By Sabrina Corlette and Jack Hoadley.
This blog originally appeared on The Hill’s Congress blog on July 17, 2013 and is reproduced here in its entirety.
There’s been a lot of angst lately about some strategic decisions by the Obama Administration to delay implementation of key provisions of the health reform law. Most recently, the Internal Revenue Service told employers that the reporting requirements underpinning the employer mandate would be postponed until 2015. The Department of Health and Human Services (HHS) delayed for one year the option for employees in the small business (SHOP) exchanges to choose among health plan options; instead employers in most states will continue to make the plan selection on employees’ behalf. And they’re also phasing in some of the quality improvement and accreditation requirements for health plans participating in the federally facilitated exchanges.
Some ACA critics have asserted that these transitional policies signal that the law is “unraveling” and that the launch of the health insurance exchanges will be a “total fiasco.” If history is any guide, this kind of fear-mongering is sadly misguided. For example, at this time in 2005, many people had many of the same concerns about the launch of the Medicare Part D program, which provided seniors with a prescription drug benefit provided exclusively through private insurers. As we wrote in our recent Robert Wood Johnson Foundation report on this issue, the Part D program had many critics who pointed to design flaws and excessive costs as reasons the new benefit would be unworkable. And, to be sure, when Part D was launched there were numerous educational, technical, and policy challenges to getting the program off the ground.
And, just like the Obama Administration has done, the Bush Administration made strategic decisions to delay or transition some key elements of the Part D program in response to technical and timing difficulties. A few examples of such decisions are below:
- Delayed plan choice for dual eligibles. According to the law, beneficiaries dually eligible for Medicare and Medicaid were supposed to be able to choose a plan for themselves, with the option of being assigned to a plan randomly only if they failed to pick one. But Administration officials, pressed for time and facing technical barriers, chose to assign dual eligibles to a plan first, while giving them the option to switch into a different plan if they chose.
- Emergency transition assistance. Soon after January 1, 2006, it became apparent to that technical glitches would prevent thousands of low-income beneficiaries from obtaining drugs under the new Part D benefit on a timely basis and at the correct level of cost sharing. Initially, over half the states started picking up the tab when needed to ensure that their dual eligible beneficiaries would get their prescribed drugs. Soon thereafter, Administration officials used demonstration program authority to reimburse states for the money they spent to help out. The Administration also added requirements on the new drug plans to make available a temporary supply of drugs in situations where a low-income patient’s drug was not on the new plan’s formulary.
- Waiver of late enrollment penalty. A key – and unpopular – provision of the Medicare Part D program was a late enrollment penalty for beneficiaries who failed to sign up for the program when they first became eligible. The idea was to prevent people from waiting until they got sick and needed drug coverage to enroll. In the first year of the program, the Administration used demonstration program authority to waive that penalty for low-income Medicare beneficiaries.
- Delayed enforcement of medication therapy management. A key requirement of the law for participating drug plans was that they establish medication therapy management programs for enrollees with multiple chronic health conditions. In order to ease the regulatory burden on plans, the Administration limited oversight and enforcement of this provision in the early years of the program.
- Methods of calculating beneficiary premiums and enrollment. Officials delayed key elements of the law’s methodology for calculating beneficiaries’ share of drug plan premiums in order to keep premiums lower than projected. Starting in the program’s second year, this calculation was supposed to be weighted by enrollments. But the Administration used demonstration authority to phase in this requirement.
These early decisions by the Bush Administration to delay, modify, or phase in policies required by the law were by no means indicators that the Medicare Part D program would fail. On the contrary, they demonstrated that when problems arose – as they inevitably did – federal officials were willing to use their authority to implement the law with flexibility and to delay enforcement of certain requirements to ease the transition for beneficiaries and health plans alike. That early flexibility paid off. Eight years after its launch, the Medicare Part D program is widely popular among the public and, more importantly, it is helping seniors obtain access to life-saving drugs.