It seems political crisis is not the only side effect of the botched implementation of the Affordable Care Act’s individual insurance exchanges. Many Americans, frustrated with the government-run health care website and not expecting to receive a subsidy to put toward their exchange-purchased coverage, have chosen to fulfill the individual mandate by purchasing policies from insurers directly.
In defending the Obama administration’s rush to rollout the cornerstone provision of the Affordable Care Act, the online insurance marketplaces, even after the website had crashed while being tested with just a few hundred people logging in, Department of Health and Human Services Secretary Kathleen Sebelius told CNN’s Chief Medical Correspondent Dr. Sanjay Gupta in a Tuesday interview that that, “Waiting was not an option.” Implementation “moved forward because millions of people have been waiting for health care insurance,” she added.
The Affordable Care Act was designed to make affordable health insurance accessible to most all Americans via a two-part system: the expansion of Medicaid and the creation of insurance exchanges where individuals will be able to comparison-shop for health insurance policies in online marketplaces where their collective bargaining power will theoretically foster competition and drive down prices. Subsidies in the form of tax credits were also included to make coverage more affordable for the exchange enrollees that qualify. This plan to provide subsidized health care to millions of uninsured Americans and make health care more affordable for many others is the most ambitious social program implemented in the United States since Medicare was passed in the 1960s.
Thanks to the software errors — which caused hours-long wait times, prevented potential customers from creating accounts and completing the 30-step enrollment process, sent insurers the wrong information, and made it difficult for customers to get an accurate cost estimate — the necessary supports for the success of the reform are crumbling. The systemic flaws have prompted Republican lawmakers, and now their Democratic counterparts, to push the White House to delay the tax penalty that will be levied against Americans who do not purchase qualifying insurance coverage by the enrollment cut-off date of March 31, 2013.
So far, all the Obama administration has admitted is that the website, healthcare.gov, which links all federally-facilitated exchanges, has been two slow. In a Monday speech, the president said he wanted “the cash registers to work” and “the check own lines to be smooth,” adding that there are “no excuse for the problems.” But, at least for now, the individual mandate has not been pushed back one year to 2015.
John Gorman, a former assistant to the director of the Health Care Financing Administration’s Office of Managed Care, now the Centers for Medicare and Medicaid Services, which is the agency responsible for the rollout, described the problems as “a perfect storm for an IT meltdown” to Bloomberg. The Obama administration has indicated that the high traffic numbers the federal website have exacerbated the technical problems. While it is true that approximately 8.6 million people visited healthcare.gov by October 4, independent research shows that of the 9.47 million people that visited the website in the first five days after launch, only 36,000 people — roughly 1 percent of those who attempted to register for the federal exchange — enrolled. Of course, the exchanges operated solely by individual states have suffered far fewer problems.
Therefore, IT problems mean enrollment problems for the Obama administration. “If they can’t get it fixed for most people by mid-November, they start raising questions about who’s going to enroll and concerns about adverse enrollment,” Gail Wilensky, a former administrator of HCFA, told Bloomberg. In fact, experts believe that the glitches will turn off younger, more web-savvy individuals from purchasing insurance via the Obamacare exchanges. That is concerning for the administration because, officials have calculated that of the 7 million people who are expected to enroll via the Affordable Care Act’s exchanges around 2.7 million need to be young adults for the entire system to function financially.
Executives of nearly a dozen insurance companies offering plans on the insurance exchanges told Reuters that they have received very few enrollments through the federal marketplaces. However, they have insurance company call centers and websites have received record traffic. For those potential customers who will likely qualify for government subsidies, shopping baskets are created with the plans they like, and they are then sent to healthcare.gov to verify eligibility. However, if shoppers do not qualify for a subsidy, insurers told the publication that they sell customers plans directly. More often than not, those plans are policies not available on healthcare.gov. Selling plans off-exchange takes potential customers away from the system, potential customers paying full price for their policies who are needed to make the exchange system work.
Furthermore, a weaker enrollment in the Obamacare exchanges will likely mean the risk pool will have a higher concentration of sicker consumers who will rack up higher medical bills. If that situation materializes, it means that, “The healthy ones tried and gave up (on enrollment) and the sick ones were the persistent ones that actually got through the process,” as Jefferies & Co analyst David Windley told Reuters. To function as intended, the marketplaces need a broad, healthy risk pool to keep staggering rate increases from occurring. The premiums of healthy, cheap-to-insure people cover the big bills for the relatively small number of sick people. So if the exchanges do not enroll enough young, healthy people, insurers will have to raise premiums across the board.
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