The Third World Exchanges

Published October 15, 2013

Consumer Power Report #392

Why aren’t the Obamacare exchanges working?

“We’ve known since at least February that the exchanges were looking shaky. There were Chao’s comments at the insurer conference. There was a survey by Edifecs, a health-care IT consulting firm, found that 70 percent of insurers were “skeptical that the [exchanges] will be ready to launch by the October 1, 2013 deadline.” 93 percent said that exchanges were not seeking enough feedback from insurers; 75 percent were “very concerned with being able to reconcile premium, enrollment, and payment records” from exchanges; and 88 percent were “concerned about potential disruption to existing IT enrollment infrastructure and processes.”

“The White House, and its progressive allies, have repeated the talking point that it’s recalcitrant Republicans who have sabotaged the law, by refusing to set up state-based exchanges in red states. But Kevin Counihan, chairman of the insurance exchange in blue-state Connecticut, has repeatedly expressed frustration at the contradictory instructions from Washington. … Counihan is one of the many people trying in good faith to implement the law who says, “I wish we had one more year.”

As it turns out, the real reason Obamacare’s exchanges are still crashing is that they’re trying to hide the true costs from you. By requiring applicants to enter eligibility information before applying, the system is becoming overburdened.

A growing consensus of IT experts, outside and inside the government, have figured out a principal reason why the website for Obamacare’s federally-sponsored insurance exchange is crashing. forces you to create an account and enter detailed personal information before you can start shopping. This, in turn, creates a massive traffic bottleneck, as the government verifies your information and decides whether or not you’re eligible for subsidies. HHS bureaucrats knew this would make the website run more slowly. But they were more afraid that letting people see the underlying cost of Obamacare’s insurance plans would scare people away.

“ was initially going to include an option to browse before registering,” report Christopher Weaver and Louise Radnofsky in the Wall Street Journal. “But that tool was delayed, people familiar with the situation said.” Why was it delayed? “An HHS spokeswoman said the agency wanted to ensure that users were aware of their eligibility for subsidies that could help pay for coverage, before they started seeing the prices of policies.”

If 50 million people are uninsured today, mainly because insurance is too expensive, why is it better to make coverage even costlier? The answer is that Obamacare wasn’t designed to help healthy people with average incomes get health insurance. It was designed to force those people to pay more for coverage, in order to subsidize insurance for people with incomes near the poverty line, and those with chronic or costly medical conditions.

What is ironic and horrendous about this approach is not that it is so poorly executed, or so obviously a representation of the failure of the expansive technocratic state. It is that the failure is derived from a core component of Obamacare: insulating people from the real costs of health insurance..

— Benjamin Domenech



Bob Laszewski is very skeptical about the back end of the federal exchange.

Based upon my survey of a large number of health plans accounting for substantial market share in the 36 states the federal insurance exchange is operating in, not more than about 5,000 individuals and families signed-up for health insurance in the 36 states run by the Obama administration through Monday.

It is not uncommon for a major health insurer with a large market share to report less than 100 enrollments in the first week.

Reports today say the enrollments continue to trickle in at about the same rate.

Worse, the backroom connection between the insurance companies and the federal government is a disaster. Things are worse behind the curtain than in front of it.

Here is one example from a carrier–and I have received numerous reports from many other carriers with exactly the same problem. One carrier exec told me that yesterday they got 7 transactions for 1 person: 4 enrollments and 3 cancellations.

For some reason the system is enrolling, unenrolling, enrolling again, and so forth the same person. This has been going on for a few days for many of the enrollments being sent to the health plans. It has got on to the point that the health plans worry some of these very few enrollments really don’t exist.

The reconciliation system, that reconciles enrollment between the feds and the health plans, is not working and hasn’t even been tested yet.

When health plans call the special health plan “help desk” they are lucky to get through. When they finally get through, the feds are creating a “help desk ticket” to be researched.

Now, if we are enrolling 20 to 50 people per day per health plan per state through the federal exchange, that might be sort of manageable. But if this thing ever ramps up to thousands of enrollments a day …

In summary, big market share health plans are getting maybe 50 enrollments per day per state from the feds and that little bit of new business is a mess.

SOURCE: Health Care Policy and Marketplace Review


In March, Henry Chao, the chief digital architect for the Obama administration’s new online insurance marketplace, told industry executives that he was deeply worried about the Web site’s debut. “Let’s just make sure it’s not a third-world experience,” he told them.

Two weeks after the rollout, few would say his hopes were realized.

