Blows to Health-Care Law Pile Up, Cutting Its Sweep - For people above the poverty level, the federal government is encouraging enrolling for coverage through the insurance exchanges. But it has limited funding for getting that message out in 33 states where it is partly or fully responsible for the exchanges.

From The Wall Street Journal:

The big expansion of health insurance envisioned under the 2010 Affordable Care Act is now looking less sweeping.

The latest indication that the coverage net won't be as wide as initially expected came this week when the Obama administration delayed for a year a requirement that larger employers offer health insurance to workers or pay a penalty. The move means businesses with 50 or more employees that don't currently offer coverage—such as some retailers and restaurants—can continue on that track without penalty until 2015.

While the unexpected move received attention, it is at least the third time that a development since the law's passage has potentially limited the expansion of insurance.

The two earlier snags involve Medicaid, a federal-state program for the poor, and the new health-insurance exchanges where individuals can buy coverage. The law was supposed to expand Medicaid to include more of the poorest Americans, but a Supreme Court ruling last year allowed states to opt out of that expansion; at least half are poised to do so.

At the same time, analysts warn that hiccups are possible in implementing the exchanges after more than 30 states refused to set up their own versions, forcing the federal government to operate them on states' behalf.

"You've got three body blows toward expansion of coverage," said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of Deloitte LLP. "It's three punches in a row."

The law was designed to extend insurance to most of the 50 million Americans who lack coverage. But when the main features of the law go live Jan. 1, the share of those people set to remain uninsured is bigger than the proportion set to gain coverage. That raises the prospect of a long battle to make the law work as its supporters intended, and the likelihood that opponents will dismiss it as a costly failure.

The nonpartisan Congressional Budget Office projected soon after the law passed that it would reduce the number of uninsured to 23 million people in 2019, from about 50 million people now. In an updated projection earlier this year, the economists estimated around 30 million people would still be without coverage that year. The office has yet to revise its estimates in the wake of this week's announcement.

Some analysts played down the employer-requirement delay. "It is much ado about very little," said Gerard Anderson, a professor at Johns Hopkins University. "So many people in firms larger than 50 already had health coverage."

Critics of the law predicted further problems. "Much like Humpty Dumpty, Obamacare had a great fall and all of King Obama's bureaucrats cannot put it back together again," said Rep. Tim Huelskamp (R., Kan.).

In sectors that employ many lower-wage hourly employees, such as agriculture and services, fewer than half of workers have employer-sponsored coverage, according to the Bureau of Labor Statistics. Plans currently offered often include limited-benefit policies known as "mini-meds" that can't be sold next year because the law bans lifetime or annual payout limits, a feature of such plans.

Under the original version of the law, states would enroll in Medicaid everyone who earned up to about a third more than the federal poverty level. Under that plan, many employees making up to about $10 an hour were to set to qualify. Eligibility for Medicaid currently varies by state but in many parts of the country, childless adults don't qualify even if they have income significantly below the poverty line.

In the wake of the Supreme Court ruling, officials in 28 states have indicated they plan to sit out the Medicaid expansion next year or are still debating it.

Those 28 states are home to about 9.6 million uninsured people who would become newly eligible for Medicaid, according to estimates from the left-leaning Urban Institute think tank. Those people can try shopping for coverage on the new insurance exchanges. However, an estimated 7.4 million of them won't be able to obtain subsidies for that coverage, because they are below the poverty level and the law is written to give subsidies only to people above that line.

"Just when we think we have something, someone in the capital says we don't," said Sarah Bates, an uninsured, self-employed oboe teacher in Austin, Texas.

Ms. Bates, 27 years old, had an income of about $4,000 last year after adjusting for business expenses. She takes three prescriptions and needs treatment for asthma and a hormone disorder. For now, she receives care at a local hospital sponsored by an Austin group for uninsured musicians.

For people above the poverty level, the federal government is encouraging enrolling for coverage through the insurance exchanges. But it has limited funding for getting that message out in 33 states where it is partly or fully responsible for the exchanges. Some 28 million uninsured people live in those states, according to government data.

Despite the delay in the employer mandate, the Treasury Department said the individual mandate requiring people to carry coverage starting in 2014 or pay a tax penalty remains in place. So do subsidies for people who are eligible. The penalty, however, is set to be small in the first year, with most low-income people exempt.

Health and Human Services Secretary Kathleen Sebelius has said she believes the administration is on track to meet its goal of enrolling seven million people in coverage through the exchanges in the first year and her department hopes more states will ultimately decide to join the Medicaid expansion.

For now, groups that favor expansion under the law say the confusion is making it harder for them to explain options to the uninsured. "This ever-changing landscape is just getting more difficult," said José Camacho, executive director of a Texas association for clinics treating mostly uninsured people.