WASHINGTON — When millions of Americans around the country sign up for insurance under President Obama’s sweeping health care law in October, the system they encounter will lack some of the key protections and cost controls that Massachusetts consumers receive.
Massachusetts, the first state in the nation to implement near-universal health coverage, served as the model for major aspects of the groundbreaking health care overhaul law. But under lobbying pressure from the insurance industry, the Obama administration has decided not to adopt features of the Massachusetts plan that advocates say have helped consumers more easily make cost-effective choices.
Massachusetts, in an effort to ensure that consumers get the best deals, conducts competitive bidding to promote cost-efficient plans in its exchange — the state’s online insurance marketplace — and standardizes the benefit packages to make it easier for consumers to compare plans.
The federal program will also feature exchanges. But in the 34 states where the federal government will be running the exchange, the government has decided to permit any plan to qualify that meets a minimum set of standards set by the law.
Other than that, its gatekeeper role will be weak. It will not conduct competitive bidding, nor will it require that plans contain the same features so consumers can make easy comparisons.
‘If companies’ benefit packages are all over the lot, the consumer really can’t tell what’s the best value.’ — Jay Angoff, attorney
The federal rules took shape amid an intensive lobbying campaign by the insurance industry, and advocates say the result was a weakening of the law’s basic goal of giving consumers a simple way to shop for health insurance.
“The insurance companies want the exchanges to be weak. They don’t want the exchanges to negotiate with plans, to establish a competitive bidding process, to standardize the benefit package,” said Jay Angoff, former director of the administration’s newly created Office of Consumer Information and Insurance Oversight who is now a Washington-based attorney focused on health insurance. “They want to be able to sell whatever policies that meet the minimum standards of the statute and to charge whatever they want.”
Since January 2011, 44 health insurance companies and HMOs have spent a total of $135.9 million on federal lobbying, including on the Affordable Care Act, according to an analysis by the Center for Responsive Politics, a nonpartisan group that tracks the influence of money in Washington.
Insurers say they want to give consumers as many choices as possible and encourage competition.
“We want to make sure this transition is as smooth as possible for everybody, and that costs don’t go up too much,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans. “If you limit the number of plans, you're not going to get the desired result.”
With midterm elections looming and Republicans poised to make health care a campaign issue, the accommodations are being made by an administration wary of waging another costly political battle over health care. It would like instead to focus its full attention on implementing the crux of the complex law — making sure enough insurers and consumers participate in the exchanges.
Obama himself promoted some of the overhaul’s provisions at a recent White House event, in the face of House Republicans last week staging their 37th vote for repeal of the law.
Touting the health insurance exchanges to be as easy as comparison shopping for cars online, Obama said he is “110 percent committed to getting it done right” because the law is too important for political games.
But the compromises have come at the expense of consumer protections, say Angoff and other critics. “The administration needs to accommodate the industry and business — I did it myself when I was there — but it’s gone a little too far now, at the expense of the consumer, and ultimately at the expense of the success of the Affordable Care Act,” Angoff said.
Some consumer advocate groups, though, are downplaying the significance of the weaker exchanges, preferring instead to focus on the law’s goal of increasing the number of Americans with insurance. Starting January 2014, most Americans must obtain insurance or face a tax penalty.
“We’re picking at this and that, and losing sight that we are going to see more than 30 million people moving into the ranks of the insured, many for the first time in their lives,” said Kathleen Stoll, director of health policy at Families USA. “Frankly, there’s going to be a few bumps in the road, but we’re focused on trying to get insurers in, trying to get consumers in, and having them understand how this all works."
Since the law’s success depends heavily on the participation of insurers, that gives the industry considerable clout to negotiate terms most favorable to profit making, said Wendell Potter, a health care consultant and former insurance communications executive.
“The insurance companies and other special interests have been working very much behind the scenes to weaken the consumer protections in the Affordable Care Act,” said Potter, whose 2010 book “Deadly Spin” examined the public relations machinations of the health insurance industry. As a former vice president at Cigna, Potter oversaw the company’s political action committee and participated in the industry’s efforts to kill health care overhaul under President Clinton.
“They just want to make sure they’re in control as much as they can be on how the law is implemented to protect their profits,” Potter said.
States had a choice of creating their own exchanges or having the federal government run one for them. Among the 16 states that will be running their own exchanges, six, including Massachusetts, will adopt some form of standardization or rate negotiation next year to offer consumers a more manageable lineup of choices, according to the Kaiser Family Foundation. The other states are California, Oregon, Rhode Island, Vermont, and New York.
Erin Shields Britt, a Health and Human Services spokeswoman, said that by listing all plans that meet the minimum federal standards, it “will create a stronger market and more choice for consumers,” she said. The administration will reevaluate the marketplaces after the first year.
Critics argue that consumers will be left with a bewildering array of choices that are not screened by an educated intermediary. Insurers “profit from confusion,” Potter said.
“It’s a big mistake for the exchanges not to use their bargaining power in the first year,” said Angoff, a former Missouri insurance commissioner who instituted competitive bidding to sell a standardized benefit package to state employees. “If companies’ benefit packages are all over the lot, the consumer really can’t tell what’s the best value. A weak exchange is really defeating the main purpose of establishing exchanges to begin with.”
Amy Whitcomb Slemmer, executive director of Health Care For All in Boston, said that while the country is on the cusp of significant change in decreasing the number of uninsured, many advocates were hoping for more standardization in the federal exchanges to more easily allow for “apples to apples” comparisons.
“We are frustrated by some of the compromising that’s going on in the implementation process, and we hope state advocates really push for more regulatory teeth in the exchanges,” Whitcomb Slemmer said.
Other bumps in implementing the new law include a one-year delay in requiring that insurers adhere to a $6,350 out-of-pocket limit for individuals, and a proposal to delay providing small business workers a choice in health plans.
The administration will give health plans that use different managers to oversee benefits such as prescription drugs and medical care a one-year reprieve from the out-of-pocket maximum. In such circumstances, the caps would apply to each benefit, potentially doubling what patients would pay. The delay is meant to give plan administrators time to figure out a way to combine their charges for the various benefits.
But the delay has set off concerns among many disease and consumer groups, who fired off a letter to the secretaries of health and human services, treasury, and labor last month asking them to revise the policy.
“The cap is a critical part of the law. Doubling the cap is pretty financially devastating for people,” said David Certner, legislative policy director for AARP, which signed onto the letter. “It doesn’t take much for a cancer patient to blow through a cap like that.”
Other consumer advocates say they are hesitant to criticize the law’s implementation for fear that it will only fuel opponents of the overhaul. Kaiser’s latest monthly poll released in April shows that public opinion on the 2010 law remains mixed, with negative views slightly outnumbering positive views 40 percent to 35 percent. Four in 10 Americans remain unaware that the law is being implemented.
“At the end of the day, the greatest number of provisions that affect the greatest number of people are all being implemented,” said Ethan Rome, executive director of Health Care for America Now.
Jon Kingsdale, former head of the Commonwealth Health Insurance Connector Authority who is now a health care consultant helping other states develop insurance exchanges, said that while some consumer protections are weakened during the law’s first year, the delays say “nothing about the intent of the federal government to weaken the scope of health reform.”
“2014 is the start,” he said. “It’s not the finish line.”