By Henry J. Aaron
The first two weeks of the Affordable Care Act have not gone smoothly. Newspapers and TV news reports have been filled with reports of computer glitches and crashes. A mixture of gloating and faux surprise has been heard from some quarters. Other observers have shown genuine concern about whether all would-be purchasers will be successfully enrolled by January 1 when coverage through the new marketplaces—or "exchanges"—begins.
Surprise at the glitches is unwarranted. Concern about design flaws is legitimate. The gloating is contemptible.
Problems attend the roll-out of every complex law. The start of the drug benefit under Medicare in 2006 is illustrative. Many feared that the array of choices was so bewildering that enrollees would make costly mistakes. The start was marked by confusion and sluggish take-up. Eventually, people selected plans—not always optimally, according to various studies—but well enough so that millions of enrollees gained access to new coverage that helped made drugs affordable.
The choices through the health insurance exchanges are far more complicated than any enrollee in Medicare drug coverage faced. Administrators must perform tasks under the Affordable Care Act vastly more complex than confronted in setting up Medicare drug coverage. They must determine each family’s and individual’s eligibility, structure plan offerings in an understandable way, train people to guide enrollees through plan choice, determine the financial assistance to which applicants are entitled, and hand off enrollees to insurance companies. Scores of family types and sometimes hundreds of different plans make the task of writing software to handle these tasks automatically so formidable a challenge that a ‘glitch-less’ roll-out would have been a miracle. No one should have expected the opening days of the health exchanges to go smoothly.
But concern is surely understandable. To apprehend just how daunting the administrative challenges are, consider that applicants can choose among insurance plans that cover four varying proportions of expected medical outlays (five levels if the applicant is under age 30). At each level, they typically may choose among many different plans. Administrators must compute the financial assistance to which each applicant is entitled. That assistance depends on family type and income and on whether various family members are covered by other forms of insurance—Medicaid, employer-based insurance, Medicare, or other coverage such as that offered to Defense Department employees (Tricare). In principle, different members of a family could derive coverage from each of these sources. Computer software must handle the hundreds of combinations of family types, choices of insurance offerings, and family income levels.
Difficult as these tasks are, things worked reasonably well in some places on opening day. Exchanges in four states opened for business and stayed open. They handled a flood of "shoppers" interested in finding out how the exchanges work and what their choices would be. They handled a smaller number of people determined to set up accounts, select plans, enroll, and even pay premiums, although insurance coverage will not begin until January 1, 2014.
When only four jurisdictions out of fifty-one handle all enquiries, however, the clear message is that much work remains to be done. Another message should be equally loud and clear, however: the challenges of implementing the ACA can be met. Massachusetts implemented a law much like the Affordable Care Act. A Republican governor and a Democratic legislature, leaders in business and labor, hospital executives and physicians, all worked together and met them.
The auguries are promising now as well in the nation’s capitol. In the District of Columbia, the mayor and a unanimous city council set up an independent health exchange board. The board hired the former insurance commissioner of the state of Maine and a professor at a local university to run its exchange. The board consulted with local stakeholders—insurance companies, brokers, public interest groups, business leaders, and labor representatives. It contracted with 33 community organizations that have put nearly 200 trained assisters in the field to help people enroll. Three hundred brokers have undergone training so that they can help their clients, mostly small businesses, enroll in the new health insurance market place. Insurance companies are offering more than 300 distinct insurance plans through the DCLink, the new marketplace for individuals and small businesses. DC residents, individuals and small businesses now have more choice among competing insurance plans that they have ever had before. The DC exchange has enlisted the collaboration of DC Chamber of Commerce, the Greater Washington Hispanic Chamber of Commerce, and the Restaurant Association Metropolitan Washington in explaining to small businesses why buying insurance through the DC Exchange gives them better access to competing insurance companies than they ever had before. DCLink opened on October 1, has remained open, answers calls promptly, and is updating and improving its interface with customers so that all comers will be enrolled by January 1, 2014.
There is more good news. Competition is already working to help keep prices down. After D.C. insurers first filed their plans and had a chance to look at what the competition is doing, they have twice cut prices. At the national level, Peter Gosselin of Bloomberg reports that insurance premiums are 30-35 percent lower in health exchanges where there are ten or more competing plans than in exchanges where there is a single plan.
Which brings me to the gloating. I labeled this gloating ‘contemptible’ because it is emanating mostly from those who have staked their political futures on the contention that the Affordable Care Act can’t work and who have been doing their best to make the Affordable Care Act fail. They have denied sufficient funding to the federal government to enable it to buy the services needed to keep start-up problems to a minimum and to solve them as expeditiously as possible. They have worked in various states to obstruct the hiring, training, and deployment of personnel to help people make informed choices. Some members of Congress have even refused to help constituents comply with the law.
At this point, the judgment on the roll-out of the health exchanges under the Affordable Care Act should be one of cautious optimism, with emphasis on both words. The U.S. health system is uniquely complicated. Because Congress decided to build on that system, rather than replace it with something simpler but more radical, complexity is inescapable and managing that complexity will strain administrative capacity. But it is a job we know can be done, because it has been done. And, when it is done, millions of previously uninsured Americans will enjoy access to health care and peace of mind that most Americans already enjoy and treasure.
Aaron is a Senior Fellow in Economic Studies at the Brookings Institution