REAL ID, No Child Left Behind, and the future of the Affordable Care Act

Few federal laws have survived the type of bruising attacks that the Affordable Care Act (ACA) has endured during its brief history. President Barack Obama’s signature health-care law helped foment the Tea Party insurgency, was litigated all the way to the Supreme Court, and drove massive amounts of money into anti-Obama PACs during the recent presidential election. In each and every case, the ACA and its supporters triumphed over the myriad forces arrayed against them. Instead of being forcibly rolled-back, the law is now on the road to full implementation, free of significant encumbrances.

Despite an unbroken string of victories against its political foes, it is fair to ask whether the ACA may yet succumb to its most daunting adversary – itself. 

By looking at the track records of similarly ambitious legislative endeavors, one can’t help but wonder whether some of the ACA’s key provisions will be rendered moot because they cannot ultimately be enforced.

Implementing the ACA

The Affordable Care Act is a law about which everyone has an opinion, but which few comprehensively understand. At over 2,000 pages of text, it is easy to see why. 

The provisions of the ACA impact virtually every aspect of the health-care industry, and have been gradually taking effect over the past two years. In the eyes of its proponents, the ACA is intended to increase insurance coverage and improve health-care results. Its provisions are numerous, and range from instituting insurance requirements for those with pre-existing conditions to raising tax levies on tanning salons. 

The components of the ACA that will take effect in 2014 are among its most far-reaching and significant.  These include:

• The implementation of the so-called “individual mandate” for all Americans to purchase health insurance.
• The launch of a series of “health care exchanges” through which Americans will compare and purchase health insurance.

The combination of these two items may present the largest functional challenge to the operation of the ACA. Whatever one thinks of the overall goals of the law, hard questions should be asked about the practicality of implementing the requirements above.

Health care exchanges

Through the ACA, Congress sought to establish exchanges where consumers could review the terms of various health-care plans, and purchase coverage either on-line or over the phone.  The fact that the Supreme Court recently upheld the ACA’s individual mandate means that millions of Americans will need to utilize these exchanges once they are operational.

The terms of the ACA specify that states must construct and operate their own exchanges unless they affirmatively choose not to participate. In those instances, the federal government will establish and operate exchanges on the states’ behalf.

The federal deadline for the launch of the ACA’s health care exchanges is Jan. 1, 2014. In the 13 months that remain, states must undertake and complete scores of tasks, in concert with 664 pages of federal exchange regulations.  

In that time, many states will need to create exchanges from scratch, as several have not yet passed enabling legislation. Operations infrastructure (IT and call-centers) will need to be put into place. Participating health plans must be selected, and regulations must be promulgated for those that opt-out. Cultural competency training programs must be created and implemented. The exchanges will also need to be able to ingest a series of data streams from federal agencies to verify immigration status, income level and criminal history.

Finally, states will need to establish funding streams to run the exchanges going forward.  Federal grants are available to cover start-up costs, but ongoing funding will rely on state-level mechanisms, even as many states struggle with budget deficits and other economic problems. This structural challenge was noted in a July Congressional Research Service (CRS) report on ACA implementation.

At present, the governors of eight states have indicated that their states will decline to establish state-level exchanges, and several others are leaning toward opting-out. Will the remaining states be able to establish their exchanges and achieve compliance by the 2014 deadline? 

A comparative look at other ambitious federal undertakings offers some insights into whether this is possible.

The life and death of ‘No Child Left Behind’

In 2001, President Bush signed the “No Child Left Behind” (NCLB) Act into law. The law provided for broad-based education reforms, and enjoyed wide, bipartisan support. 

The law’s passage was met with florid praise in many quarters. A 2003 Pearson Education report on NCLB provides a representative sentiment: “With NCLB, a new era began where accountability, local control, parental involvement, and funding what works became the cornerstone of the nation’s education system.”

NCLB tied federal education funding to school performance as measured by a series of standardized tests. If NCLB’s “carrot” was funding, its “stick” was testing, with the intention of driving results through the threat of withholding federal education dollars.

The goals of NCLB — as originally articulated — were to have 100 percent student proficiency on standardized tests by the year 2014. Instead, nearly half of all public schools were unable to meet NCLB testing requirements last year, subjecting them to incremental penalties under the law. The imposition of penalties on such a scale has proved to be a political impossibility, and has generated significant push-back from educators. The Obama administration began to search for ways to release states from the strictures imposed by NLCB, and started to issue “opt-out” waivers in 2011. As of this writing, 33 such waivers have been issued, largely invalidating key provisions of the original law. 

