Blog Home

«
»

Implementing Health Reform: The State Of The Exchanges, Income Verification, And More



October 16th, 2013

**** Update, 10:45 PM, October 16: Although the House Republicans began the budget and debt ceiling debate with high hopes of defunding the Affordable Care Act, in the end they achieved almost no changes in the ACA despite shutting down the government for sixteen days and bringing the United States to the brink of default.  The only provision of the budget resolution that directly addresses the ACA requires the HHS Secretary to certify to Congress that the exchanges verify eligibility for premium tax credits and cost-sharing reduction payments consistently with the requirements of section 1411 of the ACA.  By January 1, 2014, HHS must submit a report to Congress as to how the exchanges are verifying eligibility, and by July 1, 2014, the HHS Office of Inspector General must submit a report to Congress as to the effectiveness of the eligibility procedures and safeguards in place for preventing inaccuracies and fraud.

The referenced Section 1411, however, provides few specifics as to how financial eligibility is to be determined, and further provides, “The Secretary may modify the methods used under the program established by this section for the Exchange and verification of information if the Secretary determines such modifications would reduce the administrative costs and burdens on the applicant.”  In sum, HHS may for political reasons choose to enhance verification procedures, but there is nothing in the ACA or in the budget resolution that would require it to do so.  In any event, HHS already requires far more to verify exchange eligibility than the IRS often requires to verify eligibility for other tax benefits, which in aggregate probably cost the U.S. Treasury far more money.

It is October 16, 2013 and we are over two weeks into the federal government shut-down and the failed launch of the Affordable Care Act federal marketplace.  The two are probably not wholly unrelated.  With the nation’s borrowing capacity nearly exhausted, it is hard to believe that Congress will not soon take action to resolve the debt crisis, and, as part of the package, reopen the government.  Once the Department of Health and Human Services returns to full staffing, one can only hope that the problems with the federal exchange will be more quickly resolved, although it appears that the problems with the exchange are predominantly the responsibility of private contractors.

It is frustrating that HHS has failed to provide information as to what precisely is wrong with the exchange.  Some of the problem is clearly due to the high volume of website visits during the first few days of the exchanges operation — a reported 14.6 million during the first 11 days according to the Administration — but visits have dropped dramatically and problems persist.  Moreover, it is becoming increasingly clear that problems persist throughout the enrollment process, and particularly at the back end where applicants are actually supposed to be enrolled with insurers, as Robert Laszewski has been reporting.  There has been excellent investigative reporting on what is going wrong with the marketplace, but in the end, it is the responsibility of HHS, or perhaps the White House, to explain to the American public what exactly is wrong and when we can expect it to be fixed.  This has not yet been done.

There is some good news.  Some of the state exchanges have been quite successful in enrolling applicants in health plans.  This would suggest that parts of the federal computer system are in fact working, as the states must go through the federal data hub to determined eligibility for premium tax credits.  Also, the flood of interest in the exchange is an undeniable sign of success.  In particular, there are indications that much of the interest is coming from young people, who must enroll for the ACA insurance plans to be viable.

Moreover, roll-out glitches are not unprecedented.  As Jack Hoadley reminds us at Georgetown’s CHIRblog, the Bush Administration’s Medicare Part D Prescription Drug Finder launched almost a month late and the program was plagued with glitches throughout the enrollment period.  Medicare and Medicaid themselves had rocky launches, although they did not have websites to contend with.  Major product launches in the private sector are also often error prone.

We also have time to fix the website’s problems.  Exchange-qualified health plans, premium tax credits, and cost-sharing reduction payments are not available until January 1, 2014, and individuals have until December 15, 2013 to apply and still be enrolled by that date.  Applicants have until February 15 to enroll and completely avoid the individual responsibility penalty for 2014.  The exchanges remain open for individual enrollment until March 31, 2014.  If HHS can get the system up and running by early November, it should be possible to get people enrolled to meet these deadlines.  But they do not have forever, and real progress must soon be apparent.

The political debate over the ACA — income verification and subsidies for Congressional members and staff.  Much of the shut-down, debt-limit, debate has centered on changes to the ACA, particularly in the House.  The initial House gambit to defund the ACA altogether was predictably rejected by the Senate and White House.  Subsequent proposals have included repealing or delaying the medical device tax, withdrawing federal contributions for health insurance payments for members of Congress and possibly their staff, delaying reinsurance fee collections, requiring certification that the exchanges consistently and successfully verify income eligibility before they provide subsidies for coverage, and possibly broadening exemptions to the contraceptive mandate.

The verification requirement has proven particularly persistent, although it apparently is becoming less draconian.  The initial House-passed version  would have required the HHS Office of Inspector General to certify the accuracy of verification before subsidies could be issued.  As Judy Solomon reports, the OIG informed Congress that it was not blessed with the gift of prophecy and could not verify the success of a program until it was in fact implemented.

