Measuring Success of the Implementation of Insurance Exchanges

In the movie “Night at the Museum: Battle of the Smithsonian” come-to-life wax-figure General George Armstrong Custer – when facing a particularly threatening situation – shouts “We’re Americans! We don’t plan. We do!” Ready or not, what America is about to do is witness the implementation of President Obama’s 2010 Affordable Care Act (ACA). The success or failure of the implementation of ACA will have serious political ramifications for both Congress, President Obama, as well as for the American people. Yet it seems there is little uniformity of thinking about how health reform – and more specifically the implementation of the health exchanges, currently moving forward in 28 states – should be measured.

State response varies
It’s been over a year since the U.S. Supreme Court delivered its surprising two-part decision on the ACA. While the justices upheld the individual mandate to buy health insurance, they weakened the ACA’s plans to uniformly expand Medicaid. The June 28, 2012, decision ruled that the federal government could not force states to accept the Medicaid expansion. Since that ruling, state policies toward the question of Medicaid expansion have varied widely. Before attempting to suggest some evaluative criteria for measuring the success of implementation, some background on state’s attitudes opposing the Medicaid expansion program is warranted.

The ACA is still a widely unpopular law, with many continuing to call for its repeal or delay. Implementation of health exchanges will not occur in 22 states because the state governments have chosen not to expand their Medicaid programs. One of the main reasons why these 22 states have opted not to expand Medicaid to cover families earning up to roughly $30,000 per year (or 138 percent of the poverty line) is partially because they want to “halt expansion of a program that provides limited access to quality care while devouring state budgets”1. Frankly put, these states do not want to add more people to a federal/state program that has “not been fundamentally changed since it was created in 1965”2. Additionally, these states are skeptical of the federal government’s claim that it will cover 100 percent of the expansion costs for the first three years, and 90 percent after that. Some states don’t exactly see the federal government as their best long-term business partner. Subsequently, these states argue there is no guarantee this match rate will not decrease in the future and their taxpayers will get stuck footing a massive bill. Plus, the administrative cost of a Medicaid expansion rests with each state. Ultimately, what these (largely) conservative states holding out want is control over their own health care programs and the opportunity to reform their own systems as they see fit.

The policy implications of not expanding the Medicaid program are significant. The Congressional Budget Office (CBO) reported in May 2013 that there were 53 million uninsured persons in the United States, including uninsured illegal aliens, prior to the ACA enactment.3 In that report CBO stated that while the ACA would reduce the number of Americans without insurance by about 50 percent, covering roughly 25 million new Americans over the next decade,4 there will still be roughly 31 million individuals left uninsured by 20235. In addition to undocumented workers, those Americans living below the poverty line in states not expanding their Medicaid programs will be in this group of 31 million Americans still without health insurance. Today, this is the reason why the United States can only be truthfully categorized as having a “near-universal” healthcare system.

Some proponents of the ACA indicate that once the majority of Americans “just understand how great a deal the ACA is” all states will be politically forced to expand their Medicaid programs. This viewpoint is what is derisively referred to as the “enlightenment” argument. Yes, there is no deadline for states to expand their Medicaid programs, but the outlook seems indeed bleak for these 31 million in America still left uninsured. These individuals, who are both below the poverty line and not eligible for Medicaid and/or government subsidies to buy insurance, are left with the same limited options they have always had: rely on free health clinics and/or hospital emergency room visits.

Measuring
How to determine evaluative criteria is problematic given the differing perspectives. Reasonably, a good place to begin an identification of criteria for success of implementation would seem to be with the federal Centers for Medicare and Medicaid Services (CMS). However, the government is also scrambling to identify criteria right now. In a recent conversation with a senior CMS official, not much advice was given about what health policy experts and members of the general American public should be looking for in determining whether or not the implementation of health exchanges is successful.

Further complicating matters is the lack of overarching and uniform criteria that states can use as guidelines to establish their exchanges; therefore, it is possible for no two health exchanges to produce the same results. In all fairness, it is a very complicated time to be working for CMS because of the shear scope of the ACA implementation. With regard to identifying success criteria, the CMS official added “that’s what we’re trying to figure out now.” Maybe it is comforting to know that CMS is as unsure about measuring the success of implementation as everyone else seems to be, despite the fact that CMS is not only tasked with creating the federal health exchange but also ensuring that each state participating in the program establishes its own exchange.

