I tell people don't get too excited until you see what the next year's premiums are going to be because there is enormous uncertainty. I think the reason some of the big private companies have very selectively participated in the exchanges — and they have only selectively participated in maybe 8, 10, 12 of the exchanges — is because they are very concerned that there will be substantial adverse selection this first year. It will mainly be the people who are unable to go to the high risk pools or who have been actively trying to buy insurance in the past and haven't been able to who will be first in line. It's unclear how many of the unhealthy will show up this first year. It's very expensive to them [insurance companies], actuarially, by virtue of the rules that the administration put in place. So you'll know if after the first year it looks like the premiums were about right, then it's real. But until you actually have real live experience it's a crapshoot for everyone involved.

DMN: Do you think the administration will be able to meet its enrollment goals in order for the law to work?


GW: No. It's already made clear since the enrollment goal for the exchanges is now 7 million, which is about half of what it was when the legislation was passed. The "goal" will be a moving target. It's kind of ridiculous what they were saying early on as though it wouldn't take three to four or even five years to ramp up to some steady state. It clearly will. I guess in some ways it's a good thing because if the exchanges are going to get stressed with 7 million, it's hard to imagine what it would have done at 15 million.

DMN: What are some other funding issues the law is up against?

GW: Obviously, the Republicans in the House who remain primarily against this legislation are not eager to be helpful in providing additional funding where that might have helped it proceed more smoothly.

DMN: What's your overall view of the law? Are there certain things you think should have been included, or not included?

GW: I'm very supportive of the notion of getting more insurance coverage out. I am concerned about a number of the specific features of the exchanges — there are some that get quite technical. For example: requiring insurers in the exchanges to continue providing insurance for 90 days whether or not people are paying their premiums. It seems like an invitation for bad behavior and it's very different from the practice that exists in the commercial sector, for example, where you basically pay for the month as you go into the month, and if you don't pay after 30 days, your insurance is terminated. It also strikes me as something that will be up for revision.

We are fortunate that we are in period of lower spending growth that I think is heavily influenced by the deep, continuing recession. We'll know how much of it is not recession-associated when we get to the point of two to three years of robust recovery, but we are obviously not anywhere near that yet. And I would have liked to have seen more aggressive ways to take some of the innovations that are being sponsored by the innovation center and make sure that scaling and replicability are an automatic part of the process if they show initial promise in terms of improving quality and lowering costs. The secretary can do that but there is nothing that requires the secretary to do that. And given the history of even having promising demonstrations and pilots get lost over time, I'm very worried that the coverage and spending will happen but the improved efficiency will be much more unknown. Because what we've done now is commit to reimbursing less for Medicare. We haven't done anything to lower cost and those are very different activities that people get confused by.

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