Obamacare 2.0: More regulation
By: Jason Millman
January 31, 2014 06:10 AM EST
Part of a POLITICO Pro Special Report series on the Obama administration’s executive action and regulatory agenda.
The president’s health care law may finally be up and running, but the regulatory lift to get the Affordable Care Act working at full capacity is far from over.
Four years after the law’s passage, some major provisions still await regulatory action or have been delayed because of the Obama administration’s struggles to get core elements in place in time for the start of enrollment last October. Large businesses haven’t seen final rules for the employer mandate, and insurers are waiting for more details on the benefits they’ll have to offer in the future.
More than a dozen rules, ranging from technical to significant, are slated to come out this year or later. That count, detailed in a Congressional Research Service report this month, doesn’t include several dozen proposed and final rules that were expected during a 12-month period dating back to last July. Pending changes like new nondiscrimination standards for health plans will broadly affect the health care industry. Others, such as new calorie-count requirements on menus and vending machines, will be felt in the business community.
Federal agencies’ work since Obamacare became law totals tens of thousands of pages of specifics drafted on insurance market reforms and tax provisions. The fact that the work is still unfinished isn’t surprising given the huge regulatory undertaking that the law triggered.
Facing tight deadlines, a bitterly divided Congress and negative public opinion, officials prioritized which ACA pieces to put in place before coverage expansion took effect Jan. 1. During the past several months, the administration showed that it wouldn’t hesitate to act on its own to diminish political headaches stemming from Obamacare implementation failures.
Some of the most important actions ahead may be impossible to predict until after the initial open-enrollment period ends March 31. At that point, the administration will start to see how the health care law is playing out and decide how to best smooth out the rougher edges, said George Washington University professor Sara Rosenbaum. These include issues related to getting people connected to the right coverage and the right source of subsidy as well as minimizing the effects of “churn” among people bouncing between Medicaid and exchange health plan eligibility.
“There are so many downstream questions,” said Rosenbaum, who supports the health law. “Like with any program, in implementation you need a second generation of policy, and the problem with the rocky rollout is we’re very delayed in focusing on the second-generation questions, which are inevitable in any major health reform effort.”
The administration, though, is still addressing first-generation problems.
Following weeks of harsh criticism over policy cancellations, the White House announced in November that canceled individual health plans could be extended for at least another year, and the White House has left the door open to extending the policies beyond that. That delay came months after the administration unilaterally postponed the law’s key employer mandate.
Final rules for that mandate, now scheduled to take effect in 2015, are being hammered out. Businesses with at least 50 employees will face fines if they don’t offer health coverage meeting minimum standards to full-time workers and if employees then get subsidies on health insurance exchanges.
The administration is also now weighing whether and how to exempt some groups from an Obamacare fee — known as the “belly button tax” — that is intended to support a $20 billion reinsurance program. The program is meant to provide financial protection to insurers if too many sick patients sign up for coverage right away.
The proposed carve-out is getting new pushback from some sectors. Industry experts say it likely favors unions, while the unions say the proposal is vague and as written won’t benefit them much.
“I’d really like to see the transparency for what will be the impact of the change,” said Gretchen Young, who leads health policy for the ERISA Industry Committee representing large employers.
The Supreme Court may also force the administration to rewrite regulations if there’s an adverse ruling on its contraceptive mandate. In the next few months, the court will consider whether for-profit, secular businesses can claim a religious exemption from the requirement that their health plans cover contraception. An array of religious-affiliated organizations are mounting similar challenges, contending that a regulatory exemption created by the administration falls short.
Meanwhile, two key agencies continue to revisit regulatory issues.
The FDA is still wrestling with long-delayed rules on the ACA’s menu labeling provisions, which add calorie count requirements for most restaurant chains, vending machines and grocery stores. Food retailers and pizza chains were particularly angered by the requirements initially proposed.
HHS will soon reconsider rules on essential benefits, which dictate what health plans in the small group and individual markets must cover. The rules originally gave states and insurers more leeway to design benefit packages in 2014 and 2015, but consumer advocates pushed for a more prescriptive approach.
As issues around the health care law continue to emerge, the still-divisive politics of Obamacare make it unlikely that lawmakers will be able to agree on even minor fixes, said Sam Batkins, director of regulatory policy at the conservative American Action Forum. Because of that, the administration is likely to keep relying on the rulemaking process for fixes.
“You don’t have to worry about Congress blocking anything through the regulatory process,” Batkins said. “There may be legal challenges, but they’ve pretty much survived all the major legal challenges so far.”