Expert Gives Obamacare Rollout a B-Minus

Health care reform -- now almost universally called Obamacare -- kicks into high gear in October, when millions of consumers begin shopping for health insurance on new state and federal exchanges.

But the law has been reshaping the health care landscape for several years now. What grade does Obamacare deserve to date?

"B-minus," says Victor Puleo, associate professor of insurance and risk management at the University of Central Arkansas in Conway.

Puleo admits the grade may be a "little harsh." In fact, he sings the praises of many of reform's biggest accomplishments. In the following interview, Puleo explains what has gone right -- and wrong -- with health insurance reform.

Grade the Obamacare rollout up to this point. Where is it succeeding? Where has it fallen short?

I would give Obamacare a B-minus on its rollout to this point. And that's probably being a little harsh.

There are quite a few success stories for consumers with the implementation of health care reform. To date:

  • Lifetime limits on benefits have been eliminated.
  • All group and individual plans had to begin covering dependents to age 26.
  • Pre-existing conditions for children under 19 have been eliminated.
  • First-dollar coverage for specific preventative health care services have been mandated.
  • Fully insured plans are subject to medical loss ratio requirements providing health insurance premium rebates to both employers and employees, and those covered by individual plans.

Beginning in 2014, we will see the removal of all annual limits on essential health benefits, guarantee issue and elimination of pre-existing condition limitations for adults, a maximum 90-day waiting period on all plans, and premium tax credits for individuals and families with household incomes between 100% and 400% of the federal poverty level ( FPL) to purchase individual coverage through online insurance marketplaces/exchanges.

That's quite a few successes for such a controversial law.

However, there are at least a couple of places where Obamacare has fallen short. The one-year postponement in the shared responsibility penalties (employer mandate) is most definitely a shortfall, as is the delay until 2015 in annual limits on out-of-pocket maximums for some employer-sponsored health insurance plans.

The Obama administration's flexibility in implementing the law and postponing these two parts of health care reform alone has created unexpected challenges for consumers -- and for some employers, new opportunities to rethink health insurance strategies for 2015.

2014 is the year that Obamacare finally gets into full swing. What do you think will be the biggest challenges facing consumers, employers and insurers over the next 12 months?

Consumers with incomes up to 400% of the federal poverty level that currently do not have affordable health insurance offered through an employer will be eligible for premium tax credits to purchase health insurance on the health insurance marketplaces/exchanges.

Additionally, consumers with low-end household income -- 100% (to) 250% of FPL -- may be eligible for reduced cost sharing (deductibles, coinsurance and copayments) if they obtain coverage through the health insurance marketplaces/exchanges. Health insurance plans sold both on the exchanges and off the exchanges will not be able to turn people down or charge them more because of a pre-existing medical condition.

This will be the first time the majority of the uninsured population has ever purchased health insurance. Helping consumers to understand the process of qualifying for premium tax credits/cost sharing and to actually purchase health insurance on the online health insurance marketplaces will clearly be one of the biggest challenges to successfully implementing Obamacare.

Employers that currently offer health insurance -- and their employees -- will most definitely see premiums increase in 2014. The premium increases will be partly due to fees associated with implementing health care reform. Increased health insurance premiums will continue to be a challenge for both employers and their employees.

There have been several delays in how Obamacare is being implemented. How is the one-year delay regarding the employer mandate likely to affect consumers?

This is an expensive delay. Estimates are that this particular delay may cost the American taxpayers over $10 billion.

The one-year postponement in the shared responsibility penalties (employer mandate) applies to employers who average 50 or more full-time employees (or full-time employee equivalents), and either they do not offer health insurance coverage to their full-time employees (employed an average of 30 hours per week), or the coverage offered does not meet government requirements.

An overwhelming number of the employers affected by this delay -- large employers with 50 or more full-time employees -- already provide health insurance. Employees with employer-provided health insurance will not see an impact from the employer-mandate delay.

However, some employers currently offering health insurance may choose not to continue health insurance coverage in 2014 regardless of the postponement in the employer mandate because of the increased costs and reporting requirements associated with health care reform.

Employees working for large employers that don't offer health insurance in 2014 to either full-time or part-time employees will be eligible to begin purchasing health insurance as early as Oct. 1, 2013, on the health insurance marketplace/exchanges, with coverage beginning Jan. 1, 2014, and (they) may qualify for premium tax credits.

What about the one-year delay on placing caps on how much a person may have to pay out of pocket for care? How will this affect consumers?

One of the consumer protection pieces of Obamacare that was scheduled to be implemented in 2014, the annual limit on out-of-pocket maximums, has now been delayed until 2015 for group health plans offered by certain insurers and employers -- and thus, the consumers -- covered by these plans.

This one-year postponement does not apply to individual policies sold in the health insurance marketplaces. The annual limits on out-of-pocket costs that insured consumers must pay -- deductibles, coinsurance and co-payments -- were set to $6,350 for individuals and $12,700 for families in 2014.

Delaying this section of Obamacare disproportionately affects those in most need of health care reform -- consumers with chronic illnesses, such as cancer and diabetes, who currently spend more than these annual limits for treatment and prescription drugs.

Copyright 2013, Bankrate Inc.