Obamacare’s Moment of Truth

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.

When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers.

Some consumer advocates and health care providers are increasingly concerned. Decades of experience with Medicaid, the program for low-income people, show that having an insurance card does not guarantee access to specialists or other providers.

Consumers should be prepared for “much tighter, narrower networks” of doctors and hospitals, said Adam M. Linker, a health policy analyst at the North Carolina Justice Center, a statewide advocacy group.

“That can be positive for consumers if it holds down premiums and drives people to higher-quality providers,” Mr. Linker said. “But there is also a risk because, under some health plans, consumers can end up with astronomical costs if they go to providers outside the network.”

Insurers say that with a smaller array of doctors and hospitals, they can offer lower-cost policies and have more control over the quality of health care providers. They also say that having insurance with a limited network of providers is better than having no coverage at all.

Starting this week, the White House will kick off a six-month campaign to persuade millions of uninsured Americans to sign up for health coverage as part of insurance marketplaces that open for business on Oct. 1. If too few people enroll, the centerpiece of the president’s Affordable Care Act could collapse.

But instead of offering the kind of grudging cooperation that normally follows even the most bitter of legislative battles, Mr. Obama’s foes have intensified their opposition, trying to deepen the nation’s anger about the health insurance program, which both sides often call Obamacare.

Across the country, Republicans are eager to prevent people from enrolling, fearing that once people begin receiving the benefit they will be loath to give it up. And in Washington, lawmakers have cast the law as the evil villain in a legislative melodrama about the budget that is barreling toward another government shutdown.

One group called Generation Opportunity distributed a Web video last week showing a creepy-looking Uncle Sam peering between a woman’s legs at a gynecologist’s office.

“Don’t let government play doctor,” the video says at the end. “Opt out of Obamacare.”

In the face of the intense opposition, the White House is pushing ahead with a vigorous public relations effort that will begin accelerating Monday, according to top White House aides in charge of the program.

Officials said the rollout would include a presidential event this week in New York with former President Bill Clinton and a health care speech by Mr. Obama on Thursday in Maryland. Michelle Obama will urge mothers and veterans to enroll their families. Vice President Joseph R. Biden Jr. will host a nationwide conference call with nurses to enlist them in the effort to spread the word. Members of the president’s cabinet will fan out across the country, lobbying constituent groups to prod their members into action.

Those efforts will eventually be augmented by a Madison Avenue-style advertising campaign by insurance companies, which officials say are poised to spend $1 billion or more to attract millions of new customers. Some of the ads are likely to be aimed at young people, many of whom are uninsured but healthy – and great for the insurance companies’ bottom line.

Insurance executives and government officials are rushing to address a pricing glitch in the software that operates health insurance exchanges before the online marketplaces open in less than two weeks.

The software, which affects all federally run and assisted exchanges in 36 states, isn’t accurately determining how much consumers will pay for coverage, insurance execs and people familiar with the program told the Wall Street Journal.

What’s more, testing of the price tool was scheduled to begin months ago, but the federal government only started last week testing it with some insurers. Molina Health Care, which will offer plans in seven federally run exchanges, said calculator testing hasn’t been completed in six states, but went well in one.

“There’s a blanket acknowledgment that rates are being calculated incorrectly,” one senior health insurance executive anonymously said to the WSJ. “Our tech and operations people are very concerned about the problems they’re seeing and the potential of them to stick around.”

Despite this and other technical glitches that have arisen in the last few weeks, the Obama administration insists the exchange open enrollment period will start on time. “We may encounter some bumps when open enrollment begins but we’ll solve them,” Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, told a House panel on Thursday.

The Obama administration’s readiness for the exchange launch has been called into question multiple times over the last few months. The U.S. Government Accountability Office warned in a June report that untested health information technology and slow consumer outreach jeopardize the start of exchange open enrollment.

Part of the problem is that the exchange pricing tool must make eligibility determinations and subsidy calculations based on information transferred from several organizations, including the U.S. Departments of Treasury and Homeland Security, Stateline/Kaiser Health News reported.

Some states are running their own exchanges, while others are letting the federal government handle that task. Some are pushing ahead with the biggest expansion of Medicaid – the federal-state program for the poor – since its creation in the 1960s. Others aren’t extending local eligibility rules for Medicaid. Some are giving generous funds to “navigators” who are supposed to help people sign up. Elsewhere, navigators face restrictions.

“Your prices, your consumer experience will differ dramatically across states or even regions in states,” said Joel Ario, managing director at Manatt Health Solutions, a New York-based health-care consulting practice. Rural areas will likely have fewer insurer choices than urban areas, where insurers are competing more vigorously for new customers.

The divergences could make it harder to judge the law’s success, at least initially. With the health law, President Barack Obama envisioned expanding medical coverage for most of the 48 million people who currently don’t have it and placed confidence in governments to run the system smoothly. Critics called his plan a government takeover of health care that would result in bureaucracy run amok and higher costs. After coverage begins Jan. 1, gauging which of those scenarios will be closer to the truth could vary depending on the conditions in each area.

In general, the states that declined to run their own exchanges are the ones where conservative legislators and voters have been most hostile to “Obamacare.” Many of those states also have had historically tight eligibility for Medicaid and are generally declining to expand it now. And they are also the states most likely to have added restrictions on navigators.

Not all the differences fall along a red state-blue state divide. Both Kentucky and Missouri voted against Mr. Obama, but Kentucky is running its own exchange and using state employees to encourage enrollment, while Missouri is relying on the federal government’s exchange and barring state employees from helping.

The price of insurance policies available on the exchanges varies by area – and just as importantly, the perception of the prices is likely to be different. Some states have long had tight restrictions on the kind of policies that can be sold to individuals and small businesses, resulting in relatively higher prices. People in those states aren’t likely to see big premium jumps. In states that left insurers with a freer hand, some people face greater price increases.

While the Obama administration has pushed back for a year a mandate requiring many employers to start covering their workforces, officials have moved forward on the new insurance exchanges, which they hope will promote competition among insurers and drive down the cost of individual and employer-sponsored coverage.

Called DC Health Link, the District’s site will house two separate marketplaces, one for individuals and one for small business owners, where residents can purchase plans from several carriers and apply for tax breaks.

“At this point, we are testing the heck out of the system,” DC Health Link Executive Director Mila Kofman said in an interview, noting that her team passed the final security inspection from the Internal Revenue Service last week.

All that remains is a final operations review from federal regulators before the team can plug into a central data hub, which will give them access to the information they need from the IRS, Veterans Affairs and Homeland Security. For instance, the hub will connect all state-run exchanges to citizenship and income records, which are necessary to determine whether enrollees are eligible for coverage and tax breaks.

Kofman expects to complete that last step in the coming days, and the site will go live on Oct. 1.

A Wall Street Journal/NBC News poll found that even those lacking health insurance, who are supposed to be the law’s biggest beneficiaries, generally believe it wouldn’t do them much good. In a new poll, a large number of uninsured say the new federal health-care law, known by many as ObamaCare, will have a negative effect on their family.

Overall, nearly 70% of poll respondents said they didn’t understand the health-care overhaul passed by Democrats in March 2010 or only understood a part of it. Only 31% said they thought the overhaul was a good idea, with 44% saying it was a bad idea and 25% saying they didn’t have an opinion or weren’t sure.

Uncertainty over the law has created a window for political groups on both sides to try to shape opinion in advance of midterm elections next year. Conservative organizations such as Americans for Prosperity have begun television advertisements criticizing the law, while Organizing for Action, the spinoff of President Barack Obama’s re-election effort, is running ads in its favor.