For the past 12 days, a system costing more than $400 million and billed as a one-stop click-and-go hub for citizens seeking health insurance has thwarted the efforts of millions to simply log in. The growing national outcry has deeply embarrassed the White House, which has refused to say how many people have enrolled through the federal exchange.

Even some supporters of the Affordable Care Act worry that the flaws in the system, if not quickly fixed, could threaten the fiscal health of the insurance initiative, which depends on throngs of customers to spread the risk and keep prices low.

“These are not glitches,” said an insurance executive who has participated in many conference calls on the federal exchange. Like many people interviewed for this article, the executive spoke on the condition of anonymity, saying he did not wish to alienate the federal officials with whom he works. “The extent of the problems is pretty enormous. At the end of our calls, people say, ‘It’s awful, just awful.'”

Interviews with two dozen contractors, current and former government officials, insurance executives and consumer advocates, as well as an examination of confidential administration documents, point to a series of missteps — financial, technical and managerial — that led to the troubles.

Politics made things worse. To avoid giving ammunition to Republicans opposed to the project, the administration put off issuing several major rules until after last November’s elections. The Republican-controlled House blocked funds. More than 30 states refused to set up their own exchanges, requiring the federal government to vastly expand its project in unexpected ways.

The stakes rose even higher when Congressional opponents forced a government shutdown in the latest fight over the health care law, which will require most Americans to have health insurance. Administration officials dug in their heels, repeatedly insisting that the project was on track despite evidence to the contrary.

Dr. Donald M. Berwick, the administrator of the federal Centers for Medicare and Medicaid Services in 2010 and 2011, said the time and budgetary pressures were a constant worry. “The staff was heroic and dedicated, but we did not have enough money, and we all knew that,” he said in an interview on Friday.

SOURCE: New York Times


To promote the Oct. 1 debut of the exchanges, the online marketplaces where consumers can shop and buy insurance, Obama administration and Illinois officials touted the lower-than-expected monthly premiums that would make insurance more affordable for millions of Americans. But a Tribune analysis shows that 21 of the 22 lowest-priced plans offered on the Illinois health insurance exchange for Cook County have annual deductibles of more than $4,000 for an individual and $8,000 for family coverage.

Those deductibles, which represent the out-of-pocket money consumers must spend on health care before most insurance benefits kick in, are higher than what many consumers expected or may be able to stomach, benefit experts said.

By comparison, people who buy health insurance through their employer have an average individual deductible of just more than $1,100, according to the Kaiser Family Foundation.

Although millions of Americans will be eligible for federal assistance to help offset some of those costs, millions will not, underscoring one of the trade-offs wrought under the law’s goal to ensure most people have access to health insurance.

“It’s been major sticker shock for most of my clients and prospects,” said Rich Fahn, president of the Northbrook-based insurance broker Excell Benefit Group. “I’m telling (clients) that everything they know historically about health plans has changed. They either have to pay more out-of-pocket or more premiums or both. It’s an overwhelming concern.”

Plans with the least expensive monthly premiums — highlighted by state and federal officials as proof the new law will keep costs low for consumers — have deductibles as high as $6,350 for individuals and $12,700 for families, the highest levels allowed under the law.

Because the federal website that runs the Illinois exchange remained largely inoperable as of late last week, the Tribune used data from websites of four of the five insurers that will offer plans in Cook County on the marketplace. One insurer, Coventry Health Care, did not have plans available on its website last week but provided data to the Tribune.

Insurers say the price and cost hikes result from new benefit mandates, additional taxes levied as part of the law and a requirement that they can no longer deny coverage to people with pre-existing medical conditions.

The vast majority of insurance plans for 2014 must include a list of 10 essential health benefits, some of which, like maternity care, weren’t necessarily included in all health plans a year ago.

The law also includes mandatory coverage of mental health and substance-abuse treatment, prescription drugs and rehabilitative care. All preventive care, including annual physicals and routine immunizations like flu shots, must be covered at no cost.

SOURCE: Chicago Tribune


Medicaid, the joint state-federal safety net intended for the poor, already covers more than one of five Americans and pays for two of five U.S. births. And that’s before ObamaCare dumps up to 20 million new dependents onto its rolls. Liberals are still somehow evoking Little Nell and the blacking factory because 26 Governors or legislatures or both are so far declining to expand. Their hysterics would benefit from a fact or two.

First note the Perils-of-Pauline Medicaid moment is the result of a 7-2 Supreme Court majority, which ruled that the Affordable Care Act’s expansion mandate was coercion exceeding the Constitution’s limits on federal spending powers. This was the first such holding in the history of the Republic and the rebuke ought to embarrass Democrats, if they’re still familiar with that sensation.

