Budget office predicts rocky start for health care law

The Obama administration has been publicly upbeat about the coming rollout of its health care law. But a new report from the nonpartisan Congressional Budget Office suggests that at least one set of influential observers anticipates some turbulence in the law’s first years.

On several important measures of the law’s success, CBO’s numbers are pessimistic compared with earlier estimates: Fewer uninsured people will get coverage, insurance options will be more limited, and more employers will stop covering their workers. Perhaps most noteworthy, the report suggests that the new health insurance marketplaces set to launch later this year are unlikely to be completely ready in time.

That negativity came cloaked in the careful language of the budget office—what former Bush health official Tevi Troy called “heavy bureaucratese”—but the report signaled CBO officials are worried that key provisions of the law are not going to work as intended.

“They view the odds of success as diminishing sharply,” said Douglas Holtz-Eakin, the president of the conservative American Action Forum and a former CBO director.

The health insurance marketplaces, or exchanges, will be the place where individuals, families, and small businesses can shop for insurance using tax credits. They are a key element of the law, because they will be the place where uninsured Americans can purchase health plans.

Publicly, administration officials have promised that the new exchanges will be ready on time. In a characteristic statement, Gary Cohen, who runs the agency overseeing the exchanges, told the House Energy and Commerce Committee in December that they would open their doors for enrollment in October, as scheduled. But the CBO report expresses skepticism. The “change reflects the agencies’ judgment about a combination of factors, including the readiness of exchanges to provide a broad array of new insurance options, the ability of state Medicaid programs to absorb new beneficiaries, and people’s responses to the availability of new coverage.”

In plain language, that means CBO thinks the marketplaces won’t have many insurance choices, the Medicaid enrollment systems will not be ready for new people to enroll, and people will be less enthusiastic about signing up for new insurance options.

Critics have long been cautioning that the administration’s optimism was unwarranted. “A whole bunch of people have been saying for quite a while that these things are not going to be ready, and when they are ready they’re not going to be the be all and end all that people say they’re going to be,” said Troy, a senior fellow at the Hudson Institute.

The revised estimates only apply to the first two years of the law’s implementation—2014 and 2015. Over the long run, the CBO does expect the new marketplaces to work as they had previously predicted. But in 2014, it now anticipates only 7 million people will be insured through the marketplaces. That’s down 2 million from its last estimate, in July.

Dan Mendelson, the CEO of the consultancy Avalere Health, and a former White House budget official, said that the new estimates do not predict calamity, but they do reflect a growing awareness that implementation of the health law will not be easy.

“They are starting to adjust to reality, and reality is you have to work really hard to get people to sign up,” he said. “While I don’t think they are predicting a failure of the systems, they are acknowledging the realities that people do not sign up instantaneously.”