Glitches and all, Obamacare can work if given a chance. But it’s more complicated than your average piece of historic social legislation. That’s in part because the Affordable Care Act has set off a cascade of other changes in the U.S. health insurance industry. “What the ACA has done is put all 300 million-plus Americans in the mode of thinking about health care,” says Jim Winkler, a chief innovation officer at Aon (AON), a London-based company that operates a private insurance exchange in the U.S.
The trickiest part of Obamacare is the awkward combination of private insurance for the rich and public insurance for the poor. The political gene-splicing produced a hippalectryon: half horse, half rooster, and entirely ungainly. Middle- and upper-income families will stick with employer-sponsored health insurance. Poorer Americans will get expanded Medicaid or receive subsidies to purchase private insurance through the new government-sponsored websites known as exchanges.
The problems mainly involve the people who are stuck in between, including low- to moderate-income, full-time employees. They’re poor enough that they would qualify for government subsidies through the exchanges. But Congress wanted to suppress the number of people on exchanges and preserve employer-sponsored health insurance. So the ACA bars people from buying subsidized insurance through an exchange if they have the opportunity to buy affordable insurance through their employers. Some of these workers will be allowed to sign up for benefits in 2014, but they will be kicked off in 2015 when the employer mandate takes effect after a one-year delay. For millions of lower-income Americans, though, receiving insurance through their employers might not seem like a benefit at all, but an obstacle to getting cheaper, potentially better coverage through an exchange.
Those subsidies make all the difference. For a New Jersey family of four earning $50,000, the unsubsidized premium for benchmark coverage (the second-cheapest “silver” plan, covering 70 percent of expected expenses) is $943 a month. After applying a tax credit, the cost drops to $282, according to data released by the government on Sept. 25. President Obama, appealing to the young, healthy, and uninsured that he needs to sign up, said that for some, “you’re going to be able to purchase high-quality health insurance for less than the cost of your cell phone bill.”
One reason congressional Republicans are fighting Obamacare so hard—to the point of threatening a government shutdown—is their fear that once it’s in operation, it will unleash forces that will lead to the expansion of government-subsidized insurance. That fear isn’t unfounded. After all, one obvious way to help the low-income workers who are barred from subsidized coverage would be to change the eligibility rules. That could be done by simply declaring more employer-offered plans unaffordable to their low-income employees. If a company’s offering is declared unaffordable, then the company’s low-income workers would qualify for subsidized insurance. In an e-mail, Dr. Jay Bhattacharya, a professor at Stanford University School of Medicine who wrote about the law in the current issue of Health Affairs, said: “It’s hard for me to predict what Congress will do, but I think there will be a lot of pressure to switch over from people who are put in a tough situation because of the current interpretation.”
Obamacare could also expand if more part-time workers throw in their lot with the exchanges. Currently they’re not eligible for subsidies if they work at a job for 30 hours a week or more. (Their employers are required to offer them coverage.) Raising that threshold to 35 hours a week would relieve employers of responsibility for multitudes of part-time workers—and give the employees a shot at the public subsidies. Even if the law stays as is, some employers may reorganize to get more of their workers below the 30-hour threshold and onto the exchanges.
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