Passed as a grand solution for student performance problems, NCLB has quietly unraveled a mere decade after its passage. NCLB critics have blamed unrealistic federal mandates, unfunded obligations, and a lack of local program flexibility for creating an environment in which the law’s goals could not realistically be achieved.

In this, is NCLB an outlier, or is it illustrative of a broader trend?

The slow demise of REAL ID

The collapse of NCLB is echoed by the continued inability of state governments to implement driver’s license modifications under the provisions of the 2005 REAL ID Act, another expansive federal mandate.

Arising from a recommendation in the 9/11 Report, the REAL ID Act sought to create national requirements for driver’s licenses as a way to frustrate terrorist travel and fraud through the imposition of rigorous ID document standards.

The original deadline for states to comply with new federal requirements was May 11, 2008.  That date passed with exactly no states in compliance, and many engaged in active resistance.  As with NCLB, the federal bureaucracy began a soft retreat from its original goals. The initial deadline for REAL ID compliance was extended to December 2009, and then extended once again.

In the intervening years, several state legislatures fought REAL ID as an invasion of states’ rights and prerogatives. In total, 16 legislative bodies passed laws prohibiting their states from complying with REAL ID mandates. Minnesota passed such legislation in 2008, but it was vetoed by then-Gov. Tim Pawlenty.

Many states resisted REAL ID on the basis of its cost, and the nature of the unfunded mandate that it presents. Like the ACA, REAL ID established federal expectations that ultimately must be paid for out of state coffers.

Even as some state DMVs have slowly implemented license alterations in line with REAL ID specifications, overall state compliance has been markedly soft. For instance, New Jersey dropped its REAL ID project entirely less than two months ago.

According to the Department of Homeland Security, January 2013 is now the “final” deadline for REAL ID implementation. The penalty for noncompliance, as DHS has long maintained, is that non-conforming state IDs will now longer be valid for the purpose of boarding airplanes. If actually enforced, this could potentially ground millions of Americans and throw the air travel system into chaos. With January 2013 a month away and many states still non-compliant, it is easy to see the functional impracticality of the DHS deadline, and the corollary emptiness of its threat.

Will health care exchanges meet a similar fate?

The foregoing history produces many questions about the practicalities of launching the ACA’s centerpiece health care exchanges.

As with the federal programs described above, ACA compliance deadlines have already become softer and more flexible. The original deadline for states to submit exchange “blueprints” was Nov. 16, 2012. The Department of Health and Human Services has now pushed that deadline back to Dec. 14.  If history provides any guidance, that deadline will likely move again.

One measure of how long implementation may actually take can be found by looking at the experience of the few states that had set up health care exchanges prior to the passage of the ACA. Former Utah state Rep. David Clark has noted that Utah’s experience with its own, much more limited exchange demonstrated that three years were required to create a plan of action, and that up to 10 years might pass before its goals would be fully realized.

Under the ACA, those states that are unwilling to set up their own exchanges will be provided access to a federally run exchange instead. While “opt-in” states are currently grappling with how to pay for the exchanges they are constructing, it is equally uncertain how the federal government will cover the cost of providing its alternative system.

Earlier this year, the Congressional Research Service asked that very question in its July report on ACA implementation. According to CRS, “The President’s FY2013 budget requested more than $1 billion in new discretionary funding for HHS and IRS to pay ACA-related administrative costs. It remains unclear, however, whether congressional appropriators will provide some or all of those funds.”

A recipe for non-compliance?

The ACA’s health care exchanges appear to be the next in a series of ambitious federal programs that share the following lineage:  The establishment of sweeping goals without clear funding mechanisms, followed by implementation during a period of economic crisis. While Congress may be able to muster the political will to enact such programs, the federal government increasingly seems to be unable to whipsaw states into complying with the vast complexities and costs of their mandates. 

The object lesson here is one of dissonance between the political system and reality on the ground.  It is one thing to get a congressional majority to pass a sweeping legislative package.  It is a very different thing to shoehorn thousands of school districts into compliance with a statutory scheme such as No Child Left Behind, for example.  It is almost certain that the ACA’s directive to run millions of uninsured Americans through (largely) non-existent state exchanges will face similar hurdles.

This year’s Supreme Court battle over the Affordable Care Act focused on whether Congress had exceeded its enumerated constitutional powers in creating the law. Regardless of the court’s findings on that question, Congress increasingly seems to be exceeding the bounds of the possible, and the strains on the system are beginning to show.

Matt Ehling is a writer and television producer based in St. Paul.

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