Sebelius is gone, so what’s next?

By Tony Pugh / McClatchy Washington Bureau

Published Apr 12, 2014 at 12:01AM

Sebelius’ likely replacement — Sylvia Mathews Burwell, nominated to run “Obamacare,” would bring a wealth of expertise in economics and government management to one of Washington’s toughest jobs, even though she has little direct experience in the health care industry.

In selecting Burwell to replace Health and Human Services Secretary Kathleen Sebelius, Obama chose a veteran technocrat who members of both parties say is up to the challenge of running a $1 trillion bureaucracy that rivals the Pentagon in complexity.

Although the Senate confirmed her unanimously for her current job as Obama’s budget director, Burwell is unlikely to emerge this time without a few bruises. With an eye toward the midterm elections, Republicans are eager to relitigate Obama’s health care law in every public setting possible — and a Senate confirmation hearing offers a prime opportunity.

— The Associated Press

WASHINGTON — The resignation of Health and Human Services Secretary Kathleen Sebelius comes at an opportune time for the Obama administration.

With sign-ups for private marketplace coverage now at 7.5 million and the special enrollment period nearing an end, the administration can momentarily catch its breath after a roller-coaster six-month enrollment period that saw the president’s signature legislative accomplishment nearly crash on takeoff.

The Silicon Valley SWAT team that rescued the malfunctioning HealthCare.gov website also saved Obamacare in the minds of a skeptical nation, nearly half of which still roots for its failure.

With phase one of its messy implementation nearly complete, the health law’s supporters and opponents both seem confident that the Affordable Care Act’s fortunes ultimately will turn in their favor. Insurers, health care providers and consumers aren’t so sure.

The coming months will provide greater clarity as technical and legal challenges facing the ACA are resolved. Important questions about 2015 premium rates and the age and health status of the newly insured also will be answered.

The outcomes will go a long way in determining whether Obamacare is working according to design — and which political party will benefit most as a result.

Right now, it’s anybody’s guess.

“The open enrollment period introduced millions of Americans to the reality of the law, as opposed to the rhetoric and debate emanating from Democrats and Republicans,” said Kev Coleman, head of data and research at HealthPocket, a website that compares and ranks insurance plans. “While the initial rollout of the federal and state exchanges was plagued with technical problems, the conclusion of the enrollment season was strong and exceeded expectations.”

While 7.5 million sign-ups is a strong turnaround, critics are already looking to discredit the numbers. They’re focusing on how many of the new enrollees were previously uninsured and how many have actually paid their premiums — questions Sebelius couldn’t answer at a Senate hearing on Thursday.

Noted health care blogger Robert Laszewski foreshadowed the upcoming forensic body counts in a post last week after marketplace enrollments reached 7.1 million.

“If 20 percent do not pay, as has been the case since Obamacare launched, then the real Obamacare exchange enrollment number is about 5.7 million,” Laszewski wrote. “If 83 percent of those 5.7 million were subsidy-eligible,” as HHS has reported, “then about 4.7 (million) subsidy eligible (individuals) have signed up,” Laszewski added.

And since 17.2 million people were eligible for federal subsidies to help pay for marketplace coverage, according to the Kaiser Family Foundation, “that would mean that only 27 percent of subsidy-eligible people have enrolled — and 73 percent of those who were subsidy-eligible have not,” Laszewski reasoned.

Others wonder whether enough young and healthy people have signed up to keep premiums in check for 2015.

Because they’re typically healthier, young adults are cheaper to insure and would offset the coverage costs for older plan members, who are generally sicker and more costly to cover.

But the proportion of young adults ages 18 to 34 who bought marketplace coverage remained at 27 percent in January and February, far from the 35 percent to 40 percent level that experts suggest is needed to keep premium costs down next year.

The Obama administration is expected to release enrollment figures for March next week.

In the past, new enrollees had to fill out detailed medical histories to get the individual coverage that’s now sold on the marketplaces. Those with too many questionable health risks were often denied coverage or were stuck with insurance that was very expensive.

Because the Affordable Care Act doesn’t allow insurers to ask those questions, the health status of new marketplace enrollees won’t be known until they start seeking medical care.

That means insurers will have to estimate their 2015 premiums based on just four to five months of medical claims from people whose coverage began in January. They’ll only have one month of claims for people who got coverage in the special enrollment period that began after April 1.

A new report by Express Scripts, the nation’s largest pharmacy benefits manager, suggests, as most experts have predicted, that a disproportionate share of early marketplace enrollees were more likely to be in bad health.

Their review of pharmacy claims from 400,000 marketplace plan members found that 1.1 percent were for specialty drugs to treat complex chronic conditions. That was 47 percent higher than the 0.75 percent of specialty drug claims typically received from people in other private plans.

If that trend continues, marketplace insurers would be likely to raise premiums for 2015. That in itself wouldn’t be surprising, since insurance premiums have risen steadily for at least the last 14 years, according to the Kaiser Family Foundation.

To limit premium hikes, the Affordable Care Act features three programs designed to mitigate losses by insurers whose claims payouts are higher than expected. In addition, the administration has promised a stringent review of 2015 premium increases that exceed 10 percent. Both measures should help avoid the kinds of steep rate hikes that critics have warned of.