Palli: Troubles with sign-up aren’t indicative of Affordable Care Act potential

Recent chatter about the Affordable Care Act indicates that many think there are two reasons to doubt it will work: the federal exchange is dysfunctional and people are being dropped from their insurance policies.

Let me deal with the more substantive objection first. Lots of people are being kicked off their current health insurance. According to CBS News, more than 2 million “are unable to renew their current policies.” Why?

The Affordable Care Act establishes minimum requirements for all new health plans, including preventative and emergency care. According to insurance companies, most people are being forced out of plans that are deemed illegal under the new rules. Since any plans created prior to 2010 do not necessarily have to cover essential health benefits, according to United Healthcare, it is more likely that these people are being forced out due to the requirement to not have lifetime or annual dollar limits than it is because their plans don’t cover all the essential health benefits.

So people are going to get “better” health insurance when they sign up for post-Affordable Care Act insurance on the exchanges. The question is whether the new insurance will be affordable.

Theoretically, it should be at the same price or slightly lower for people below 400 percent of the poverty line ($40,000 or so for a single-person household) due to government subsidies, but may be significantly higher for those who make more money. This reflects the free-market compromise inherent in the health law. Rather than having a single-payer system or leaving those with pre-existing conditions or lesser financial means without care, the Affordable Care Act shifts costs from these individuals to the government and those with greater financial means. 

The federal health exchange, however, is currently non-functional, meaning that people can’t really find out where they stand on this spectrum. Hence, one might think that the failure of the federal health exchange reveals a fundamental lack of foresight in the Affordable Care Act and by the Obama administration, but one might also think that this failure leaves countless people in the dark. The former argument goes something like this: The exchanges have fundamental flaws, so no one can buy health insurance on the exchanges. This part of the law — the exchanges — isn’t working, so why should we believe that the rest of the law will work?

Though these failures might indicate that the government needs to work on its process of implementing technology, the exchange implementation has nothing to do with health care policy implementation. Politicians and bureaucrats set policy while the Medicare office technicians and a smattering of technology contractors and subcontractors designed the complicated handoffs involved in the exchanges.

Saying that policy-makers are incapable of setting health care policy because they can’t handle a huge IT project is like saying that a management expert can’t diagnose problems in government management because they can’t distinguish between allergies and the flu.

Some have argued that more avenues for purchasing insurance or greater publication of alternatives to the website are necessary to help people meet the deadline for the individual mandate and preserve optimism for new insurance plans. This deadline, however, is four months away.

Even if getting the website up and running takes two months, the fraction of the populace that needs to purchase insurance on the exchange will have a full two months to do so before being penalized. Furthermore, all information ultimately has to go into the same online data system. Any efforts to increase utilization of alternative mechanisms for signing up for insurance will divert valuable resources and waste effort in collecting and re-entering information into the unfinished computer system. Finally, people’s optimism and attitude toward the law will be shaped by the policies they are able to purchase and the price of those policies, not the precise date upon which they are able to access the website.

Given the complexity of these problems, the media does a huge disservice to the truth when they simplistically say “the website doesn’t work” and discuss political implications of the situation. People need to understand that this is not just a website and the government could not have handled this project on its own without the help of the NSA — but does anyone want to the NSA brokering their health insurance transactions?

Furthermore, those pundits who do acknowledge the entire complex situation nonetheless go on to say that we will know this year or next how expensive plans are and who signs up, as if this will be a definitive judgment on Obamacare.

According to the Atlantic, covering 97 percent of the population in Massachusetts took six years after the implementation of their law. Less than 40,000 people — less than 1 percent of the population at the time — signed up for health insurance on the exchange the first year that Massachusetts opened its exchanges for business. In comparison, Obama’s estimate of 7 million Americans is more than 2 percent of the country’s population.

This estimate is unrealistic and the idea that the law will immediately cover everyone and fix problems in the health system is preposterous. Solving America’s health care problem will take a long time, and the Affordable Care Act is only the first step — and even that step will take years to fully take effect.

The current glitches (rising to the level of “scandal” in some eyes), higher insurance premiums and drops of those with the cheapest coverage are expected to be undetering consequences of the Affordable Care Act. In the end, “Obamacare,” along with Obama, will be judged not by how quickly everyone was insured, but by the state of health care in the United States 20 years from now.

Write Rohith at rop33@pitt.edu.