By LOUISE RADNOFSKY and SARAH E. NEEDLEMAN
Government officials are falling behind in around half of the tasks needed to set
up new insurance exchanges for small businesses, and it's not clear if they will
open smoothly this October, the Government Accountability Office says. Louise
Radnofsky and small-business owner Mike Brey discuss.
Government officials have missed several deadlines in setting up new healthinsurance exchanges for small businesses and consumers—a key part of the
federal health overhaul—and there is a risk they won't be ready to open on time
in October, Congress's watchdog arm said.
The Government Accountability Office said federal and state health officials
still have major work to complete, offering its most cautious comments to date
about the Obama administration's ability to bring the centerpiece of its signature
law to fruition.
"Whether [the government's] contingency planning will assure the timely and
smooth implementation of the exchanges by October 2013 cannot yet be
determined," said the GAO in twin reports to be released Wednesday.
The 2010 Affordable Care Act created two exchanges, seeking to provide
coverage for many Americans who now go without health insurance. President
Barack Obama has said the exchanges will be ready on schedule in October,
offering coverage to take effect Jan. 1, 2014, but he has cautioned that "glitches
and bumps" are likely.
Around two million people are projected to receive insurance through the
small business exchanges and seven million people will be enrolling in the
individual insurance exchanges in 2014, according to the Congressional Budget
Office.
The small-business exchanges in particular have had some early setbacks.
The federal government said in April that contrary to initial plans, it wouldn't
allow workers in the first year to choose between a range of insurance options
offered through employers. For the first year, companies will select one plan to
offer to workers.
In some states, only one insurance carrier has expressed interest in the smallbusiness exchange. In Washington state, officials have had to postpone the
exchange altogether because they couldn't find a carrier willing to offer smallbusiness plans for all parts of the state.
Seventeen states are running their own small-business exchanges, with the
federal Centers for Medicare and Medicaid Services carrying out the task on
behalf of the remaining 33 states.
The GAO report on the small-business exchanges said officials still have big
tasks to complete including reviewing plans that will be sold and training and
certifying consumer aides who can help companies and individuals find plans.
It said that the 17 states running their own exchanges were late on an
average of 44% of key activities that were originally scheduled to be completed
by the end of March. "While interim deadlines missed thus far may not impact
the establishment of exchanges, any additional missed deadlines closer to the
start of enrollment could do so," the report said.
The Obama administration has long said that it expects to be ready on Oct. 1.
"We have already met key milestones and are on track to open the marketplace
on time," said Joanne Peters, a spokeswoman for the Department of Health
and Human Services.
"This GAO report confirms our suspicions about the implementation of the
health care law," said Rep. Sam Graves (R., Mo.), chairman of the House
Committee on Small Business. "With each passing day it appears the creation
of the exchanges are very much in doubt."
The administration has welcomed signs that the growth of health-care costs
has tempered recently. Some economists believe that may be partly due to the
new health law encouraging more cost-effective care. The Labor Department
said Tuesday that its price index for medical care fell a seasonally adjusted
0.1% in May, the first monthly drop in almost four decades.
The administration and liberal groups are stepping up efforts to prepare
people to enroll for coverage. For the economics of the exchanges to work, they
must attract healthy people to balance the risk of those who have chronic
diseases.
Enroll America, an administration-backed nonprofit group, opened its "Get
Covered America" campaign Tuesday. "We are at a place where…78% of the
uninsured aren't even aware of what's coming their way," said Anne Filipic, the
group's president.
Republicans who oppose the health-care law are poised to highlight any
glitches in the rollout, and many believe implementation of the law could be a
key issue in 2014 elections.
Regulators in New Hampshire have said they received applications from only
one carrier, Anthem Blue Cross and Blue Shield, a unit of WellPoint Inc., WLP 0.44% to sell small group plans or individual policies through the exchange next
year.
Small-business owner Nancy Clark of North Conway, N.H., said she was
disappointed more carriers didn't apply because Anthem is already one of just
two carriers that doctors in her area accept.
"I was hoping more [insurance] providers would step up to the table," said Ms.
Clark, whose firm, advertising agency Glen Group Inc., has 10 employees and
has offered benefits to full-time staff since 1997 to attract and retain talented
workers. "I had these rose-colored glasses on, thinking that doctors in our area
would then accept more insurance plans, truly giving everyone a choice."
Ms. Clark said she also worried that without more carriers in the exchange,
the cost of a group health plan wouldn't stabilize or go down as she had
anticipated. She said her premiums have increased every year by double digits
despite her work force's good health.
Some Democratic members of Congress also are beginning to express
concerns about particular aspects of the law relating to employers. Sen. Joe
Donnelly of Indiana, who voted for the law as a member of the House, on
Wednesday is expected to become the first Democrat who backed the law to
support changing a requirement that larger firms must provide coverage to
employees working 30 hours a week or more, his staff said.
Joe Trauger, vice president of human resources policy for the National
Association of Manufacturers in Washington, D.C., said the trade group's
12,000 members are "deeply concerned" about the lack of information available
about the state exchanges. "It comes up in every meeting I'm in," he said.
Backers of the law say that over time, competition between carriers and new
restrictions barring insurers from setting small group premiums based on
members' medical history will keep costs in check for business owners and
enable them to keep offering coverage.
Michael Brey, president of Brey Corp., a toy retailer in Laurel, Md., that does
business as Hobby Works, said he was looking forward to being able to shop
for a small-group plan from a variety of carriers through his state's exchange.
Currently he can choose from just three carriers. "I have some degree of
confidence that it will be a good move for us," he said.
Mr. Brey also said he expected to get a better deal through the exchanges. He
covered 100% of the cost of premiums for his staff when he bought the
business in 1992, but he said he can only afford to contribute 50% now, and
only for full-time employees.
—Jennifer Corbett Dooren contributed to this article.
Write to Louise Radnofsky at louise.radnofsky@wsj.com and
Sarah E. Needleman at sarah.needleman@wsj.com