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Full Implementation a Ways Off, 2013 Will Be Pivotal for Affordable Care Act

December 25, 2012 at 12:00 AM EDT
Americans won't see the full effect of the Affordable Care Act until 2014, when uninsured people will be eligible for new coverage or get insurance subsidies. But before that can happen, states must decide how they want to make that system happen and if they want federal assistance. Ray Suarez talks to NPR's Julie Rovner.
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GWEN IFILL: What’s ahead for implementation of federal health care reform?

Three years ago, the Senate passed a bill on Christmas Eve that resembled much of what would become the final law.  Now the Obama administration faces the challenge of making it work amid continuing resistance from some states.

Ray Suarez explored those issues in a conversation he taped last week.

RAY SUAREZ:  The full impact of health reform law won’t be felt until 2014.  That’s when many of the uninsured will either start getting new coverage through Medicaid or receive subsidies to buy insurances through new marketplaces called exchanges.

But the coming year is also a pivotal one in many respects.  For one thing, states must begin setting up those exchanges, and there remains plenty of resistance.  Just 18 states have said they will set up their own exchange.  Many Republican governors have indicated they will leave it up on the federal government to create one.

Julie Rovner of NPR has been covering all this and takes a look ahead.

Now, we have come to the time when the states have had to pretty much declare their intentions.  Now that’s done.  What does America’s insurance map look like now?

JULIE ROVNER, National Public Radio:  Well, as you mentioned, 18 states have said that they want to do their own exchanges.  Now, states have until February to decide if they want to do one in partnership with the federal government.

If they decide not to do that, then the federal government will build this exchange for them.  And exchanges, of course, are where people will go, individuals and small businesses, to actually purchase insurance under the new law, because, remember, most people will be required to have health insurance, or else they will pay a fine.

RAY SUAREZ:  Now, some big states, Texas, Florida, have declared they’re out.  What happens there?

JULIE ROVNER:  That’s right.

So in the cases will of those states, then the federal government will come in and build the exchange for them.  So it will look to the consumer, to the small business, the same as it would if the state had done it.  There will still be a Texas health insurance exchange and a Florida health insurance exchange.

But it will be run by the federal government and not by the state.

RAY SUAREZ:  Now, when that happens, until now, insurance has been captive inside state borders.  There is no regional marketplace.  Can the feds attain some sort of efficiency of scale by being able to run such a large number of state programs?

JULIE ROVNER:  Well, they will still be individual and it will still be basically done state by state, because insurance is still regulated within each state.

There will be — in every exchange, however, there will be two national plans.  There will be — so there will be at least two plans that will be available in every state.  That was — that is going to be true even in the states that are — where the states are setting up their own exchanges.

That was something that was stipulated by the law.  But, basically, what the hope is, is that the federal government by — now they’re going to have to set up probably 30 exchanges, instead of, it was assumed, 10 or 15.

And the idea is that they will get an idea of how to do it since they’re going to have to set up so many.  Perhaps it won’t be quite so expensive to do that.  But the idea of letting the states do it was that the states knew best what their insurance markets looked like.

This was to give these states that were probably going to be resistant a chance to have some control over what was going to happen.  Instead, the states sort of said, we’re just going to wash our hands of this.  We don’t know how much it’s going to cost.  We don’t really have any interest in facilitating this law because we don’t like it, so we’re just going to step away and let the federal government do it.

RAY SUAREZ:  And create a paradoxical situation?  Because many Republican governors, the thing they hate more than anything is federal influence in their business, and here they are inviting the federal government to run a very basic part of daily life in their states.

JULIE ROVNER:  Exactly.

I mean, that has been pointed out by many people, that you have these governors who spend all their time talking about states’ rights, talking about not having the federal government come in and run things, now saying, OK, federal government, you can come in and run this.

Now, it should be pointed out that the federal government has said that at any point states would like to take this over, they may.  So I think a lot of these governors are saying, well, we will let the federal government build it, and then maybe if it’s not so terrible, we will take it over later.

RAY SUAREZ:  With the new Supreme Court decision of 2012, the states don’t have to play with the precepts of the Affordable Care Act in running their Medicaid programs.

Do the numbers still work, the finely calibrated numbers that set up the Affordable Care Act?  Do they still work if a lot of states don’t enter that program?

JULIE ROVNER:  This is a big concern.

One of the things that the exchanges have to do is link people who are eligible for Medicaid with Medicaid.  It’s another big irony.  Depending on how the states that do it themselves do it, it can be easier or harder for that to happen.  Now, if the federal government does it, the federal government is going to make it very clear that people who are eligible for Medicaid find their way to Medicaid.

Now, people who are currently eligible for Medicaid, obviously, will get on Medicaid, and that’s why a lot of these Republican governors, even if they’re not going to expand Medicaid, which is what the law originally envisioned and what the Supreme Court made optional, those people may be left without anything.

But the people who are currently eligible for Medicaid will be steered to Medicaid if they’re eligible.  That’s called the woodwork effect.  People are expected to come forward, try to buy insurance through the exchanges, and then someone at the exchange will say, well, you’re actually eligible for Medicaid now.

Governors are having to put money for that in their budgets.  That’s one of the things governors were worried about, these people who are currently eligible for Medicaid, but not getting it.

So, then there will also be a lot of pressure, it’s expected, on those governors to expand Medicaid anyway, even if they say they don’t want to do it, because that’s going to be a big source of money for hospitals in those states and other safety net providers.

If the governors don’t expand Medicaid, those hospitals are going to lose money that they’re currently getting from the federal government to pay for the uninsured, because the idea behind the law was that, well, we’re going to expand Medicaid, so those hospitals won’t need money — this extra money they’re now getting for the uninsured, because there won’t be that many uninsured.

So these hospitals are going to go to these governors and say, look, this is free money coming from the government, or almost free money.  It pays 100 percent for the first three years.  It phases down, but it’s still 90 percent after that.  So, they say, if you don’t take it, then going to have to find the money to pay us.

RAY SUAREZ:  What else is going to happen during 2013 that people will actually notice in their lives in the way they shop for, buy, acquire health care for themselves and their families?

JULIE ROVNER:  Well, one thing wealthier people will notice is that there is going to be a couple of expanded taxes in 2013 to do some of the other paying for the things that are going to happen in 2014.

Wealthier people will see an additional tax — an additional Medicare tax.  Their Medicare — their payroll tax will go up by 0.9 percent, and there will be a tax for the first time on non-wage income in Medicare for people who earn over $200,000 for an individual, $250,000 for a couple.  There will be a tax on investment income for the first time.

There will also be a limit on what you can put aside in the so-called flexible spending accounts.  These are places you can put pre-tax money, so basically help you pay for things that your insurance doesn’t cover, things like orthodontia, perhaps, or eyeglasses, or your deductibles and co-pays on your insurance plans.

Usually, there could be no limit or a large limit of $5,000 or $6,000.  That’s being cut to $2,500.  So, those are a couple of things that some people will experience next year.

RAY SUAREZ:  Which means you will have plenty of work to do in 2013.

JULIE ROVNER:  I will have plenty of work to do in 2013.

RAY SUAREZ:  NPR’s Julie Rovner, thanks a lot.

JULIE ROVNER:  Thank you.