Note also that the opinion, which allowed states to choose to expand or not, was joined by Justices Stephen Breyer and Elena Kagan, President Obama’s former Solicitor General. These liberal stalwarts explained that ObamaCare transformed Medicaid into something that “is no longer a program to care for the neediest among us.” The major reason states don’t want to participate is that rather than help members of society emerge from poverty, new Medicaid is supposed to be a permanent Washington-run, price-controlled health system, with no flexibility for the states.

The feds are dangling the promise of paying for all the costs of the new beneficiaries, at least for the next three years. This subsidy honeypot can’t last forever, and Governors are right to worry about taking on fiscal obligations that will increase 13% on average in 2014 under new Medicaid, according to a Kaiser Family Foundation state budget survey.

The Beltway boys and their allies in the hospital industry that are ravenous for more federal revenue are stunned that their bribery failed. So the new line of assault is to declare that the 26 conscientious objector states must hate poor people, or racial minorities, or Saint Peter and Christianity itself.

In reality, Medicaid is now mostly a middle-class entitlement for nursing homes. Almost two-thirds of Medicaid spending flows to the elderly, and 60% of people in long-term care institutions are on the program.

Some 20% of the people under 65 who are eligible for the program today also haven’t signed up. One reason might be the scandalously poor quality of care as states squeeze down provider reimbursements. Only this May an important randomized, controlled trial in Oregon concluded that the program generates no discernible improvement in health compared to being uninsured.

If the sojourners for Medicaid were serious about helping the least fortunate, they’d try to repair its current dysfunctions. Start by prioritizing spending, and then give Governors waivers to manage case loads and make operations more efficient. But the truth is that liberals view Medicaid as a national model, not a national disgrace.

SOURCE: Wall Street Journal


Kathryn Quirk thought it would be easy to find a new doctor when she moved from Boston to Newton in 2009, just like it was when she arrived in Boston in 1996. Back then, she walked across the street to a doctor’s office and got an appointment.

It isn’t 1996 anymore. Quirk still hasn’t found a primary care doctor she feels comfortable with. Her quest sounds a lot like dating; in four years she’s had three doctors and has sometimes preferred to get care from physician’s assistants and nurse practitioners who work in those doctors’ offices. With three kids, a husband, and a job, Quirk doesn’t have endless time to look. She’s frustrated that it took her four months to find her first doctor in Newton. When she didn’t connect with that physician, she was able to switch to one she liked. But his practice stopped taking her insurance, and Quirk has needed a good chunk of this year to land a replacement doctor. She felt relief in September when she found one who was accepting new patients, but that was only the first hurdle. She won’t find out whether she likes this new doctor for a while; she couldn’t get an appointment until April 2014.

Quirk’s woes reflect a broader problem in the Boston area: It’s hard to get a doctor. Entire practices are booked. Even if she wanted to go back to her old doctor in Boston, he probably wouldn’t be able to take her. His practice is part of Massachusetts General Hospital, and primary care openings at MGH are like snowflakes in September.

Across Massachusetts, about half of primary care doctors aren’t taking new patients, according to the Massachusetts Medical Society’s 2013 Patient Access to Care Study. The rate for internal medicine specialists, or internists, who often also serve as primary care doctors, is 55 percent. If you’ve found a new doctor and want to schedule a routine visit, be prepared to wait. It takes an average of 39 days for new patients to get an appointment with a family physician and 50 days to see an internist. That’s better than last year, when the average wait was a whopping 45 days, but up from 29 days in 2010.

The wait could get longer. The Association of American Medical Colleges projects that nationwide 13,700 more doctors of all types were needed than were available in 2010, and that the gap will hit 130,600 by 2025, with about half of the shortfall in primary care. Are doctors becoming two-headed calves? No, but they are getting scarcer, for lots of reasons.

SOURCE: Boston Globe


Tech experts: glitches only the beginning.

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Obamacare enrollees as urban legend.

The deceptions and disasters of Obamacare.

The IRS’s problems with Obamacare.

Feds reviewed only one bid on

“Obama lied, my health care died.”

Hospitals cut thousands of staff.

Obamacare and the part-time economy.

Hollywood writes a new storyline for Obamacare.

Idaho insurance exchange projects fee hike.

Kasich moves to bypass legislature for Obamacare money.

In Florida, opposition by the state and snags in signing up on the web.