Sunday, November 10, 2013

The Obamacare Rollout: The Administration Needs a Plan B––Now!

It is now becoming clear that the Obama administration will not have Health.care.gov fixed by December 1 so hundreds of thousands, or perhaps millions, of people will be able to smoothly enroll by January 1.

Why do I say that? Look at this from the administration spokesperson's daily Healthcare.gov progress report on Friday:
Essentially what is happening is people [those working on the fixes] are going through the entire process. As we have fixed certain pieces of functionality, like the account creation process, we're seeing volume go further down the application. We're identifying new issues that we need to be in a position to troubleshoot.
Does that sound like the kind of report you would expect if they were on track to fix this in less than three weeks? Their biggest problem is that they admittedly don't know what they don't know.
The spokesperson also reiterated the administration intends to have Obamacare's computer system "functioning smoothly for the vast majority of users" by the end of the month.

It's time for the Obama administration to get real.

It takes months to properly test a complex data system like this. Two things are obvious:
  1. When they launched on October 1, very little of the testing had been completed. 
  2. They are now in the midst of that many months long testing and fixing period. It is clear they don't have a few weeks of work left; they have months of work left.
As Senate Finance Chair Max Baucus (D-MT) told HHS Secretary Sebelius last week, if you aren't going to make your goal to get this fixed by the end of November tell us sooner, don't wait until the end.

We can all debate just how many people will eventually sign-up for Obamacare or whether the administration has any chance of making its first year goal of 7 million people. But, there is no doubt in my mind that hundreds of thousands if not millions of people do want to sign-up and be covered on January 1. Clearly, there are lots of people who have been patiently waiting for the day they could get coverage for their pre-existing conditions and who need the subsidies to buy insurance. And, then there are the millions who have already received their cancellation notices in the individual market and need to enroll in a new plan by January 1.

The administration needs a Plan B and they need it now. To get one, they can't be working on it themselves. They will need the help of the insurance industry, the state insurance regulators, and the many navigator organizations that have been sitting in a frustrating limbo since October 1.

What might a Plan B look like?

The Corner They Are In
First, it is important to understand some of the obstacles Obamacare is up against.

Millions of people are facing those cancellation letters. Ideally, we could just say, never mind––let these people simply stay on their current policies. But here's maybe the biggest irony in this whole mess. The Obama administration may not be ready for Obamacare but the insurance industry is. The health insurance companies spent the last many months rolling their old policies off the books and replacing them with the 2014 Obamacare compliant products––Bronze, Silver, Gold, and Platinum.

Cancellation letters have been sent. Their computer systems took months to program in order to be able to send the letters out and set up the terminations on their systems. Even post-Obamacare, the states regulate the insurance market. The old products are no longer filed for sale and rates are not approved. I suppose it might be possible to get insurance commissioners to waive their requirements but even if they did how could the insurance industry reprogram systems in less than a month that took months to program in the first place, contact the millions impacted, explain their new options (they could still try to get one of the new policies with a subsidy), and get their approval?

The Obama administration told the carriers to be ready on October 1 and they are ready. You just can't waive a magic wand and put Humpty Dumpty back together again.

And then we need to remember that these cancelled policies––over 4 million and counting––are in two distinctly different classes:
  1. Policies written since March of 2010 that by statute cannot be grandfathered. The grandfather provisions of the new law apply only to people who had a policy in force on the day the law was passed in 2010. This makes up about half of the policies being cancelled.
  2. Policies in force the day the law was passed are the only ones subject to the very narrow administration's grandfather rules. Any policy, for example, where the consumer chose to raise the plan's deductible in order to avoid a rate increase––a very common thing––from something like $1,000 to $1,500, has lost its grandfather status. That is almost certainly the majority of this class of policies and why so many are being cancelled.
As I have said on this blog before, all of the 50% of policies in the first class and most of the policies in the second class likely total about 80% of the existing individual health insurance market that have received, or are going to receive by the end of 2014, cancellation letters.

Then there are all of those people who want to buy coverage for the first time on January 1. Like those who have received cancellation letters, they also have to sign-up by December 15 to have any hope of being on the rolls by January 1. And, no one ever planned for the possibility that we would have back end-loaded hundreds of thousands or even millions of people into a two-week period between December 1 and December 15.

The administration has said that people can sign-up via the call centers or through navigators using paper applications. But really, they cannot. First, it is almost impossible to have any understanding of what are often dozens of complex insurance plan options by talking to the call center over the phone. And, call centers or navigators, rarely are they able to get much information on just which doctors and hospitals are in which plans. Then, if they do sign-up, any application they complete gets stuck in the same computer mess everyone is dealing with online. Only a very tiny trickle of people get their enrollments through to the insurance companies.

One of the things the carriers and the private exchanges asked the Obama administration for months ago was to enable the private exchanges and insurers to access Healthcare.gov in order to be able to calculate subsidies for people and sign them up directly. The administration did not make this a high priority and it is still not done. As a result, carriers can sign people up directly through their websites or call centers but cannot get them subsidies.

Plan B?
So what could the administration now do?

I would suggest a number of things:
  1. Stop telling people to keep trying to sign-up via the federal government website or the call center until things really do work. Their efforts are getting nowhere with only a trickle of people making it through the gauntlet every day.
  2. To help those who have had their insurance cancelled; the administration should encourage the use of the early renewal programs many insurers have offered that let them keep their coverage until at least December 1, 2014. Then, by December 2014, change the regulations and statute so they can keep these policies longer. The administration should also encourage states that have prohibited this early enrollment practice to allow it, as well as insurers who have not yet offered it.
  3. Encourage people to call the insurers and private exchanges serving their states directly. The administration should post those phone numbers and web addresses on the first page of Healthcare.gov. If they went directly to insurers, people would have to access multiple insurer sites to shop rather than the one-stop shopping the federal exchange would have provided. If they went to private exchanges, they would have the full shopping experience. However, in either case, they would not be able to get a subsidy by going direct as long as the insurers and private exchanges are unable to access the federal subsidy system. But they could get signed up for coverage by January 1. While this would not help people without the money to buy a policy, everyone would ultimately get the entire subsidy they are entitled to as part of their 2014 tax filing.
  4. Build, as the very top system priority, the subsidy calculation bridge the insurers and private exchanges have been requesting for months but the administration made a lower priority well before October 1. If insurers and private exchanges have the ability to access the subsidy calculator and enroll people in the subsidy program, the administration will have built a workaround system for the interim so people who could not otherwise afford coverage would be able to get a subsidy
Does each of these suggestions have major drawbacks?

Yes.

But this administration has now painted itself into a terrible corner. People's policies are canceled, they can't smoothly access Healthcare.gov, and many are facing big unforeseen increases in premiums and out-of-pocket costs as well as provider restrictions. People who have been waiting patiently for guaranteed issue subsidized health insurance can't get to it and there is little hope they will find a smoothly running system capable of handling an enormously back-loaded demand in the two weeks between December 1 and December 15.

The administration needs a Plan B and they need it now!

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