Whitehouse.govAt a congressional
hearing yesterday with Gary Cohen, the Health and Human
Services official charged with managing the implementation of
Obamacare, Republican legislators
charged that Cohen’s agency may be improperly allowing some
states to run “assister” programs that pay people to help
individuals sign up for the health law’s coverage options.
Republicans charged that HHS may not have the statutory authority
to fund those programs in states running their own exchanges. That
includes states like California, which
plans to use a significant part of the $910 million it has
received so far in federal implementation grants to pay 21,000 such
assisters $58 for each person successfully enrolled in new
Obamacare coverage.
To most observers, this probably looked like a strictly
technical dispute over the rules governing Obamacare’s
implementation funding. But at the heart of the dispute is
something much larger—the growing liberal concern over what might
be called the Obamacare Nightmare Scenario: that too few people,
who are too sick, will sign up for coverage under the law, that
premiums will rise in the exchanges, and that this will reinforce
public skepticism of the law as an unworkable burden whose primary
effect is to cause costs to rise.
You don’t need to read between the lines to see this fear
creeping into the left’s conversations about the law.
You can see it in former White House health adviser Ezekiel
Emanuel’s recent Wall Street Journal op-ed, which warned
that enrollment efforts needed more attention, because there’s no
certainty about how many people will sign up for coverage under the
law. “This uncertainty,” he
wrote, “could set off a negative reinforcing cycle that
undermines the entire exchange system.”
You can see it in Kathleen Sebelius calls to insurers, to
friendly foundations, and to tax prep organizations asking them to
“support” Enroll America, a nonprofit that is practically an
extension of the administration—it’s led by
a former Obama administration health official, and its entire
mission is to
sign people up for the new health law.
You can see it in the anxiety over California’s enrollment
promotion. As The L.A. Times
reported last year, “federal officials have a lot riding on the
California effort,” which will be “an important test” of Obamacare
in the face of GOP opposition. But it all “depends on getting
enough people — healthy and unhealthy, uninsured and insured — to
enroll. If that doesn't happen, the state could lose billions in
federal dollars and insurance premiums could soar.” The piece says
that California authorities expect to enroll 2 million people in
private insurance through the law, and describes the challenge of
getting people to enroll as “daunting.”
Whitehouse.govThey’re right to worry. In part because, as
Emanuel notes in his piece, this sort of enrollment push has never
been tried at this scale. But also because a version of what they
worry about—low enrollment, an unusually sick population, and
spiraling costs—has happened before, in Obamacare’s first,
smaller-scale attempt to expand coverage to the uninsured.
For the period between when the health law was passed and when
its major coverage expansion kicked in, Obamacare set up a stopgap
option for hard-to-insure individuals with troubled health
history—the Preexisting Condition Insurance Plan (PCIP). The
initial worry with this program, one I shared, was that it would go
over budget as a result of high enrollment.
That concern was half right. Somewhere between 350,000 and
400,000 people were expected to enroll in the program. Instead,
just 135,000 signed up—and then only after the administration went
on an aggressive enrollment push. Yet even as The New York
Times
reported this week, even with far lower than expected
enrollment, the cost of claims in the program has “far exceeded
White House estimates, exhausting most of the $5 billion” the
legislation provided to fund the program.
It wasn’t just that too few people signed up. It was that the
people who did sign up were, on average, very sick. And thus, very
expensive to cover.
Which left states with very costly programs helping very few
people: Last year Alaska
said that its PCIP would cost $10 million in 2012—and cover
just 50 people. New Hampshire enrolled just 80 people in its
program, but spent
twice its allotted federal funding. California had the
highest enrollment of any state in the nation, but
per-beneficiary costs came in
three times higher than expected.
And what is the administration doing in response? Cutting
payment rates to providers in order to hold costs down.
This could be Obamacare’s future: Not a broad middle class
benefit, but an expensive program with low enrollment that mainly
covers the very sick and serves as a catalyst for driving doctor
reimbursements down. Granted, this is far from the only possible
future for the law, and far from the only way it could go wrong.
But right now, I suspect, it's the disaster scenario that many
liberal supporters of the health law fear the most.
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