Is the PPACA DOA?

by Tim Wyman
The Wyman Group

After hearing the New York Journal had wrongly run his obituary, Mark Twain was quoted as saying, “The reports of my death have been greatly exaggerated.” It seems the Journal had mistakenly picked up on a report about his cousin, and Twain lived another 13 years, but this provides a classic example of making certain that you check all your facts first. But we can excuse those kinds of mistakes in 1897, can’t we?

Healthcare reports in the year 2013 should be a different story, right?

Given the current state of affairs surrounding the government’s move toward full implementation of the Patient Protection and Affordable Care Act (PPACA) in 2014, one has to wonder if the prognostications and vehement declarations by the right wing are true, and unlike with Twain, are timely in their predictions.

Is the PPACA DOA in 2014? Recent events might provide some validity to the health insurance soothsayers.

An Implementation Struggle
Back in March of this year, the Department of Health and Human Services announced a delay until 2015 for the federal Small Business Health Options Program (SHOP). In theory, employers with under 100 employees were supposed to be able to get online, enter their employee census, how much they were willing to pay for insurance, and the employee would be able to pick and choose among a multitude of plans and benefits. Rumors out of HHS suggest the delay may extend into 2016. Here in Illinois, the online health exchange, scheduled to open for business October 1, 2013, has already stumbled several times as it approaches the finish line. Initially, the exchange struggled as politicians could not decide whether it should be federally or state-operated. Illinois Governor Pat Quinn was rebuked in mid-July in his efforts to change the Illinois exchange from a federally-run one to a state-operated entity when the legislature adjourned without providing action.

More telling is that only six insurance carriers submitted plans to be offered in the Illinois exchange, and notably, United HealthCare and Aetna have declared a wait-and-see stance. The philosophy behind the exchanges is that the website would provide a broad, borderless marketplace in which carriers would compete with one another. It is disconcerting that the country’s largest and fourth-largest carrier, respectively, are nowhere to be found.

The biggest bombshell in the PPACA implementation process came when the administration quietly announced prior to the long Fourth of July weekend that one of the cornerstones of the law would be delayed until 2015. The so-called “pay-or-play” mandate stipulates that any employer with more than 50 full-time employees or full-time equivalents must pay for “affordable” health insurance or face substantial penalties. Employers were given a one-year reprieve. “This announcement means even the Obama administration knows the train wreck will only get worse, and a clear acknowledgment that the law is unworkable,” said House Speaker John Boehner.

Evidently, the government is having difficulties setting up the systems that would be able to track American workers. Maybe they should talk to the NSA.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” wrote Mark Mazur, assistant secretary for tax policy, in a blog post. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”

The IRS and federal government did ask that businesses voluntarily comply with the law, as well as all the reporting requirements, in 2014 so that when 2015 arrives, employers “are ready to go.”

Uncertainties Remain
There has also been a great deal of concern that employers are reducing their employees’ work hours to less than 30 per week in order to avoid the pay-or-play mandate. Unions have already geared up in states like California and New York to fight large employers who have already implemented the reduced-hours policy. The Obama administration has signaled both its support for the unions and its intention to address these concerns in the near-future.

An even bigger shocker slid under the national media spotlight in July when the IRS announced that individuals who file for subsidies on the exchanges, for at least 2014, will be on the “honor system” when they report their income. The IRS reported its computer system will not be able to validate income as people purchase healthcare online.

Remember, back in 2012, the Supreme Court ruled that the individual mandate, the requirement that all Americans have health insurance or otherwise pay a penalty (or a tax, as Chief Justice Roberts said), was legal. A recent CNBC survey indicated that more than 67 percent of Americans who are currently uninsured “are uncertain” if they will purchase healthcare once mandated in 2014.

And what is the government going to do about it? Not much. It is estimated that over 53 percent of Americans pay no income tax whatsoever. There is no mechanism currently in place to collect the penalties, and the IRS has admitted as much. There was talk of reducing annual tax refunds, but that talk quickly died. On the other hand, the government has done a great job collecting over 20 major new tax increases inside PPACA, most of which were implemented this year.

Without question, PPACA has been a major rework of our healthcare system, and in the interest of fairness, it must be pointed out that some of it has worked out well. Insurance companies, for example, have admitted that insuring children to age 26 was cost-neutral for them.

However, as major parts of this law come online in 2014, we have already witnessed the difficulties the government and large employers have had implementing its vast provisions. There is no reason to expect these kinds of issues to abate as we move forward.

So, the question stands. Is Obamacare dead? Some would like to think so, but the evidence is simply not there for a major catastrophe. Work on it continues. There have been no internal leaks suggesting that hurdles are insurmountable. If there is trouble, it came from the government making the mistake of pausing implementation while we awaited the Supreme Court ruling and the results of the presidential election.

Logical observation tells us that matters are not dire, but simply taking longer than expected. So, Obamacare is not dead. It is not even on life support.

But I could easily argue it is in the hospital for the unforeseen future. That much is for certain. And we all know how much extended hospital stays cost.

That should be the concern for the American taxpayer. iBi

 

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