Affordable Care Act / Economy / Healthcare / Regulation

A Drop in the Bucket: the Obamacare Application Gets a Reboot

Flexible and nimble, these are the words chosen by one Obama Administration official as part of the announcement earlier this week that the application to apply for health insurance through the Affordable Care Act’s (ACA) shiny new state exchanges would be trimmed to three pages. The presentation of the new form, meant to remind the public of the Administration’s pledge to be more responsive than its predecessor, follows growing criticism of initial drafts that some claims placed as high as 60 pages.

This announcement will certainly generate plenty of buzz, but a new Kaiser Family Foundation poll suggests excitement about the Affordable Care Act is far from the norm. Indeed, so might be a basic knowledge of the Act’s existence. According to this research, fewer than six in ten Americans are aware that the signature achievement of President Obama’s tenure is still law. Despite comprehensive media coverage of last summer’s Supreme Court decision, which famously upheld the ACA’s individual mandate, seven percent of those surveyed believe the court overturned the law.

But what does this new three page application mean? The new application strikes at least 18 pages from the previously dense iteration, which the administration admits was due to a law that is an amazingly complex piece of legislation. Ten separate ‘titles’ comprise the law, stretched out over an impressive 2,409 pages which one industry analyst from Forbes estimated required 40 hours to make a clean read-through.

It is not surprising then, that almost 60% of those uninsured feel that they do not have enough information about the ACA to make informed decisions regarding coverage. A further 78% were unaware that coverage eligibility begins in 2014.

These three flashy pages likely represent the administration’s opening salvo in a campaign they call ‘Enroll America’ lifting off this summer with the aim of drawing American attention to the ACA’s new health care regime. But if these Americans look beyond these 3 pages, they may not like what they see.

The American Action Forum (AAF) celebrated the third birthday of the ACA this past March by examining the holistic impact of this reform-minded legislation. Despite the fanfare surrounding the removal of 18 pages from the application for enrollment, AAF has catalogued federal agency estimates of the rules associated with the ACA and found a total of 111 million hours of paperwork to be filled out to comply with the Act’s requirements. Assuming a standard 2000 hour work year, this paperwork would require 5,500 employees dedicated to nothing other than navigating red-tape for a calendar year to meet the reporting obligations of the ACA.

The associated costs of these obligations total $30 billion in private sector burdens. This figure is up from $12 billion a year ago, meaning that a piece of legislation meant to curb the rising cost of health care in the United States has more than doubled its own cost burden in one year. Despite these rising compliance costs, the cost trajectory is nowhere but up as many of the rules concede that additional costs will likely find their way to consumers in the form of premium increases. Investigating these agency admissions, an AAF survey of insurers estimates that young, healthy Americans face a premium increase of 169%.

The answer, therefore, to the question posed above is that this three page application means that all Americans should take notice, though perhaps not as much as the States. The ACA examinations highlighted above demonstrate the increasing complexity of the health care law, a need for information unlikely to be met in three pages. This means the Obama Administration is likely banking on state agencies to fill in the gaps with robust compliance and reporting regimes of their own.

The ACA already imposes $9.8 billion in unfunded state mandates. The need for state governments to avoid consumer fraud by picking up the mess left by the federal government’s attempt to curtail its own information intake represents a hidden mandate of, as yet, unknown size. Taken together these burdens underscore a law that has made little progress in achieving its mission of cutting health care costs.

Three pages, awesome.