ObamaCare exchanges: What if they are not ready by October?

John C. Goodman's picture

On Oct. 1, millions of Americans are supposed to be able to go online and acquire health insurance on electronic exchanges in the states where they live. But a new Government Accounting Agency (GAO) report is raising an issue I raised in The Wall Street Journal: What happens if the exchanges aren’t ready?

Already, the Department of Health and Human Services has thrown in the towel on small-business exchanges that were supposed to allow employees to choose among competing health plans. The opportunity to make those choices has been put off for at least a year, leaving small-business employees with only their employer’s plans as options.

As for individuals acquiring insurance on their own, the only states that have functioning exchanges at the moment are Massachusetts and Utah. Both developed their exchanges independently of the Affordable Care Act, and they may not be able to do everything the federal government requires.

Fifteen other states are trying to develop their own exchanges with varying degrees of success. The other 33 states have either completely ceded responsibility to the federal government or have entered a partnership that gives the federal government responsibility.

There are five reasons the supply side of the market may not be ready when the buyers are.

Cost. One problem is that too little money was budgeted for creating the exchanges. The Congressional Budget Office originally estimated that setting up the exchanges would cost between $5 billion and $10 billion. California alone is spending more than $900 million, yet the health-reform law allocated only $1 billion for the country as a whole. The Obama administration has been cannibalizing other federal health budgets in a mad rush to find more for the exchanges.

Complexity. A second problem is that the Obama administration wants something the federal government has never done: a computer system that connects the Department of Health and Human Services, the Internal Revenue Service, the Social Security Administration, Homeland Security and perhaps other departments. This is a herculean task with unclear benefits.

For perspective, consider that the Veterans Administration converted to electronic medical records in 1998 and the VA and the Defense Department tried without success to share records until February, when then-Secretary of Defense Leon Panetta announced that the plan would be abandoned.

Meanwhile, has anyone asked why we need to link all these agencies in order to operate an exchange? We allow people to self-report their incomes on income-tax returns without checking all the databases the government has at its disposal. Why should health insurance applications be different?

Incompetency. A third and much bigger problem is that the federal government is probably the worst entity possible to design an exchange.

In July 2011, Fortune magazine reported that the government is spending $80 billion a year on buying and operating information technology, and much of it is simply wasted.

The government has accumulated 24,000 websites and more than 10,000 separate IT systems. Servers in some agencies are idle 93 percent of the time. Uncle Sam’s first chief information officer, Vivek Kundra, who was appointed by President Obama in 2009, told Fortune: “We found that billions of dollars in information technology projects were years behind schedule ... and after the money was spent weren’t even working.“

Reinventing the wheel. One of the worst mistakes the federal government makes is the tendency to try to reinvent systems the private sector has already invented. The government has been true to form under the health-reform law, completely ignoring private exchanges that are up and running.

EHealth, for example, operates an online site that has allowed three million people to acquire health insurance, 40 percent of whom were previously uninsured. BenefitMall has been operating a private health-insurance exchange in Maryland since 2000 and currently competes against two other private exchanges in the state. Nationally, Mercer and Aon Hewitt are running private exchanges for large employers. Overall, there are 100 private exchanges in existence today.

Anti-private sector bias. For reasons that are hard for an ordinary mortal to understand, individuals and families who earn too much (more than 400 percent of the poverty level) to qualify for a subsidy will be allowed to go through private exchanges to purchase insurance. HHS has explicitly given the federal-allied exchanges the option to use private website companies as portals, but so far no state exchange has allowed a private company to serve as an entry point for anyone who is entitled to a subsidy.

Meanwhile, the Obama administration is going to spend millions of dollars on “navigators.“ These will be people trained to locate those who are eligible for subsidized health insurance and help them get into a health plan although in most cases the task of actually signing up for a plan will fall to enrollees.

Writing in Forbes, Rick Ungar sums up the situation this way: “Whatever the reason for the reluctance of the state-created exchanges to include private business participants, the end result is that taxpayers will spend millions of dollars unnecessarily while fewer people are likely to be enrolled in qualified health insurance programs and that is just wrong.”

[John C. Goodman is President and CEO of the National Center for Policy Analysis (NCPA) and a senior fellow for the Georgia Public Policy Foundation, an independent, state-focused think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians] © 2013 Georgia Public Policy Foundation.

stranger than f...
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Charles Krauthammer to the Tea Party - "This is nuts."

One of the most conservative columnists in America is honest enough to warn the Tea Party that they are sabotaging the conservative agenda. The column appeared in today's AJC and can be read online at:

http://www.denverpost.com/opinion/ci_23778804/how-broken-is-gop

Will conservatives ever stop self-destructing and allow an electable alternative to the Democratic Party?

Davids mom
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Believe it or not
PTC Observer
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DM - I believe

it, for sure.

When you create fiscally irresponsible programs, and there are many, that benefit some at the expense of others, in a social democracy it is not reversible.

The larger the special interest group the more difficult it is to reverse any entitlement.

The point is that what has been promised, is not what will be delivered.

Finally, it will harm not help healthcare delivery in this country, it will distort employment markets and cause America to turn into a cottage industry as companies will stay below 50 employees and/or 30 hours per week. Larger corporations will remain and pass benefit costs to taxpayers and cancel company provided care. Insurance companies will roll in the dough. If you want to see how it "works" look to Europe, mostly poor public healthcare with excellent private care for the rich. Kiss your current level of healthcare goodbye and get in line. Unless you're rich of course.

