Published October 03, 2013
With all the chaos happening on Capitol Hill amid the government slimdown, there may be a better approach to looking at the situation that falls outside of the realm of politics. Any business person looking at ObamaCare would assess the cost and benefit of it to determine key business metrics such as return on investment, net present value and how to measure performance.
There are five specific areas that Congress and the administration can look at together that put in place specific parameters as it pertains to ObamaCare, funding and ultimately the debt ceiling.
1. Implement spending limits on the federal exchanges
The U.S. Department of Health and Human Services (HHS) has clearly exceeded its limits in terms of funding required to implement the federally run exchanges in states that do not establish their own.
Any funding beyond what was budgeted when the Affordable Care Act was passed and should be tied to specific standards, timelines and budgets that are proved by both Congress and the administration so that there is no expectation that there is a blank check for implementing the federal exchanges, and that it’s okay for the dates and key milestones to be a moving target. If one were to look at the initial approved budget for the implementation of the exchanges, this has clearly exceeded initial estimates; especially since the Supreme Court Ruling allowed more flexibility for the states in terms of the direction they choose to go.
The health care law did not provide any funds specifically for HHS to set up a federal fallback exchange because lawmakers initially envisioned most states setting up their own marketplaces. The cost of running the operations for the federal exchanges is a black hole, and it is important for Congress to get those answers and set standards.
2. Make sure the exchanges work
No technology is expected to be perfect on day one. But no business-minded person would make an investment in technology without having specific standards and requirements for performance before a product is allowed to go live. Furthermore, no business would set an unlimited budget to pour good money after bad for a product that isn’t working just because there was a budget for it.
Similarly, the federally run exchanges need to be held to specific standards of compliance in terms of number of mistakes that are allowed, as well as how effective they are in enabling consumers to sign up for plans easily, and ensure that the plan calculators on the websites are working. If these milestones are not met then funding for the exchanges should be withheld until those perameters are rectified within a certain period of time, or the funding stops.
3. Verify what people earn
A major part of how the exchanges work, and how the subsidies are supposed to be paid out, depends upon sophisticated data hubs that are able to share information about individual and household incomes. At the moment, the exchanges are relying on self-reported data to determine who is eligible for subsidies because these data hubs don’t work. The funding for the subsidies should be tied to an automated verification for individual and household income so that we have checks and balances in place to know where the money is going. Without the ability to verify, the government might as well just write everyone a check. That’s not to say that the average American is dishonest, but without the right processes in place, we have no way of really knowing.
4. Set limits on Medicaid expansion
At least 22 states are expanding Medicaid to cover most adults with income up to the poverty level or slightly above. As many as 28 states aren’t expanding the program and some of this burden may fall on the federal government, which is yet another unintended consequence. The federal government needs to be given a timeline and specific perameters for Medicaid expansion, and a defined budget for what they will spend in each of these states to ensure coverage. Otherwise, it is likely that we will see ourselves in a situation where the cost of expanding Medicaid coverage in at least half the country will surmount the budget for implementing the Affordable Care Act and the exchanges.
5. Show me that I can keep my doctor
The administration has said repeatedly that a key provision of ObamaCare would be that if you like your doctors you can keep them. But the reality is that many insurance companies participating in the exchanges will narrow their physician networks so that they can survive and provide policies with premiums that help them stay afloat. It’s time to start measuring how many individuals actually are able to keep their doctors to determine whether the exchanges are really working, and whether further funding should be provided to companies that don’t provide adequate choices for consumers.