With the open enrollment period approaching in November, HIX supporters and detractors are assessing access to the federal health insurance exchange as well as its performance and prospects.
Implementation of the federal Patient Protection and Affordable Care Act is back in the spotlight this week in Washington, DC, and on Wall Street.
In Washington, a pair of top federal officials endured a PPACA grilling Wednesday during a hearing before the health panel of the House Committee on Ways and Means. Republican lawmakers sought assurances that flaws in the rollout of the PPACA insurance exchanges for this year would not be repeated in 2015. The GOP legislators also asked whether the Internal Revenue Service is on track to administer the impacts of the PPACA on taxpayers.
On Tuesday, Moody's Investors Service released a HIX "special comment" report, "The Affordable Care Act Exchanges: Mid-Year Summary and Assessment." Its key findings include the observation that uncertainty over health insurance policies sold through the exchanges is expected to continue for years, but that risk is not expected to affect the credit ratings of insurers operating on exchanges because HIX activity represents a small portion of their business.
Contentious House Hearing
Members of the Ways and Means health subcommittee are deeply divided over the PPACA along partisan lines. During the Wednesday hearing, that chasm was on full display.
In his opening comments, panel Chairman Kevin Brady, (R-TX) noted several flaws such as the "disastrous rollout of healthcare.gov" during last fall's open enrollment season on the exchanges. "The ACA has helped some Americans, no doubt, but hurt many more," he said.
The ranking Democrat on the health subcommittee, U.S. Rep. Jim McDermott, (D-WA), was equally strident in his opening remarks. "Despite the Republicans' best efforts at sabotage, the ACA is working," he asserted.
After the preface of political posturing, the health subcommittee members heard testimony from IRS Commissioner John Koskinen and Andy Slavitt, the recently installed deputy principal administrator of the Centers for Medicare & Medicaid Services, the federal agency with primary responsibility for implementing the PPACA.
Koskinen reported that the IRS is "on track" to administer the tax impact of the PPACA on millions of Americans. He stressed that the law's impact on most taxpayers will be limited to checking a single box on their tax forms indicating they have health insurance and received no government subsidy for coverage in 2014.
"The vast majority of Americans will have to do nothing related to healthcare other than check a box," he testified.
For taxpayers who have received federal subsidies for health insurance in 2014 through the new exchanges, the coming spring's tax filing season will be more complicated. Those taxpayers will be issued a new IRS form—1095A— from the exchange where they obtained health insurance to confirm their actual 2014 income as opposed to the estimated income they submitted on paperwork during HIX open enrollment.
"It will help us make sure that only the people who qualify for the premium subsidy will receive it," Koskinen testified.
Republican members of the health subcommittee pressed the IRS commissioner hard on the agency's readiness to administer the "reconciliation" process on the exchanges. "In my view, the American people have lost trust in the IRS for a lot of reasons, including healthcare," Brady told Koskinen. "Problems obviously remain with this and will continue next year. How do you regain the people's trust?"
Koskinen not only defended his agency and said it takes compliance "very seriously." But he went on the offensive over funding for the IRS. "We understand there are going to be challenges in the first filing season."
The IRS commissioner said Congress had shortchanged his agency by $440 million this year and $450 million next year, which has prompted scrambling to make sure the nation's tax collector can live up to all of its responsibilities.
U.S. Rep. Bill Pascrell Jr., (D-NJ), said the underfunding of the IRS is an example of how Republicans in Congress have sought to systematically undermine the PPACA. "If you can't shoot the dog, starve it," the New Jersey Democrat said. "There are great things going on in the ACA, and the detractors won't admit it."
In his testimony, Slavitt indicated the PPACA has achieved significant healthcare reform goals, and said federal officials expect a smoother ride in the second year operating the exchanges.
"There's growing evidence the Affordable Care Act is working," he testified, noting major gains in access to healthcare through the exchanges, expansion of Medicaid in half of the states and beneficial PPACA provisions such as mandating insurers to cover individuals with pre-existing medical conditions. "In addition, we are seeing overall lower growth in healthcare spending."
U.S. Healthcare Spending Growth to Resume
Slavitt said CMS has taken several steps to help ensure there is no repeat of last fall's weak performance of healthcare.gov. Those steps involve adding new features to the site and increasing the amount of time devoted to testing its functionality.
The CMS official also addressed Republican lawmakers' concerns over a lack of trust among some Americans about the federally driven effort to reform the healthcare industry, saying transparency, accountability and straight talk are crucial factors.
U.S. Rep. Mike Thompson (D-CA), asked Slavitt whether he was confident that the problems with healthcare.gov last fall will not arise again when open enrollment for the exchanges starts in November.
"We are in a more favorable position with a website that's up and running," Slavitt said, adding "we have built a lot more time in for testing."
View from Wall Street
Risks associated with ongoing uncertainties for insurance carriers operating on the PPACA-spawned exchanges dominate the "special comment" report released by Moody's on Tuesday.
"Last year as we approached the first open enrollment period under the Affordable Care Act, health insurers were faced with many unknowns and uncertainties regarding competition, enrollment, and profitability. Almost one year after the federal and state exchanges opened for enrollment, many of these uncertainties still exist," the report says.
The uncertainties facing insurers operating on the exchanges include an incomplete set of claims data for 2014, uncertainty about consumer behavior in 2015, and an unsettled regulatory and legal framework for the exchanges.
"Insurers are faced with making pricing decisions for 2015 with very limited claims data in 2014 in a competitive marketplace ripe for irrational pricing amid an evolving regulatory environment – a credit negative to the sector," the Moody's report says.
Even though there are substantial risks associated with the new exchanges, insurers are not running away from potential HIX riches, according to the Moody's researchers. "Despite all the uncertainties and poor projected financial results for these products in 2014, insurers are planning on continuing their participation on the exchanges in 2015," the report says.
Christopher Cheney is the CMO editor at HealthLeaders.