WASHINGTON — This month, a political organization aligned with House Republicans sent an email attacking President Barack Obama’s health care law to reporters.
“Young adults on parents’ plan pay more,” said the organization, the YG Network, citing a new employee benefits study. The email’s subject line: “So Much for Popularity.”
Actually, the study did not show that those young adults were paying more. It showed that insurance companies were, because they had begun providing health coverage to those young adults, as called for under the law.
The missive, inaccurate though it was, illustrates the immense challenge facing the Obama administration as it puts in place the most significant parts of the landmark 2010 law. Few federal initiatives reach so many corners of the U.S. economy and society — and have as much potential to generate trouble for the party in the White House.
Among the complex imperatives: pushing reluctant states to set up insurance marketplaces and expand Medicaid programs; keeping an eye on insurance companies as they issue new rate schedules; measuring the law’s effects on small-business hiring; and coaxing healthy young people to buy coverage so the system works economically for everyone else.
Gail Wilensky, who ran Medicare and Medicaid under President George H.W. Bush and supports the new law, said that 2014, when the law will make it mandatory to have insurance, “is going to be quite a bumpy year.”
Austan Goolsbee, a former chief economist to Obama, predicted “a big messaging headache the whole year.”
The law poses some modest potential headaches for the overall economy.
It requires, for example, that businesses with 50 or more full-time workers either offer insurance coverage or pay a penalty. Goolsbee said he would be watching whether companies around that threshold either defer hiring or shift some full-time workers to part-time jobs.
But the number of such companies is small. A vast majority of U.S. workers are employed by larger companies that already offer coverage.
Some younger health care customers will face a significant increase in their insurance premiums, said Karen Ignagni, who leads a major health insurance trade group. That is because the law requires more comprehensive coverage than many of them now have and curbs insurers’ ability to charge more for older customers, who tend to consume more services.
Yet those increases may be offset by subsidies available to lower-income customers and, for women, by rules barring insurers from charging women more than men.
Most significant is that those increases apply only to the small fraction of Americans who buy their health insurance individually, rather than obtain it through their employers.
N. Gregory Mankiw, a Harvard economist who advised Mitt Romney’s 2012 campaign, fears that some lower-income job holders will work less under the law, since their government-financed insurance subsidies will phase out at higher earning levels. But he acknowledged that it was an “open question” how large those effects would be.
Not large, White House economists say. And to the extent that they do happen, they would be offset by reduced marginal tax rates for others who, under current law, lose their Medicaid health coverage as they earn higher incomes.
The law’s supporters also predict that workers with better health care will be more productive. Expanded coverage may ease the “job lock” that now prevents some workers from seeking better employment for fear of losing coverage.
Uncertainty over the law’s future hung over employers and investors throughout 2012.
“It impeded the recovery,” economist Mark Zandi said.
But in June, the Supreme Court upheld the core of the law, and in November Obama won re-election.
Fewer than half of the states have indicated they plan to establish their own health care marketplaces, known as “exchanges” under the law. Washington is committed to stepping in and establishing them for states that decline to.
Only about half of the states have indicated they will expand Medicaid under the law, a key ingredient for the goal of providing coverage to those now uninsured. Some people who acquire insurance under the law may have trouble obtaining treatment, because of a shortage of doctors and state-level “scope of practice” laws restricting the ability of others like nurse practitioners to step in.
Most challenging of all is persuading young, healthy Americans, the most profitable customers for insurance companies, to buy their “mandated” coverage next year, even though the penalty for not doing so is a modest $95. White House officials say this group’s participation in health insurance marketplaces is vital to their success because it will offset the cost of less-healthy customers.
The political stakes in meeting these challenges are circumscribed by the long, acrimonious debate that has occurred within the nation’s polarized political culture. White House strategists estimate that 9 in 10 Americans have fixed views one way or the other. They say that only personal experience with the law, rather than what others say about it, can move them.
Efforts to reach the small group of undecideds will only increase as the 2014 midterm elections draw closer.