Observations
Lee Marks, State Government Executive for Orexo – a specialty pharmaceutical company – in an interview for this article, expressed initial concerns that few Americans would initially take advantage of the newly established health exchanges. This isn’t hard to imagine given the misinformation out there about the ACA, as well as considering the complexity of the exchanges. Marks offered some interesting criteria that can be used to determine the success of the recently established insurance exchanges. For instance “whether state or federally administered, these are ‘virtual’ marketplaces, as such it would seem that considerable data on access to and activity on these websites could be measured both over time and for depth of individual participation”.6 This is an interesting point since states will be publishing information regarding their health plan enrollment on a quarterly basis. Therefore, in the future, these figures will be something to pay attention to as they are released.

In another interview for this article with a Governor’s Chief of Staff – from a large southern state – who observed “that there are so many unknowns right now is sufficient enough evidence to believe the exchanges should be delayed or defunded.” Someone should definitely take this state out of the “undecided” column.

According to a long-time health care consultant at a D.C.-based government affairs firm: “This is a difficult question to answer because there is no one, clear-cut definition of ‘success.’ For instance, success depends a lot on your perspective, politics, and goals. Something all Americans need to keep in mind is the fact that success is surely going to be defined differently by every state participating in the program. For instance, it is not unreasonable for some states to seamlessly implement their programs while others suffer some hiccups or even outright fail. Furthermore, the administration’s definition of success will be different than a liberal activist group’s definition, or that of a union or a small business, or that of a bunch of conservative state employees. I don’t know of anyone who has or can put out an authoritative measure on success.”

On one hand there have been some seemingly flawed criteria which have been put forth by some talking-heads in the media. For instance, these included “the difference in premium prices and the number of people who initially sign up for coverage in the exchanges.” Another measure put forward is the sheer number of states which agree to implement the expansion. These criteria are flawed measures of success because comparing between premium prices is hard as you can’t make an apples-to-apples comparison between old policies and new ones. Also, comparing the number of people who actually sign up for insurance through the new exchanges is similarly flawed because these figures will be compared to artificial estimates made several years ago.

Maybe the short-term viewpoint about success is incorrect. Maybe the country should be taking a longer-term view of things rather than judging the success of the exchanges on Jan. 1, 2014. For instance, some long-term success criteria to consider might be the tax incidence on the American people and the ultimate number of Americans left uninsured. We also need to understand that implementation of exchanges is uncharted territory and is causing a lot of big changes in the insurance market. Another good long-term criteria will be if insurance coverage is uniform across each participating state. Maybe it is as simple as determining, in say five years, if an individual, a business, or a state government, will be able to purchase cheaper and better coverage? Or, will the ACA fail to significantly increase quality and coverage as it brings down healthcare costs?

Ultimately, in the coming months there is going to be a barrage of reports put forth by the media, government and various political groups advancing their own metrics of interest. Nevertheless, time will be the judge in determining success of ACA implementation and specifically the exchanges. Clearly, there are going to be problems along the way. However, it will reasonably take years before we can objectively say whether or not this policy implementation was successful or not.

Currently there is much debate as to what will happen to the American healthcare model. Very few individuals know what a successful implementation of the health exchanges will look like; what it will entail, what evaluative criteria should be used, and when success or failure can be determined. Since nobody really knows, there is that old saying about “patience being a virtue” to consider.

Note: The author wishes to specifically thank Brandon Cheslock, Undergraduate, Columbian College of Arts and Sciences,
a Political Science Major, at the George Washington University, for his research assistance and contributions to this article.

  1. Turner, Grace-Marie, and Avik Roy. “Why States Should Not Expand Medicaid.” Galen.org. Galen Institute and
    Manhattan Institute for Policy Research, 1 May 2013. Web. 17 Sept. 2013. www.galen.org/assets/StatesshouldblockMedicaidexpansion.pdf
  2. Ibid
  3. United States. Congressional Budget Office. CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage. Congressional Budget Office, n.d. Web.
    www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf.
  4. Ibid
  5. Sarah, Kliff, and Lena H. Sun. “Left Behind: Stories from Obamacare’s 31 Million Uninsured.” Washington Post. The Washington Post, 12 May 2013. Web. 17 Sept. 2013. www.washingtonpost.com.
  6. 9-17-13, Email interview, Lee Marks, State Government Executive, Orexo
Robert T. Yokl About Robert T. Yokl

Robert T. Yokl is president and chief value strategist of Strategic Value Analysis® In Healthcare, which is the acknowledged healthcare authority in value analysis and utilization management. Yokl has nearly 38 years of experience as a healthcare materials manager and supply chain consultant, and also is the co-creator of the new Utilizer® Dashboard that moves beyond price for even deeper and broader utilization savings. For more information, visit www.strategicva.com. For questions or comments, e-mail Yokl at bobpres@strategicva.com.

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