By Alex Wayne
Bloomberg News, April 10, 2013
Costs for a network of health-insurance exchanges, a core part of the Affordable Care Act, have swelled to $4.4 billion for fiscal 2012 and 2013 combined, and will reach $5.7 billion in 2014, according to the budget President Barack Obama yesterday sent to Congress. That spending would be more than double initial projections, even though less than half the 50 U.S. states are participating.
The unanticipated spending is a consequence of an ambitious timetable dictated by Congress and a complex new way of offering people medical coverage, say analysts, lobbyists and administration officials. Combine that with a majority of Republican governors declining to cooperate with a Democratic president and U.S. regulators are left grasping to get the 2010 health law up and running by a Jan. 1, 2014, deadline.
“Once you’re behind schedule, the way you solve problems is you write checks,” said Doug Holtz-Eakin, a former Congressional Budget Office director who is now president of the American Action Forum, which has opposed the health law.
For the areas that money can’t solve, the Obama administration is opting for delay. It temporarily backed off some provisions of the law, including restrictions on coverage for executives and a promise to offer small businesses greater choices of health plans.
The basic requirements of the health law must function by Jan. 1, even if all the bells and whistles aren’t complete, said Ron Pollack, executive director of Families USA, a consumer advocacy group that backs the overhaul.
“The Affordable Care Act is not a short term, temporary fix of America’s health-care system,” he said in an interview. “It’ll have long-term benefits, and so the administration clearly is making sure the most essential elements of the new law are effectively in place on a timely basis.”
Obama administration officials say the bulk of the health law will be up and running on time.
“There’s an awful lot to implement and we want to do it efficiently,” Ellen Murray, the assistant secretary for financial resources at the Health and Human Services Department, said in an interview. “It’s a big job, and we want to do it right.”
The government has warned that the exchanges, which are supposed to open in every state on Oct. 1, may not be easy for low-income people to navigate. In many states, people found to be eligible for Medicaid, the state-run program for the poor, will have to sign up through their state government instead of through the exchange.
“It’s a lot more complicated than anybody imagined,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the CBO, said by phone.
That’s because the federal government has been forced to build part or all of the exchanges in 34 states where governors or legislatures declined to do it themselves. The government expects to spend $1.5 billion this year on the federal exchange, Murray said.
In those states, connections between computer systems that run the federal exchange and state Medicaid programs are incomplete, said Caroline Pearson, a vice president at Avalere Health, a consulting firm based in Washington that is tracking exchange development.
The extra step required to sign up might discourage enrollment by low-income people, she said in an interview.
“You sort of always want to minimize the number of interactions you have to have in order to get people into the system,” Pearson said. These are “additional hurdles that could present a problem,” she said.