Forget weeks ... we're just four days from the kick off of the Obamacare state-run health exchanges.
Anticipation on both sides of the aisle is building as those who've been denied health care coverage in the past because of pre-existing conditions can't wait to sign up, while young adults who've largely gone uninsured and have a feeling of invincibility aren't looking forward to being coerced into buying health insurance.
Over the past few days we've also received a very crucial piece of long-awaited information: the average price of a silver-tier plan under the Patient Protection and Affordable Care Act, aka Obamacare. Coming in at $328, this figure proved lower than the Congressional Budget Office's initial projection, but also may turn out higher than some people had expected to pay. The difference really depends on your ease of access to health care and your age.
In other words, we have controversy -- and yesterday the Department of Health and Human Services gave each side an even greater reason to be divided over this bill.
According to the HHS, small businesses of 50 employees or less won't be able to enroll workers in private insurance on federally run exchanges until Nov. 1 due to technical problems; that is a full month later than the original start date. Perhaps even more concerning, HHS also noted that Spanish-language health insurance enrollments wouldn't start on time, either, and is targeting an Oct. 21-Oct. 28 start date. Both small businesses and Spanish-speaking citizens can still enroll by speaking with an Obamacare navigator (an enrollment specialist trained to assist enrollees) or filling out a paper application, they just can't do it online and compare plans side-by-side for a few more weeks.
These delays, on top of the employer mandate delay -- the portion of the PPACA that requires employers with more than 50 full-time employees to provide health insurance to those employees or face penalties of $2,000-$3,000 per employee -- in July are only escalating fears that the technical and educational aspects of this law aren't ready to go into place. But, if you can look past all of the sensationalist headlines and deluge of Obamacare articles, I can cue you in on what you really need to know as a potential enrollee and as an investor.
Are these technical delays a serious problem?
The answer is yes and no.
Obviously big delays, such as pushing the employer mandate back a full year from its original start date, aren't going to inspire confidence in the public. This pushback has given large businesses more time to comply with the employer portion of the law, but the majority of stories we've been privy to are merely those of cut hours and reduced staffing -- not exactly what the law was intended to do.
However, if you look back at the most recent health reform overhaul, the implementation of Medicare Part D under former President George W. Bush, it was a jumbled mess that was put together at the last second and had quite a few technical glitches as well. Glitches are pretty much unavoidable from the get-go of any government overhaul so we shouldn't be too surprised to see some delays popping up. As long as they're confined to a three-to-six week period I wouldn't be too concerned.
How will these delays affect my investments?
Now here's the tricky thing; although these delays are ultimately just for a few weeks they could have a moderate effect on certain health care companies that have huge expectations already baked into their share price.
The delay in enrolling Spanish-language citizens online could be a sizable blow to companies hoping to take advantage of government-sponsored enrollees (i.e., those who will soon be covered by the Medicaid expansion) such as Molina Healthcare (NYSE:MOH), WellPoint (NYSE:ANTM), and CIGNA (NYSE:CI).
Of the some 47 million people in the U.S. who are currently uninsured, about one-third are Spanish speaking, so this expansion will serve to incorporate a good chunk of this population. I know we're just talking three to four weeks here based on HHS' timeline, but a vast majority of people, be they Spanish-speaking or not, don't fully understand the PPACA in the first place. In an August poll from the Kaiser Family Foundation, a whopping 67% of respondents reported hearing "only a little" or "nothing at all" about their own state-run health exchange. This doesn't bode well for getting people signed up in time, or at all before the Dec. 14 cutoff date for coverage to take effect on Jan. 1.
WellPoint could take a double blow since it's also more exposed to small business insurance than its peers. While I don't see any long-term impact to these delays investors may wind up proving unforgiving in the meantime.
Another concern would be the potential negative PR surrounding these delays for technical contractors and consulting firms.
Take Quality Software Systems, a subsidiary of Optum which, in turn, is owned by UnitedHealth Group (NYSE:UNH),. QSS was awarded one of the largest program contracts to date, according to the Congressional Budget Office, of $55 million to develop cloud-based software that'll house Obamacare's data. Obviously its reputation relies on a smooth transition once the health exchanges open and data becomes accessible and storable.
Similarly, consulting firm Booz Allen Hamilton (NYSE:BAH) was awarded $38 million in contracts to provide consulting and technical support for the IT aspects of Obamacare's technology and rollout. Like QSS, its reputation is on the line. While the money from these contracts has essentially been accounted for, the reputations of these two companies could take hits should more delays pop up.
Onward we march
As we march closer to the inevitable opening of Obamacare's state-run health exchanges on Tuesday you can count on myself and my Foolish colleagues to offer you every angle on how this transformative bill might affect you and your investment. Stay tuned, because many of the questions that have remained unanswered for months are just days from finally being answered.