Health care law's fate could hinge on political climate in states

The greatest threats to the ultimate success of the new health care law come not from the technical problems that have plagued its rollout, but from a hostile political climate in many individual states and from potentially serious weaknesses in its design.

Those are the conclusions of a cautionary report just published by the Brookings Institution's new Center for Effective Public Management.

The authors are center director Elaine C. Kamarck, who served as a top policy adviser in the Clinton administration, and Sheila P. Burke, who was chief of staff and top health care adviser to former Senate Majority Leader Bob Dole, R-Kan..

“The highly politicized environment in which this law takes effect means that in the short-term people will see what they want to see,” Burke and Kamarck wrote.

To an extraordinary degree, they argued, the Affordable Care Act's fate has been put in the hands of individual states — and therefore, will be subjected to political forces within those states.

Its launch also coincides with an election year, which means that the agendas of the two parties will come into play. The law that is the signature achievement of Barack Obama's presidency was passed by a Democratic-led Congress without a single Republican vote.

“Going forward, politicians are hoping to use the health care issue to impact the midterm elections of 2014,” Burke and Kamarck wrote. “For Republicans, the hope is that the long-standing skepticism about the law will be reinforced as it is implemented and yield a political bonus in the 2014 midterm elections. Democrats obviously hope that a positive start will help reduce barriers to implementing the law and improve their political prospects.”

State elected officials have moved in partisan directions as they have exercised their options within the law. Among those choices: whether to expand their Medicaid programs to cover the poor, whether to set up their own health insurance exchanges or rely on the federal one, and how aggressively to promote the new coverage options.

Most Democratic governors have built their own state exchanges, expanded their Medicaid programs, and are devoting intense effort toward making the Affordable Care Act work. Generally, their efforts have been proceeding relatively smoothly thus far.

GOP-led states, on the other hand, are mostly leaving it up to the federal government — whose exchange has been plagued by technical problems. And in some instances, Republican state officials have been placing obstacles in the way of the law.

In Georgia, for example, insurance commissioner Ralph Hudgens assured an audience of Republicans that he and the governor were doing “everything in our power to be an obstructionist.”

The study noted that 13 Republican state attorneys general have raised concerns about the “navigators” hired to assist people as they enroll in the system, saying they are inadequately trained and warning that they might have incentives to commit fraud with the private information they receive from enrollees.

Some states have put restrictions on the advice that navigators can give. Florida Gov. Rick Scott (R) has banned them from operating at local health departments — an order that some counties have defied.

“You're going to see red states with lots and lots of problems, and not much [enrollment],” Kamarck predicted in an interview.

But some of the law's potential pitfalls have nothing to do with politics, she and Burke wrote.

Burke and Kamarck argued that the financial penalties imposed by the law will not be high enough to compel an adequate number of healthy people to sign up for insurance.

That leads to a situation that health experts call “adverse selection,” in which those who buy insurance are primarily sick people with enormous medical bills.

That can drive up premium costs or discourage insurers from participating in the market. And if the problem is severe enough, it can set off what is known as a “death spiral,” where healthy people drop their coverage, sending rates even higher for those who remain.

“The incentive structure in the bill is simply not strong enough to prevent adverse selection, and if you have adverse selection, the whole thing collapses,” Kamarck said. “There's just no teeth in the bill.”

Others disagree.

Jonathan Gruber, a Massachusetts Institute of Technology economics professor who advised the Obama administration as it was working to pass the law, conceded that the new system will be subject to some degree of adverse selection.

But he insisted the penalties imposed on those who forgo coverage are “high enough there won't be a death spiral.” And he added: “It's not going to mean the whole thing is going to crater.”