As I reported earlier,  income verification requirements are already quite demanding — far more demanding than verification requirements for tax benefits received by other Americans such as business-expense deductions — but in the end verification in advance of how much lower-income American families will earn over a year is a fantasy.  Lower-income Americans often work in part-time, intermittent, or seasonal jobs and are paid hourly wages, making predicting income exactly a year in advance simply not possible. Lying on an application is subject to serious civil and criminal penalties, and the amount of tax credits received by an individual will in any event be reconciled with actual income at the end of the year.  A good-faith estimate of income is all that is possible.  Congress cannot reasonably require the impossible.

The prohibition on the federal government contributing to the cost of health insurance for members of Congress, their staff, or the White House is attractive politically, but makes little sense.  Members of Congress and their staff are the only Americans required to purchase health insurance through the exchanges, but beyond that they receive only the benefits available to other federal employees — an employer contribution toward their employee coverage.  If members of Congress want to deny themselves access to health insurance, that is their prerogative.  Perhaps it will make them more sympathetic to millions of their constituents who also lack coverage.  It is to be hoped, however, that they do not also impose this burden on their staff.

Information collection.  Although the government shut down has dramatically limited the flow of ACA implementation issuances, a few continue to emerge.  On October 11, 2013, HHS published a notice of information it was intending to collect to establish individual mandate exemptions.   The notice includes forms that will be used by the federal exchange and could be used by the state exchanges for collecting this information.

There is nothing new in this notice, but the scope and number of exemptions from the ACA’s individual responsibility requirement are truly impressive.  In addition to the religious conscience, health care sharing ministry, incarceration, Native American tribe membership, and lack of affordable coverage exemptions, there is an extensive list of hardship exemptions, including:

  • Homelessness;
  • Eviction in the previous 6 months or the threat of eviction or foreclosure;
  • A utility shut-off notice;
  • Recent death of a close family member;
  • A fire, flood, or other natural or human-caused disaster that caused substantial property damage;
  • A bankruptcy filing in the last 6 months;
  • Medical expenses in the past 24 months that could not be paid;
  • Unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member;
  • The presence in the household of a child claimed as a tax dependent who was denied coverage in Medicaid and CHIP where another person is required by court order to give medical support to the child. In this case, the penalty need not be paid for the child;
  • A favorable eligibility appeals decision that makes an individual eligible for enrollment in a qualified health plan (QHP) through the Exchange, lower the costs on monthly premiums, or provides cost-sharing reductions, which removes the penalty for the time the individual was not enrolled in a QHP through the Exchange; or
  •  Residence in a state that fails to expand Medicaid if the individual would have been eligible for Medicaid.

HHS estimates that 24 million Americans will be eligible for individual responsibility exemptions and that as many as 12 million will apply for exemptions through the exchange.  In most instances, documentary evidence will need to be supplied to verify the exemption.  Unless the federal exchange website is vastly improved in the not too distant future, this could create major problems for the implementation of the individual responsibility requirement.

Email This Post Email This Post Print This Post Print This Post

 to the #1 source of health policy research.

No Trackbacks for “Implementing Health Reform: The State Of The Exchanges, Income Verification, And More”

4 Responses to “Implementing Health Reform: The State Of The Exchanges, Income Verification, And More”

  1. RandyGuy Says:

    I agree that there appears to be a lot of interest in the ACA exchanges based on the number of website visits but I am extremely dissapointed that the website designers did not plan for this initial surge. I hope that it does not discourage those that need health insurance from applying by the deadline. As you wrote elsewhere, I don’t see why the HHS would have any problems with extending deadlines based upon the current problems with the website. However, I know some of these deadlines are statutory so it may not be an option. I am encouraged that The U.S. Centers for Medicare and Medicaid Services is reporting 700,000 people have applied for insurance even with the problems associated the website. I think there is a genuine interest in obtaining health insurance out in the greater U.S. as evidenced by the success of the program in the “Red State” of Kentucky.

  2. ra.lahome2 Says:

    Based on whats happening with exchange roll-out, its hard to predict how many people end up enrolling in first year. Federal exchange is carrying the bulk of the load providing 36 state residence , a single website to enroll in obamacare. Most state initial enrollment numbers are reported here:

    http://insuranceexchangehq.com

    They seem to be doing better than federal exchange. Jury is still out there as to whether health exchanges will be successful. We probably need to wait till end of the year or early next year to find out.

  3. Peter Whiteford Says:

    If you want to look at problems associated with income estimation and overpayments in the UK and Australia, see http://www.jrf.org.uk/system/files/1859351107.pdf and http://www.bbc.co.uk/news/business-10823283

  4. leetocchi Says:

    Tim, stick to explaining the new rules as they roll out. Keep your political beliefs to yourself or state that they are just your opinion. If the enrollment fails (my opinion that only 2-3 million will enroll) the administration will not be forthcoming, but will look to the folks like Health Affairs bloggers to provide cover. If they start talking about how much under budget the cost of subsidies are then we should know how few sign-up there are.

    As for waiting for the white house to explain anything…good luck. And as for the interest in the web site (unmanageable numbers of visitors), those are the rubberneckers slowing down to look at the train wreck.

Leave a Reply

Comment moderation is in use. Please do not submit your comment twice -- it will appear shortly.

Authors: Click here to submit a post.