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Affordable Care Act

Are Officials Who Predict Health Reform Doom and Gloom Sowing a Self-Fulfilling Prophesy?

As 2014 approaches, the health policy community is focused on implementation of the Affordable Care Act’s (ACA’s) main coverage provisions: the opening of health insurance exchanges, related reforms of the individual market, and the Medicaid expansion that states can choose to adopt or reject. Collectively, this is an enormous undertaking and is expected to result in the largest-ever increase in health insurance coverage in the United States. By 2019, exchange-based plans are expected to cover 29 million Americans and Medicaid/CHIP another 12 million.

Austin Frakt, PhD

Achieving this unprecedented expansion of coverage will require meeting many challenges, as documented in a recent report by Jack Hoadley and colleagues at Georgetown University’s Health Policy Institute. Some of the key implementation performance questions are identical to those that arose during rollout of the Medicare prescription drug benefit (Part D) in 2006:

  • Will enough plans participate?

  • Will necessary information systems be ready?

  • Will enough consumers enroll?

  • Will premiums be too expensive for some consumers? And will subsidies be sufficient?

  • To what extent will states cooperate?

Although all these questions are important, politics may play a particularly significant role in state cooperation, which, itself, has implications for some of the other issues. State cooperation is most crucial in states that are running their own exchanges (a choice made by 16 states and Washington, DC), although the 14 states partnering with the federal government to do so also have important responsibilities. The remaining 20 states have ceded exchange functions to the Department of Health and Human Services.

Cooperation has many dimensions, including working out compatible information system interfaces and informing citizens of their options. And these efforts must be undertaken in a political environment not entirely or uniformly supportive of the law, in a rather compressed time frame, and in the context of complex legislation that is not well understood by the public.

Consider outreach. The law requires states that run their own exchanges to engage in education and marketing campaigns. These will likely involve community organizations, providers, health insurers, brokers, foundations, and other health care organizations. Government officials also have a role to play. And here, too, there is a parallel to the rollout of the Part D drug plan.

Several years ago, my Boston University colleague Steve Pizer and I published an article examining the relationship between the popularity of the elected official most identified with Medicare Part D—then-President George W. Bush—and enrollment in the program. Our model included all the standard controls for such an investigation, including measures of price (premium), competition, and demand and supply factors. But it also included, as a measure of popularity, the percentage of a county’s electorate that voted for Bush in 2004. Interestingly, this turned out to be very strongly and positively correlated with the proportion of beneficiaries in a county who enrolled in a stand-alone Part D drug plan. In fact, enrollment in a plan was more strongly related to Bush popularity than to premium.

Why would this be? The key notion from behavioral economics that explains our result is that of “attribute substitution,” a form of intuitive thinking in which readily accessible attributes of an object are used as proxies for the less accessible attributes relevant to a rational decision. In the case of Part D plans, we hypothesized that beneficiaries might have substituted the recommendations of respected political leaders for the less accessible calculations of expected financial values of Medicare plans. Perhaps some beneficiaries heard Bush and others in his administration touting the benefits of the new drug plans during their nationwide promotional tour. Finding it otherwise difficult to make their own independent assessment of the relative merits of various coverage options, receptive beneficiaries may have substituted officials’ enthusiasm for their own prediction of plan benefits.

So, according to our work, government officials’ enthusiasm and popularity can have a significant effect on the early response to a new program. This is a fairly intuitive result, and it likely applies to the ACA as well. Independent of all the outreach and education efforts by various organizations, in states with popular officials promoting the law, expect a relatively robust enrollment response. On the flip side, in states with popular officials denouncing it, expect a relatively depressed one.

In a very real and predictable sense, the success of the law in covering uninsured people is likely to be a self-fulfilling prophesy. Where officials think and talk doom and gloom, that may be precisely what they get. Then they can say, “I told you so.” But I just told you (and them) first.

About the author: Austin B. Frakt, PhD, is a health economist and an assistant professor at Boston University’s School of Medicine and School of Public Health. He blogs about health economics and policy at The Incidental Economist and tweets at @afrakt. The views expressed in this post are that of the author and do not necessarily reflect the position of Boston University. 
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