Bloomberg News

Faulty Data From U.S. Health Exchange Hints at Insurer Troubles

October 08, 2013

Insurers are getting faulty and incomplete data from the new U.S.-run health exchange, which may mean some Americans won’t be covered even after they sign up for an insurance plan.

While it’s not clear how widespread the problem is, the reports from industry consultants are the first hint that the technical troubles faced by consumers trying to enroll in health plans under the Affordable Care Act may also be hitting the insurers. The companies are receiving electronic files that can’t open or have so much missing information on new enrollees they’re unusable, the consultants said.

Some insurers have been forced to fix entries by hand, said Bob Laszewski, an insurance-industry consultant based in Arlington, Virginia.

“If we don’t see substantial improvement by the end of this week, then I would throw up the yellow flag,” said Dan Schuyler, a consultant advising states and insurers on the exchanges. “If we don’t see it in the next two to three weeks, it’s time for red flags. The concern is some people could get to Jan. 1, and not have coverage.”

Since the exchanges opened on Oct. 1, consumers have struggled to access the online marketplaces, which have been overwhelmed by millions of visitors.

While capacity was added this past weekend to a system meant to serve people in 36 states, the federal website continued yesterday to deliver error messages to potential customers trying to create accounts and shop for health plans.

State Exchanges

At the same time, most of the 14 state exchanges yesterday reported performing with fewer troubles.

Joanne Peters, a spokeswoman for the Department of Health and Human Services, which is running the U.S. exchange, didn’t provide a comment on the difficulties for the insurers described by the consultants.

The Obama administration hasn’t said how many Americans have enrolled through healthcare.gov, a central component of the Affordable Care Act. The 2010 law seeks to provide health coverage for some of the 48 million uninsured Americans. About 7 million people are expected to use federal subsidies to buy health plans through the U.S. and state websites.

States running their own systems, such as Connecticut and Kentucky, have reported initial enrollments in the hundreds or thousands in the first week of operation.

File by File

While the numbers of people signing up through the U.S. website have been small enough that insurers can fix bad data file by file, that may not be possible later, Laszewski said. Enrollment is expected to pick up as Jan. 1 approaches and coverage actually begins, he said.

“If you’ve only got a dozen bad enrollments, that’s OK, but what are you going to do when you have 200,000 bad enrollments?” Laszewski said. “What we’re seeing in public is the web portal, which is a mess. It is just as bad behind the wizard’s curtain.”

If insurers can’t sign people up for coverage, customers may become frustrated and give up, said Joel Ario, a consultant with Manatt, Phelps & Phillips, LLP and a former top official with the government agency running the markets.

Eight state-based and national insurers contacted for comment declined to speak about the computer issues or didn’t return telephone calls and e-mails seeking comment. Blue Cross Blue Shield of Oklahoma has had some of the problems with the exchange, said Lauren Perlstein, a spokeswoman for the insurer.

Rollout Glitches

“With any program of this magnitude, it’s not unexpected to have glitches during the initial rollout,” she said in an e-mail.

Each night, healthcare.gov is supposed to send a batch of new enrollments to the insurers. Called “834 files,” the data have long been an industry standard in the private sector.

The information is a new responsibility for the federal exchanges, though, according to Schuyler, a director at Leavitt Partners, a Salt Lake City-based health-care consultant. With the government site, some of the electronic files are being transfered with missing data or are corrupted to the point where they can’t be opened, Laszewski and Schuyler said in telephone interviews.

To fix the files, insurers have to go through them by hand. When thousands of people sign up, as the U.S. is hoping will happen before mid-December, it may create a large backup, the two consultants said.

The U.S. is still operating a parallel testing website that was meant to help iron out problems before the Oct. 1 opening.

“They’re doing testing this week because they haven’t got the bugs out. They still aren’t sending clean files,” said Laszewski. “The insurance industry is scared to death.”

To contact the reporters on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net; Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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