hierarchy. We believe DMHC will lose some of its authority being limited to simple Knox-Keene approval. We believe the DMHC moves too slowly for Covered California to achieve its goals. Covered California is on target to grow to 900 employees. The Executive Director, Petere Lee, is very dynamic; a man with vision who does not shrink from the limelight. He believe he will not let bureaucracy obstruct his path.

4. Supplemental services, i.e., vision, dental, will not be included under Covered California until 2015. In an ideal world all healthcare benefits will be included in health plans beginning Jan 1 2014. But, the contract that will bind qualified health plans (QHPs) is still in review. This is for the health plans that offer basic medical benefits. While there is plenty of talk about adding vision and dental we are pretty confident nobody is working on those contracts. Additionally, in order to offer these plans the carrier must hold a Knox-Keene license. This is where the DMHC poses a barrier. Covered California will need an extra year to move this obstacle.

Everyone – at least in California – wants to see Covered California be successful. The outreach and education programs are funded for 12 months. It will take at least that long to get the word out. Many small businesses – an important group whose buy-in is essential to demonstrating success – will simply wait a year to see what everyone else does. Under the stewardship of Peter Lee (pictured above) we believe the ACA will be implemented but the process will occur in fits and starts. This IS the largest change in healthcare in the past 80 years. The goals are great. The proposals to actualize them are good enough. The timelines are hopeful, at best; which for now has to be good enough.

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