What’s Next for Obamacare’s Exchanges?

Published September 9, 2013

Consumer Power Report #388

What’s Next for Obamacare’s Exchanges?

We’re 22 days away from the launch of Obamacare’s exchanges, and here are three strands of activity around them that indicate concerns for their future. Moving from the smallest concerns to the largest: First, we’re seeing groups drop out of Obamacare’s navigator program, essential to signing people up for the exchanges.

The federal government awarded $67 million to more than 100 organizations across the country to hire and train navigators last month. At least two of those groups have since turned their grants back to the federal government.

Cincinnati Children’s Hospital Medical Center has turned back a $124,419 grant to enroll uninsured people at their main hospital and two satellite locations. Spokesman Terry Loftus said that the hospital decided to decline the funding after Ohio enacted new restrictions in late July that significantly limited who could participate in the program.

“We had to withdraw because of an Ohio law which makes us ineligible,” Loftus says. “It says you can’t be a navigator if you negotiate with health insurers. As a medical provider, we can’t be a navigator. We have notified the Center for Medicare Services.”

Without the federal grant, Loftus was uncertain what type of outreach work the hospital would be able to perform. … Seventeen states have so far passed laws that place restrictions on navigators above and beyond those in the federal health law, according to analysts at the Commonwealth Fund. Most of the legislation requires navigators to obtain a state license or authorizes certain disciplinary measures that can be taken against the outreach workers.

Additionally, we’re seeing an increased push from major employers to dump their retirees into the exchanges, making for an older and sicker risk pool and driving up premium costs for everyone. Here’s IBM making that decision, followed by Time Warner today.

According to an August memo obtained by Reuters, the media company will make allocations to a Health Reimbursement Arrangement account for retirees to use towards the purchase of coverage on an exchange. Previously, Time Warner provided an indirect subsidy through a supplementary Medicare program.

The shift “will ultimately be beneficial for all retirees by providing more choice of coverage … for, in many cases, a lower cost,” read the memo, which was written by James Cummings, the company’s senior vice president of global compensation and benefits.

Finally, we’re seeing predictions already that exchanges will inevitably have to restrict the plans sold outside of them in future years. Liberal Brookings Institution economist Henry Aaron and DC Health Benefit Exchange Authority Board Member Kevin Lucia write in the New England Journal of Medicine, in a piece titled “Only the Beginning – What’s Next at the Health Insurance Exchanges?”

Mundane administrative tasks will occupy the exchanges for the first year or two. But the exchanges are an instrument of enormous potential power. … To limit information overload, they may limit the number of plans insurers can offer and require that plans differ meaningfully from one another. They can require insurers to offer certain standardized plans so that customers can more easily compare price and service. Exchanges can set additional standards for the quality of care paid for by plans, bar plans that do not meet quality or price standards, and selectively contract with those that do. In addition, to strengthen the position of exchanges within the health insurance markets, states may bar the sale of insurance to individuals and small businesses outside the exchanges or require that the same plans be sold inside and outside them.

Few exchange administrators have used many of these powers so far. They have chosen instead to focus on getting the basic administrative details right and have displayed a philosophical and practical caution about overloading insurers with new requirements. After the exchanges are up and running, more of them will be forced – or have the option – to adopt policies that can reshape the financing and delivery of care.

Together, the combined capability to bar the sale of insurance plans outside the government-run exchanges – steps that Vermont and Washington, DC already have taken – and the inevitable mandatory Medicare/Medicaid licensing requirements already teased in Massachusetts illustrate the truth behind Obamacare’s government takeover of the health insurance market. The amount of disruption we are likely to see in the coming months will have an enormous impact on the success or failure of this law.

— Benjamin Domenech



Concerns continue to rise as states examine navigator approaches.

Now Congress is asking some questions of its own, including how Navigators and the organizations they work for will be spending $67 million in federal grants they received last month.

The groups are outraged that they are being questioned. “It is shocking. It is absolutely shocking,” says Lisa Hamler-Fugitt, executive director of the Ohio Association of Foodbanks, that received a $1.9 million grant.

Letters signed by 15 Republican members of the House Energy and Commerce Committee request information from 51 organizations – including hospitals, universities, Indian tribes, patient advocacy groups and community organizers – about how they intend to use the money. A total of 104 organizations shared the $67 million in grants.

“It is Congress’ responsibility to conduct careful oversight and to be good stewards of taxpayer dollars,” said Energy and Commerce Committee Vice Chairman Marsha Blackburn, R-TN. “Americans have every right to know how their hard-earned dollars are being spent to implement the president’s health care law.”

The ranking member on the committee, Rep. Henry Waxman, D-CA, who is a master at congressional oversight, blasted back with a letter of his own: “You have opened investigations of every group that received Navigator grants in 11 states,” he wrote. “And you are requesting that they provide briefings and answer a long list of questions on organization budgets and employee training, education, monitoring, review, and supervision.”


The questions Upton and 14 other members of his committee are asking are sensible questions designed to make sure that taxpayer money is being spent appropriately.

Even now, groups are racing to hire and train the navigators, with little in the way of accountability.

SOURCE: Grace-Marie Turner


Sen. Tom Coburn (R-OK) and others are asking why the administration is getting a pass on implementing Obamacare correctly:

On September 9, 2013, Dr. Coburn, with Senators Burr, Enzi, Grassley, Ayotte, and Thune, sent a letter to Acting Office of Personnel Management Director Elaine Kaplan regarding OPM’s 2010 decision to grant the U.S. Department of Health and Human Services (HHS) “direct hire authority” after the passage of the Patient Protection and Affordable Care Act.

