Federal Agencies Struggle to Implement ACA

Administrative procedures relating to Obamacare, HHS, and the IRS

By Ferd and Cheryl Mitchell

From Spring 2010 to Summer 2013, implementation of the ACA (Obamacare) has started with federal agencies. Following passage of the ACA in March, 2010, much of the burden of implementation passed to the Department of Health and Human Services (HHS) and to the Internal Revenue Service (IRS). Urgent and wideranging administrative requirements were placed on these agencies, requiring new ways to define and understand problems as part of program planning, and new ways to implement very complex programs in a highly partisan political setting.

At first, it was difficult for managers and staff to get a “fix” on what their duties were going to be under the ACA. The Act was  large and complex, and included many new concepts that had to be integrated into the Health Care System. Just reading and understanding the statutes was difficult, and deciding how to best prepare regulations for implementation of the Act remained a substantial challenge.

HHS administrators had to take hold of the situation, with planning for program implementation; the development of policies, procedures and regulations, as the basis for implementation; and preparation for problem-solving techniques that were appropriate.

As it turned out, one of the major needs for these efforts — from the beginning — was to develop an overview list of tasks, schedules and budgets for the entire administrative process (up to January 1, 2014). But it was not clear in 2010 that the highly partisan politics in play would result in gridlock, and make it impossible to introduce statutory changes or add supplementary budgets over the next few years.

For most federal programs, administrators can count on an ability to fine-tune statutes and justify add-on budget changes over time, so that implementation does not have to be set up in its entirety from the beginning. But so far as Congress has been concerned, the ACA has been locked up, and such adjustments have not been feasible.

If administrators had fully grasped this situation, they could have planned out the entire implementation from the start. However, this was not the usual perspective that was applied to major programs, so this type of rigid control was not put in place from the beginning.

If these features of the ACA had been visible at the start, administrators could have adopted initial planning and implementation strategies that were intended to survive without further Congressional action. An initial list of tasks, schedules and budgets would have been seen as mandatory.

The situation was further confused by the legal appeals that were brought to challenge the constitutionality of the ACA. Prior to the Supreme Court ruling in June, 2012, it was widely thought that the law might be entirely thrown out, so efforts by federal agencies would have to shift from early implementation to wind-down efforts.

As it was, the only change made by the Court was to direct that states could choose whether or not to implement the Medicaid expansion included in the Act. This change was later to have significant repercussions, since half of all states are still undecided on the issue or have decided not to proceed for now.

The lack of sureness regarding the fate of the Act has prevented a strong hand from being exerted by federal agencies during 2010-2013, and still hampers implementation efforts.

Implementation of the ACA has often seemed to include some efforts at adaptation. For example, “squeaky wheel” complaints by large employers led to early waivers in some cases, as a matter of political peacemaking. New regulations  required that annual caps on covered services by insurance companies could not be less than $750,000 at first, then $1.25 million, then $2 million. By 2014, no annual caps were to be allowed. However, in order to keep more employers in the Health Plan, waivers were often given to these regulations.

No extensive public communications efforts were launched at the beginning, as urgently needed to educate the public regarding the ACA. Medicare-style brochures could have been mailed out to everyone in the country each year— but they weren’t.

The  public still knows little-to-nothing about the Act, and there are now inadequate funds available to run an in-depth educational and support program — a casualty of the failure to budget all tasks from the beginning. HHS has decided to launch last-minute state and local “navigator” programs to help individuals learn about the new Plan and sign up for coverage. A nonprofit group “Enroll America” at http://www.enrollamerica.org has been set up as an umbrella organization for this effort.

The Secretary of HHS has been reduced to asking various groups to donate to this effort (as noted by Sarah Kliff reporting at www.washingtonpost.com on May 10 and June 4, 2013). This effort to bring in outside funds has  raised political hackles. It is not clear whether this last-minute effort will be enough to prepare the public to enroll in Health Benefit Exchanges starting October 1, 2013.

For its part, the IRS was largely invisible with respect to ACA implementation until HHS regulations began to define how federal subsidies for the purchase of insurance through which the Exchanges would be handled.

As it has developed, all applicants to the Exchanges will have to provide income information similar to that required for annual income tax returns. This information will then be transmitted to the IRS to be checked, and for subsidies to be calculated. The results will be transmitted back to the Exchanges, to form the basis for shopping for insurance coverage by individuals.

As new awareness built during 2012-2013 of the IRS role in determining eligibility, the overall administrative procedures associated with the ACA seemed to become more intrusive, and unpopular with those who recognized the situation. Then, starting recently, IRS political hearings have attacked agency reputation and made the linkage to the ACA even less palatable. It may turn out that the IRS linkage is to become an administrative “stress test” that has been largely unpredicted from the start.

The ability of the IRS to perform its many functions in an accurate and timely manner has yet to be determined. And the software required at the Health Exchanges and IRS to make this round-trip procedure is untested.

From the perspective of public administration as a field, the actions by federal agencies in response to the ACA provide the potential for an in-depth case study with many unusual features and provide the foundation for insightful reviews of planning and evaluation methods. More on the organizational perspective provided here may be found in a book by the authors, titled “Legal Practice Implications of the U.S. National Health Care Plan: Overview and Analysis of the Affordable Care Act, Medicare and Medicaid”, available at www.store.westlaw.com.

(This is installment #2 of a continuing series of blogs dedicated to the tracking of  implementation efforts for the ACA and the administrative insights that may be gained. Installment #1 was posted on June 6, 2013. To read the first article, click here.)