The word is California may end up spending $300 million in insurance exchange advertising, education and outreach — a sign of just how important insurance enrollment is to the success of the Affordable Care Act.
Less than 100 days before state-based and federally-run exchanges open to consumers, there is still some concern in private and government quarters about whether all of the policy, technical and commercial components of exchange operation will be functioning seamlessly, and whether the crucial demographic of young people will be inclined or persuaded to enroll.
The federal government has to provide data exchange functions for identity verification and premium tax credit administration, and there’s also much responsibility weighing on state policies, strategies, politics and demographics.
So here are three challenges and obstacles all the HIXs will face.
1. Young people choose to be uninsured. California and Texas both have a huge number of uninsured residents — 8.2 million and 6.2 million, respectively. And the exchanges in both states (Texas opted for the federal HIX) have similar challenges in the so-called gig economy: enrolling young people who broadly fall into the category of the working poor or lower-middle class, not offered insurance with their jobs, or working part-time, seasonally or as a freelancer.
The exchanges will probably be a good financial package for people who get regular medical care and are already buying their own or their family’s health plan in the notoriously dysfunctional individual insurance market, because the exchange plans will all have essential health benefits and all likely cost not that much more than existing individual plans, after the subsidies take effect.
For some uninsured people in their 20s and 30s who don’t use healthcare regularly, the exchange health plans may not at first glance be a good deal — compared to the $95 individual mandate penalty during the first year — if they don’t think they need insurance.
The challenge for exchanges and the advertising firms they’re working with, then, is to market the exchanges and pitch the ideas of insurance and risk management as a protection against health disasters. If lots of young Californians or Texans end up going uninsured, comfortable with that risk, the state exchange markets may see rising costs, a problem for exchange organizations operating on slim budgets and counting on enrollment fees.
The individual mandate penalty increases to $325 in 2015 and $695 in 2016, but if young people don't enroll in large numbers until then, the exchanges may have already seen rising costs as a result of less-than-healthy risk pools.
2. Federal data management troubles. The federal data hub will not be a database, but rather a sort of highway that supports all of the exchanges in what should be near real-time — applicants should be told if they’re eligible for a certain plan or program within 8 seconds of submitting their information, as CMS deputy CIO Henry Chao said recently.
But the short timeline of building the exchanges has left some gaps that federal agencies may not be able to replace until after the initial enrollment period. The ones so far may be small enough to not impact the consumer experience, but government watchdogs have warned of other things potentially going awry.
It was a “system limitation” in the Centers for Medicare & Medicaid’s qualified health plan data program that is delaying the ability of insurers to charge tobacco smokers up to 50 percent more than non-smokers.
And at the Internal Revenue Service, the IT systems linking into the data hub and the HIX still have a ways to go before October. A “lack of adequate testing could result in significant delays and errors in accepting and processing,” Alan Duncan, assistant inspector general for tax administration at the Treasury Department, said at a Congressional hearing recently.
The IRS is still seeking funding for some of its key ACA IT needs. The agency’s fiscal year 2014 budget request asks for $440 million in appropriations for ACA work — $306 million of that for IT changes “needed to deliver income information, tax credits, and other ACA requirements.”
The IRS is partly scaling back its work in income validation, in cases when an applicants’ attested annual household income is more than 10 percent below what the IRS has on file, and when data on modified adjusted gross income is unavailable.
3. Insurance navigation falls short. "Let's just make sure it's not a third-world experience," Henry Chao, CMS deputy CIO, said earlier this year of the federal government's goal for the consumer experience in health insurance exchanges, joking that they weren’t being picky about design elements like font types.
But the consumer assistance programs — online, over the phone, and in person — will be key to having informed consumers who enroll year after year.
If enrollees aren’t able to understand health plan details through online information, brokers, navigators or consumer call centers, they may end up getting bills they don’t understand or agree with, thereby setting up disputes with insurers that may involve exchange ombudspersons, and possibly dissuading people from enrolling the following year.
California has budgeted almost $50 million for consumer assistance through 2014, with an all-of-the-above approach using call centers and grant-funded assistors at civic groups, with a focus on providing multi-lingual services. To meet these needs, too, watch for a growing array of consumer-self help apps and programs for managing healthcare finances.
Rock climber photo from Shutterstock.com.