In the letter, they outline nine issue areas with specific questions for OPM including why special authority was granted to fill 1,800 “mission critical positions” over 6 months that were “necessary for implementing the health care law,” meaning HHS would have had to hire roughly 10 candidates per day in order to fill all positions.

The letter follows OPM’s release of documents after Judicial Watch filed a Freedom of Information Act (FOIA) request …


  • Direct-hire authority is a legal authority that the OPM can give to Federal agencies for filling vacancies when a critical hiring need or severe shortage of candidates exists. This authority effectively allows Federal agencies to hire, after public notice is given, any qualified applicant without regard to other provisions of law which would otherwise place certain restrictions on the hiring process.
  • On the date of the passage of the Patient Protection and Affordable Care Act – which became law on March 23, 2010– former OPM director John Berry’s sent a letter to Denise Wells, Deputy Assistant Secretary for Human Resources at HHS. The letter states that HHS has the authority “to fill 1,814 mission critical positions at the GS-9 through GS-15 grade levels(or equivalent) as depicted above [in the letter] nationwide. This authority is based on a critical hiring in support of the Health Care Education Affordability Reconciliation Act of 2010.” The letter is says that “this authority will provide HHS with the means to meet hiring needs in support of the Act.”

SOURCE: Sen. Tom Coburn et al.


North Carolina hospitals must post prices for 140 procedures.

North Carolina Gov. Pat McCrory has signed into law House Bill 834, which requires hospitals to post their prices on 140 of their most common procedures.

Under the new law, all hospitals and ambulatory surgery centers will submit pricing on the 100 most common inpatient diagnosis-related groups, effective April 1, 2014, and every quarter thereafter, to North Carolina’s Department of Health and Human Services.

Beginning July 1, 2014, hospitals and ASCs will also provide prices for the 20 most common surgical procedures and 20 most common imaging procedures, bringing the total number of required priced procedures to 140. The original bill only called for the 50 most common procedures.

In addition, all hospitals will have to submit their charity care policy. DHHS will publish the pricing and charity care information on its website.

The law, which made its way through North Carolina’s legislature over the course of this year, came in response to several local newspaper reports that found significant variation in hospital prices for certain procedures, with some hospitals’ prices three times more than those of their peers.

SOURCE: Beckers Hospital Review


Investor’s Business Daily finds 258 employers cut work hours, jobs so far.

IBD is introducing ObamaCare Employer Mandate: A List Of Cuts To Work Hours, Jobs – a compilation of employers who have opted to restrict work hours to limit new liability for employee health coverage.

As of Sept. 3, this list has reached 258 – including more than 200 public-sector employers.

Almost all of those employers have cut the hours of part-time workers to below 30 per week – the point at which ObamaCare’s insurance mandate kicks in.

A few have cut payrolls to steer clear of ObamaCare’s 50 full-time-equivalent-worker definition of a large employer subject to employer fines. A few others have reduced staff while contracting with employment services firms to limit their ObamaCare exposure.

The scorecard reflects an extensive, though less than exhaustive, search. It only includes employers when there is convincing documentation (generally news accounts or public records) that job actions are specifically tied to ObamaCare.

For example, when Forever 21 said it was cutting hours for 192 workers to 29.5 per week or Lowe’s (LOW) said it would hire 9,000 permanent workers – all part-time – the ObamaCare connection wasn’t quite the slam dunk needed to land them on this list.

Because private firms may fear bad publicity or litigation if they admit to cutting hours to avoid ObamaCare’s coverage mandate, it’s not surprising that few would be willing to come right out and say it. It’s only logical to take their denials with a grain of salt.

Public employers, on the other hand, tend to make decisions in a much more transparent way. Even here, limiting hours for part-timers is often an administrative, rather than legislative, action, so documentation may be hard to come by.

All this is to say that the list in no way represents an accounting of ObamaCare’s actual impact on work hours.

There’s more here on Obamacare-driven cutbacks at colleges and municipalities.

SOURCE: Investor’s Business Daily


Technical problems plague exchanges.

Exchanges increasing outreach ahead of scheduled opening.

More employers overhaul health benefits.

Yes, we know premium prices under Obamacare. No, we don’t know if people will think they’re affordable.

Ten ways Obamacare isn’t working.

Liberal group makes the case against Obamacare.

HHS will allow “unbanked” people to use prepaid debit cards on exchanges.

Obamacare will only add 25 million people to insured listing over next decade, leaving 31 million uninsured.

High and varying prices for privately insured patients underscore hospital market power.

Obama administration plans $12M ad buy to promote health law.

Conservative ideas on health reform.

Obamacare August 2013 tracking poll.

Labor unions turning on Democrats.

These two maps are incredibly important to Obamacare.

Obamacare versus artists, writers, musicians, actors, et al.

No, it’s not “complicated”; Obamacare increases premiums for most people.

Early look at health law’s premiums.

Low-cost “bronze” plans under health law could leave some consumers with big medical bills.

ACA Medicare payroll tax to cost Massachusetts $1.7 billion over ten years.

Repealing the individual mandate is a budget deal winner.

Four signs health care costs are still out of control.

IRS finalizes penalty for Obamacare mandate.

Are doctors really ditching Medicare?

Clinton tries to sell Obamacare, but that dog won’t hunt.

More local government hour cutbacks due to Obamacare.