Starting today, uninsured Americans will have six months to buy insurance through the exchanges, a series of state- and federal-run websites.
WASHINGTON — The opening of the nation's new health marketplaces today — which has stirred hopes for success from advocates and failures from their opponents — is only the beginning of a long path to determine their true impact on the health care system, analysts say.
"It's going to be a gradual process," said Joel Ario, formerly the director of the Office of Health Insurance Exchanges at the Department of Health and Human Services and now a managing director at Manatt Health Solutions. Tuesday is "an important date, but it's just one day in a six-month process."
Until now, most reviews of the exchanges have been based on fragments of information and news of early glitches, such as the delay in electronic filing for small-business insurance by a month, or a year's delay in the requirement for businesses to offer health insurance to their employees or pay a fine.
That changes Tuesday. Uninsured Americans will have six months to buy insurance through the exchanges, a series of state- and federal-run websites. The sites need to work and connect insurance customers to where they need to find information, shop among various insurers and pay for their policies.
At least 7 million new insurance customers, the Congressional Budget Office estimates, need to do that in 2014 for the exchanges to be considered successful and to put new people into the system.
If enrollment falls below that, "it's probably not a good sign," Ario said.
Ario and others say there will be several landmarks along the way to determining how well the exchanges are working.
For example, as people begin to use their new insurance in January, other people may feel inspired to sign up. Or, as people in states that did not expand Medicaid realize they won't have affordable insurance, they may place pressure on state governments to expand. And while government officials say they expect "glitches" on the technical side as one electronic hub tries to connect millions of consumers with state and federal exchanges, the Internal Revenue Service for salary verification, Medicaid and private insurers, any real issues could cause consumers to flee.
After that initial enrollment frenzy, experts will be watching to see how bringing more people into the pool affects prices, health and the overall business environment.
The people who need coverage — who are waiting for it because of pre-existing conditions or because they could not get insurance in the past — will sign up right away. Success will come in the numbers who sign up a little later who aren't in as much of a rush, Ario said.
"The online functionality is a key thing to watch, but it doesn't need to totally be there," Ario said. "Things won't be as functional in year one as they are in year two."
Ron Pollack, founding executive director of the health care advocacy group Families USA, said people need to look at the first few months as "a marathon, not a sprint."
"The 181 days after October 1 are no less important than day one," Pollack said.
But come Jan. 1, he said he does expect to see an influx in enrollment as people begin to use their insurance, and everybody else sees how it works.
"Most people in the country who will benefit do not know how the law will affect them," Pollack said. "I think that's going to change at the three-month mark as people start receiving the benefits."
Kosali Simon, a professor of public affairs at Indiana University who specializes in health economics, said people will continue to watch small businesses to see if they switch people to part-time employment to avoid paying for their insurance. Thus far, she said it's difficult to tell.
In July, the Obama administration delayed for a year the requirement that businesses with more than 50 employees either provide coverage or pay a fine. Simon said it will be interesting to see if businesses prepare better for 2015 or if they delay, assuming the mandate and fines will be delayed again. Employers asked for the delay because, in part, they said they were not prepared for 2014.
Technological changes and payment
Over time, most of the law's issues will "work themselves out," said Bernard Tyson, chief executive officer at Kaiser Foundation Health Plan Inc.
As more doctors use electronic health records to participate in parts of the law, they're learning more about their patients, Tyson said. He hopes that leads to fewer errors, duplication and even infection as patients are better monitored.
"The data can show how things are working for populations," he said.
Eventually, doctors will communicate with patients electronically more often. Patients will pay their bills over their smartphones or check medical records on their tablets.
"Banks went the same way 15 years ago," Tyson said. "Now it's almost scarily easy to bank. I think our industry will follow suit: We'll protect people's privacy and make it more convenient."
First, it's critical that payments flow as designed from Treasury to consumers to insurers, said Cheryl Smith, who helps state governments manage health through Deloitte Consulting LLP. She also worked for Republican former Utah governor Mike Leavitt when he ran the Department of Human Services and at Leavitt Partners.
The market will look different, Smith said, because some of the traditional methods used by actuaries, who predict health costs based on everything from who will be in the insurance pool to how many people are expected to get the flu this year, will have to change. That's because the new law adds no lifetime limits on coverage and a prohibition on higher rates for the sick.
"It's a best-educated rather than scientific guess," Smith said. "That's how they determine what the rates will be."
The Massachusetts experience
In 2006, Massachusetts passed a law, signed by Republican then-governor Mitt Romney, that provided much of the inspiration for the Affordable Care Act. Jon Kingsdale ran the state's health insurance exchange created by that law.
"I think the first marker is to get people to answer the phone, and get the website up and running," Kingsdale said. "Can you get a determination of your eligibility and your subsidy and whether you're eligible for Medicaid? Does the shopping work?"
After that, he said, it's critical to see how many people have enrolled after six months, not so much at the beginning. It doesn't matter, Kingsdale said, if the new insurance customers are young, old or sick. They just need to enroll.
Massachusetts, Kingsdale said. "did have some substantial hiccups." The state started with only those people who would not have to pay anything for their insurance, and then they phased in other customers two months later.
The federal government, he said, had "a lot longer than we did to set up."
Eventually, Kingsdale said, they noticed "one very dramatic development" that he sees emerging with the federal law, too.
There was a "substantial increase" in competition.
"The exchange makes very transparent to the individual consumer what the differences are," Kingsdale said. "It turns out that people who pay for their own coverage ... are very price-sensitive shoppers."
Most people bought "skinny" benefit packages with substantial cost-sharing in Massachusetts. They went for plans with lower premiums, even when they had never heard of the insurer before. Before the Massachusetts exchange, he said there were only two companies with 95% of the market.
"There are now 10 carriers competing robustly," he said. "Which, frankly, is exactly what we need to control the market long-term."