States and insurers are already working to bail out President Barack Obama’s health-care overhaul, anticipating the system’s online insurance exchanges may not be ready by a critical December deadline.
All of the alternatives have drawbacks.
Insurance companies are hoping to bypass the troubled exchanges and directly enroll customers. While that strategy would ease access, it also might prevent consumers from shopping for the best deal, a cornerstone of Obamacare. States may extend special coverage for the chronically ill who are otherwise shut out of the market. That’s if they can find the money.
The rush to prepare work-arounds is a sign of skepticism that the Obama administration will meet its goal by the end of November to fix the technical problems that have plagued the exchanges. If they miss the deadline, millions of Americans may find themselves without health insurance next year.
“You’ve got a lot of people who have no coverage options right now other than the Affordable Care Act,” said Joel Ario, a consultant with Manatt, Phelps & Phillips, LLP and former top official with the federal agency running the exchanges. “There are a number of people now who will not have coverage on Jan. 1 if they can’t get the websites working.”
Compounding the pressure are the cancellation notices sent to millions of people whose policies don’t comply with the Patient Protection and Affordable Care Act. While the president gave insurers the option last week of extending those plans for an extra year, it’s unclear how many states will work with companies to follow through on that decision.
Short of Goals
Error messages, slow load times and garbled data have plagued the exchanges since their debut Oct. 1, especially the federal healthcare.gov site set up to serve 36 states. Fourteen states and the District of Columbia have created their own websites. In their first month, the exchanges enrolled about 106,000 people in private insurance plans, well short of internal goals set by the administration.
Consumers have until Dec. 15 to buy a policy that takes effect Jan. 1. They have to enroll by March 31 to avoid the 2010 law’s penalty for people who go uncovered.
While the White House has touted daily improvements to the system, “the question is will it be ready to sustain the volumes they’re going to see over the next five weeks,” said Dan Schuyler of Leavitt Partners, a Salt Lake City-based consultant to state exchanges. “The administration has to be thinking about alternatives right now.”
Enrolling through insurers may be the best remaining option, said Ario, who directed the federal Office of Health Insurance Exchanges until December 2011.
While customers can sign up online now through carriers such as WellPoint Inc. (WLP:US) or web brokers like EHealth Inc. (EHTH:US), they must be transferred to the hobbled federal computer system to determine eligibility for tax credits. The money, based on household size and income, can lower premiums by hundreds of dollars a month, making the difference in affordability for many consumers.
When consumers have been able to use the federal site, its results haven’t always been reliable. In Washington last week, the state-run exchange notified 8,000 people that they would be getting less aid than originally thought, raising their bills by an average of $100 a month.
Healthcare.gov could estimate subsidies for people who use outside sites or allow insurers to do so. That leaves the companies vulnerable if the number isn’t calculated correctly, Schuyler said.
“It makes sense to utilize the carriers,” he said in a telephone interview. “They’ve got the platforms and technology. They sell insurance every day. The question is who bears the risk?”
Consumers enrolling directly through an insurer may also miss out on one of the chief benefits of public exchanges, the ability to compare competing plans side by side, said Betsy Imholz, a special projects director for Consumers Union, the Yonkers, New York-based nonprofit.
Still, she said in an interview, consumer groups are coming around to the idea that “expediency says, ‘Let’s get people something.’”
When that can happen remains unclear. While the administration says most of the technical fixes needed for direct enrollment have been made, an insurance industry spokesman said more work has to be done.
Insurers “don’t have access to people’s eligibility for financial assistance,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, in a phone interview yesterday. “That can only come from the federal government.”
The administration has been concerned since before the online marketplace opened about the reaction from consumers and the media if the website failed to work as touted, according to e-mails released yesterday by the House Oversight and Government Reform Committee.
Henry Chao, the deputy chief information officer at the Centers for Medicare & Medicaid Services, told colleagues in a Sept. 25 e-mail that he was worried about the way the media would portray error messages when the site went down.
“I am picturing in my mind all the major print and online media taking screenshots” of an error message “and just ramping up the hyperbole about hc.gov not functional,” he wrote in the e-mail.
House Republicans said Chao’s e-mails are another indication the administration knew the website wouldn’t work properly before it opened for business Oct. 1.
Customers can buy insurance over the phone as well, or by mailing in paper applications. Oregon’s state-run site has hired an additional 400 people to process more than 25,000 paper enrollments, a spokesman, Michael Cox, said in an e-mail yesterday. So far, technological hurdles have kept the state from enrolling even one person in a private plan.
While insurers look for a way around the federal system, states are trying to extend “high-risk” pools that provide coverage to sick customers. The government-subsidized pools insure about 200,000 Americans with medical conditions that make it hard for them to find affordable coverage. Many were slated to go out of business by Jan. 1, when the online markets were supposed to provide a ready alternative.
Instead, states are searching for funds to keep the programs alive at least for a few months. Indiana, where the high-risk pool includes 6,800 people, decided last month to continue the coverage through January, at a cost of $6.3 million. Wisconsin has discussed a similar move.
The Affordable Care Act included $5 billion in temporary funding for the pools, which provided coverage for an additional 100,000 people. A group representing the insurance pools asked the federal government to extend that program due to the website’s problems.
“They’ve got to make sure their providers, physicians and hospitals are in the network” of plans offered through the exchanges, said Tanya Case, chairman of the National Association of State Comprehensive Health Insurance Plans. “It’s a whole different ballgame for our members.”
For some consumers, the advice may be to wait out the technical problems slowing the process, said Timothy Jost, a Washington and Lee University law professor who studies the health-care overhaul.
If they can afford it, consumers can buy an exchange plan now while waiting to apply for tax credits next year, when the system will presumably function better, Jost said in an interview. People can apply for subsidies as late as April 2015 when they file their taxes, he said.
It’s an option that would appeal only to a limited group, Jost said: those who can shoulder full premiums for a few months or who need coverage as soon as possible.
“If you’re staring a $50,000 medical bill in the face, it might be worth it,” he said.
One option that’s likely off the table is a full delay for Obamacare, said Ario, the Manatt consultant.
While healthcare.gov has stumbled, the system has worked better in states such as California and New York that have built their own websites. That’s created a constituency to maintain the law known as Obamacare and its new insurance plans and subsidies.
“The worst-case scenario is not a delay but a very hard slog through to get as many people covered as they can,” Ario said. “If it has to limp through the first few months, that may be the only real, practical solution.”
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