IMHO

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Lies on Healthcare

"It is of great importance to set a resolution, not to be shaken, never to tell an untruth. There is no vice so mean, so pitiful, so contemptible; and he who permits himself to tell a lie once, finds it much easier to do it a second and a third time, till at length it becomes habitual; he tells lies without attending to it, and truths without the world's believing him." --Thomas Jefferson (1785)

From John Hawkins - "5 Lies the Democrats Told To Sell Obamacare"

"1) Obamacare will cut the cost of your health care. When Obamacare goes into effect next year, many Americans can expect STEEP increases in the cost of health care.

President Obama (promised)...that the cost of insurance would go down “by $2,500 per family per year.” ...In fact, the average 25 and 40-year-old will pay double under Obamacare what they would need to pay today, based on rates posted at eHealthInsurance.com (NASDAQ:EHTH). More specifically, for the typical 25-year-old male non-smoker, the average Obamacare “bronze” exchange plan in California will cost between 64 and 117 percent more than the cheapest five plans on eHealth. For 40-year-old male non-smokers, it’s between 73 and 146 percent more.

2) Obamacare will not increase the deficit. Calling for a massive new government program to cut costs is sort of like moving to Death Valley for the reduced air conditioning bills. Alas, it's not so.

Obamacare will increase the long-term federal deficit by $6.2 trillion, according to a Government Accountability Office (GAO) report.

President Obama and other Democrats attempted to win support for the health-care bill by touting it as a fiscally responsible enterprise. “I will not sign a plan that adds one dime to our deficits — either now or in the future,” Obama told a joint-session of Congress in September 2009. “I will not sign it if it adds one dime to the deficit, now or in the future, period.”

3) "If you like your doctor, you will be able to keep your doctor. Period." Soon, many Americans will be happy if they can find A DOCTOR, much less THEIR DOCTOR.

Eighty-three percent of American physicians have considered leaving their practices over President Barack Obama’s health care reform law, according to a survey released by the Doctor Patient Medical Association.

The DPMA, a non-partisan association of doctors and patients, surveyed a random selection of 699 doctors nationwide. The survey found that the majority have thought about bailing out of their careers over the increased tax legislation.

Even if doctors do not quit their jobs over the ruling, America will face a shortage of at least 90,000 doctors by 2020. The new health care law increases demand for physicians by expanding insurance coverage. This change will exacerbate the current shortage as more Americans live past 65.

4) Obamacare will create jobs. That would be true if you added "...at the IRS" to the end of it, but companies have already begun to move millions of workers from full to part time to avoid punitive new costs under Obamacare.

Retailers are cutting worker hours at a rate not seen in more than three decades — a sudden shift that can only be explained by the onset of ObamaCare’s employer mandates.

Nonsupervisory employees logged an average 30.0 hours per weeek.

…This reversal doesn’t appear related to the economy, which has been consistently mediocre. Instead, all evidence points to the coming launch of ObamaCare, which the retail industry has warned would cause just such a result.

...One way for employers to minimize the costs of providing “affordable” coverage to modest-wage workers is to shift more work to part-time, defined as less than 30 hours per week under ObamaCare.

5) If you like your health care plan, you'll be able to keep it. According to Obama, even though the government is about to come crashing into the health care market like a Blue Whale bellyflopping into a pond, it isn't going to have any impact at all on the insurance companies that were already swimming along. Why, if you like your own insurance, then there is nothing to worry about because you can keep it.

Yet, it has been reported,

New health insurance rules under ObamaCare could lead to a host of personal insurance plans being canceled as early as this fall, a scenario expected to cause consumer confusion.

Under the federal overhaul, those policies that cannot meet new insurance plan standards may be discontinued. This means individuals, and some small businesses, that rely on those plans will have to find new ones.

The goal is to ensure that most insurance policies offer a basic set of coverage, as part of the Obama administration's plan to cover most of the nation's 50 million uninsured.

Yet it also seems to run afoul of one of the president's best-known promises on the law: "If you like your health care plan, you'll be able to keep your health care plan."

In fact, state insurance commissioners largely are giving insurers the option of canceling existing plans or changing them to comply with new federal requirements. Large employer plans that cover most workers and their families are unlikely to be affected.

The National Association of Insurance Commissioners says it is hearing that many carriers will cancel policies and issue new ones because administratively that is easier than changing existing plans.

..."You're going to be forcibly upgraded," said Bob Laszewski, a health care industry consultant. "It's like showing up at the airline counter and being told, 'You have no choice, $300 please. You're getting a first-class ticket, why are you complaining?'""

Davids mom
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Facts vs. Talking Points

Here are Facts rather than anti-healthcare talking points

Most persons with jobs and benefits will not be changing their healthcare plans – and they don’t have to unless qualified to benefit from the Obamacare plans.

http://obamacarefacts.com/obamacare-facts.php

The following are beneficial to those WITHOUT HEALTHCARE INSURANCE.

http://www.easierhealthinsurance.com/welcome?id=185969475081

It’s your tax dollars that are paying for ER visits of those with no insurance.

Citizen_Steve
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Not facts, just talking points

Those are not facts... the first one I read is a lie:

"The Fact is ObamaCare gives 47 million women access to preventive health services".

You cannot convince me that 47 million women were blocked from preventive health care or could not otherwise afford it without this bill. Maybe the bill forces their insurance carriers to cover it and pass those costs back on to them... could that be closer to the truth?

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Citizen Steve
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PTC O - Healthcare and the undocumented

Undocumented/illegal healthcare seems to be the hangup with immigration reform.

Pity California who, according to several reports, has about 2.6 million illegal aliens that can't immediately participate in Obamacare. Some California healthcare advocates and the Demos are pushing hard for federal money as the fiscal burden of illegal healthcare is really starting to hurt budgets in counties such as Los Angeles.

It will be very interesting to see how all of the dynamics of both immigration reform and Obamacare are "churned" together and what the outcome will be. If that delivered product does not include healthcare funding for illegals I wonder which political party will cry the loudest.

Lies and dishonesty.