Why Obamacare’s Second Year Won’t Necessarily Be Easier

Changes in the landscape could eliminate some problems while creating others.

MIAMI, FL - MARCH 31: Gexon Orozco sits with his mother, Claudia Gonzalez (L) and grandmother Consuelo Salmeron (R) as he attempts to get a health care plan under the Affordable Care Act from an agent with the Sunshine Life and Health Advisors at a store setup in the Mall of Americas on March 31, 2014 in Miami, Florida. Today is the last day for the first yearly sign-up period and Sunshine Life and Health saw a wait of four hours or more for people to see a health insurance advisor.
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Sam Baker
June 5, 2014, 5 p.m.

The White House hasn’t hit the far side of the Obama­care learn­ing curve yet.

After meet­ing its first-year en­roll­ment tar­gets prac­tic­ally in spite of it­self, the ad­min­is­tra­tion is look­ing at a year two in which suc­cess won’t simply be a mat­ter of rep­lic­at­ing year one. The Obama­care land­scape is already chan­ging in big and some­times un­ex­pec­ted ways, mak­ing the law’s next open-en­roll­ment peri­od — the second of three in­ten­ded to col­lect­ively ex­pand health care cov­er­age to some 26 mil­lion un­in­sured Amer­ic­ans — a dif­fer­ent kind of chal­lenge, but not ne­ces­sar­ily a less­er one.

For starters, the ad­min­is­tra­tion will have half as much time to meet its second-year tar­gets. The 2015 open-en­roll­ment peri­od, which has been delayed un­til after the Novem­ber midterms, is just three months long. This year’s was six months, and the ad­min­is­tra­tion needed every minute of it (plus a short ex­ten­sion).

To be sure, the first two months of the 2014 open-en­roll­ment peri­od were lost to the dis­aster that was Health­Care.gov, and, the­or­et­ic­ally, that won’t hap­pen again — which should help. (Al­though, the­or­et­ic­ally, it shouldn’t have happened the first time.)

“Hope­fully, one big dif­fer­ence the second time around will be a work­ing web­site from day one,” says Larry Levitt, seni­or vice pres­id­ent for spe­cial ini­ti­at­ives at the Kais­er Fam­ily Found­a­tion. “Long term, one would like to see im­prove­ments in the shop­ping pro­cess as well, though I’m not op­tim­ist­ic they have time to make many changes and test them for this next year.”

A couple of big changes to Health­Care.gov are already un­der­way, however, and those might boost en­roll­ment — or they might hinder it. The ad­min­is­tra­tion is in the pro­cess of re­pla­cing many of the site’s con­tract­ors, a move that of­fers a chance to ditch the deeply flawed sys­tem and its myri­ad tem­por­ary patches but also re­quires re­peat­ing the same pro­cess of con­struc­tion, in­teg­ra­tion, and test­ing that went so poorly last time.

In ad­di­tion, the site’s work­load is grow­ing. Thirty-six states re­lied on Health­Care.gov this year rather than on their own ex­changes, and that num­ber will in­crease for 2015. Ore­gon has already de­faul­ted to the fed­er­al web­site. So has Nevada, al­though it says the move is only tem­por­ary. Mas­sachu­setts is try­ing to fix its broken ex­change but has laid the ground­work to join Health­Care.gov if that doesn’t work. Oth­er states with faulty ex­changes, such as Hawaii, could fol­low. Bring­ing those states in­to the fed­er­al sys­tem could boost 2015 en­roll­ment slightly, be­cause many of their eli­gible res­id­ents who wer­en’t able to sign up this year will likely still want in­sur­ance. But that pre­sumes that the site, and the hu­mans be­hind it, will be able to keep up with the de­mand.

That will be the acid test, be­cause if there’s one clear les­son from the 2014 ex­per­i­ence, it’s that there’s plenty of de­mand for health in­sur­ance. More than 8 mil­lion people se­lec­ted a private plan through the ex­changes dur­ing the six-month open-en­roll­ment win­dow, al­most half of them in the fi­nal six weeks.

The biggest po­ten­tial threat to strong en­roll­ment in 2015 — big premi­um in­creases — doesn’t seem to be ma­ter­i­al­iz­ing, at least so far. Some in­surers and ana­lysts warned of massive cost spikes for 2015, which would not only make the ex­changes less at­tract­ive to new cus­tom­ers, but could also cause ex­ist­ing cus­tom­ers to drop out.

Only a hand­ful of states have re­leased their 2015 rates, but the in­creases so far are not nearly as big as crit­ics pre­dicted. And some in­surers even plan to cut their prices next year.

One factor keep­ing premi­um hikes in check: More in­sur­ance com­pan­ies are jump­ing in­to the ex­changes. “It’s clear from early re­ports that there will be more in­surers par­ti­cip­at­ing in the mar­ket­places, in­clud­ing in some areas where only one choice was avail­able this year. I haven’t yet heard of any in­surers drop­ping out,” Levitt said.

In par­tic­u­lar, ma­jor in­surers with big mar­ket­ing budgets are en­ter­ing the mar­ket­places or ex­pand­ing their pres­ence, of­ten com­ing in with low rates — which at­tract the health­i­est cus­tom­ers, which, in turn, forces com­pet­ing in­surers to keep their own premi­ums down. With a pool of po­ten­tial en­rollees that’s pre­sumed to be some­what health­i­er than this year’s, more in­surers are be­gin­ning to see the ex­changes as a good busi­ness op­por­tun­ity.

That’s one of the biggest changes in the Obama­care land­scape, and surely the one the White House is hap­pi­est about as it heads to­ward 2015.

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