The Affordable Care Act, or Obamacare, as it’s more commonly known, has been a nonstop drama this year. From the budget crisis, partly precipitated by attempts to repeal it, to the debacle that is the Act’s web portal, Obamacare has been in the news pretty consistently. Now, with the difficulty people are facing in signing up and the cancellation of health care plans across the country, the public is more confused and annoyed than ever.
Whatever your political stance or personal feelings about healthcare, it’s a complicated issue. I’m hopeful that this general overview of what’s going on will help you to navigate the new legislation with more clarity and confidence.
What’s Going on?
To summarize, the Obamacare sign-up portal went live with an absolute dismal performance. Few people were able to actually sign up, causing general confusion and aggravation about the program. When people began receiving notices that their health insurance plans were being cancelled (it was promised that they wouldn’t), pandemonium broke out. Would people be able to keep their policies, or was this no longer the case? Would you still get fined for not signing up for a new policy through the portal, even if you didn’t sign up simply because you couldn’t?
For now, it looks like state regulators will have to decide whether to allow cancelled plans to operate despite their conflict with the regulations, and whether insurers will reinstate the plans of those who lost them. The fines will probably remain in place for now. Unfortunately, the trouble with these fines is that for some young, healthy people, paying them and eating any medical costs is cheaper than paying their required insurance premiums. There is also some debate about whether the Internal Revenue Service can feasibly enforce the fines. This doesn’t provide a very compelling incentive for these people to sign up, and having healthy people as part of a health insurance plan is a critical way to keep it going; healthy people don’t use as many medical services, so their premiums can be used to subsidize the costs of the less healthy.
What’s Happening Now?
The site has been effectively re-launched and seems to be working for most people. It helps that there are some built-in failsafes to keep servers from overloading – if you log on, you may find that you are asked to wait a few minutes before proceeding with the application. As traffic increases and other problems are addressed, there is hope that this will get easier (though, as one commentator put it, now all the journalists and politicians get a chance to try and find ways to crash it!). But, of course, there are still some major issues. As of December 2, insurers are still reporting major problems with application forms, ranging from inaccuracy to incomplete information. There are also reports of thousands of applications going missing; in other words, users may think that they’ve signed up, but there insurer has no record of the application.
I went on the website to check out the new features on December 5, and I have to say I was amused to find nothing but the Google Chrome sad face – the website is not functioning. I guess all those journalists and politicians were successful!
On the legal side, there is some continuing controversy about the ability of the IRS to effectively assess penalties, and there are lawsuits pending about just this issue. For example, Oklahoma (along with others) has sued to stop the government from imposing penalties in certain situations. The challenge was raised in 2012, and with the continued lack of legislative clarity about the ACA’s scope for enforcing penalties, it will probably continue for some time.
Finally, in response to many consumers whose health insurance plans were cancelled due to noncompliance with the ACA, the President has announced that insurers could elect to allow consumers to keep their plans through 2014. In other words, if certain key conditions in the plans are met, insurers have the option to meet them and continue the plans, or to cancel them and offer compliant ones to their customers. Though the president put the ball in the insurer’s court, in my opinion they don’t have much incentive to hang onto the old plans. They’ll have to switch people over after 2014 anyway and have already invested in new plans, so it doesn’t seem like much will come of it for most consumers.
Some other plans (both job-based and individual) are also covered under a grandfather clause, which means that if they meet certain criteria, consumers can keep them even though they are technically noncompliant. The offering of these plans is also at the discretion of the insurance company, and the grandfather clause evaporates if there are any major changes within the plan that affect benefits, coverage, or out-of-pocket spending.
What Should You Do?
Healthcare in this country has never been a simple matter, and it looks like that’s going to continue. There is no easy answer to what you should do – do you sign up for a plan once the website is working? Do you stick with your old plan? Do you pay your fines and continue on your way? This really all depends on your individual health, the needs of your family, your outside options, and your beliefs about what’s right for you. I suspect many people are waiting until the March 31 deadline for having coverage approaches, with the thought that all the major glitches should be more or less sorted out by that time. In the meantime, people have had some better luck with the portal and with the Obamacare toll-free number (800-318-2596).
Whatever your politics or beliefs about insurance and health, one thing is certain: This new legislation has been complex, and it looks like the implementation will still take some time before things are operating smoothly. For now, I am watching and waiting to see how things go over the coming months, which seems to be what most of Washington is doing, too.
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Written by Bradford Pine
Bradford Pine Wealth Group – New York City Financial Advisors
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