We are two weeks away from the lauch of the Obamacare exchanges. Yet, as Christopher Weaver, Timothy Martin, and Jeniffer Corbett Dooren report over at the Wall Street Journal, at this point the government’s $88 billion software used to determine how much people will need to pay for coverage and how much subsidies they are eligible for is suffering from a glitch. This is a pretty big deal since, as the Journal explains:
At their front end, the exchanges are essentially websites that consumers use to compare health plans and enroll in coverage. These websites link to data from other parts of the government, such as the Internal Revenue Service, and from health plans to verify eligibility and deliver subsidies for coverage.
Individuals earning up to about $46,000 a year and couples making up to $62,000 are eligible for subsidies to buy insurance. In some cases, the subsidies could cover the full cost of plans. Higher-earning customers can also buy insurance on exchanges but will pay the full price of premiums. Most people who choose not to carry insurance will face penalties for the 2014 tax year.
But so far, it doesn’t work well. According to the Journal piece, the software is spitting out rates that are unreliable and likely miscalculate the subsidies people are eligible for.
If not resolved by the Oct. 1 launch date, the problems could affect consumers in 36 states where the federal government is running all or part of the exchanges. About 32 million uninsured people live in those states, but only a fraction of them are expected to sign up in the next year.
The remaining 14 states are running separate marketplaces with their own software. One of those states, Oregon, has already announced that it would delay some features to fix software bugs, though consumers will be able to enroll offline.
Four people familiar with the development of the software that determines how much people would pay for subsidized coverage on the federally run exchanges said it was still miscalculating prices. Tests on the calculator initially scheduled to begin months ago only started this week at some insurers, according to insurance executives and two people familiar with development efforts.
“There’s a blanket acknowledgment that rates are being calculated incorrectly,” said one senior health-insurance executive who asked not to be named. “Our tech and operations people are very concerned about the problems they’re seeing and the potential of them to stick around.”
As NRO columnist and Manhattan Institute fellow Avik Roy explains this can only lead to serious waste, fraud, and abuse:
In general, when there are problems like this, and the program rolls out anyway, the result is substantial amounts of waste, fraud, and abuse. We already know that the government will be relying on the “honor system” for people to report their incomes, and thereby their eligibility, for exchange subsidies. Combine that with the fact that the exchange software can’t calculate what your subsidy actually is, and the result is that many people will be able to game the system to gain larger subsidies than the law intends.
This problem comes on top of the fact that in many states people have no clue how much their insurance premiums will cost them on the exchanges because many states haven’t released their pricing information:
Earlier this month, I and several of my Manhattan Institute colleagues published an interactive map that allows you to figure out how much Obamacare will increase individual-market insurance premiums in your state, relative to what you can purchase today. However, we are still waiting on more than 30 states to release their pricing information, because that information is being closely held by—you guessed it—the federal government; specifically, the U.S. Department of Health and Human Services.
I’d been told by Congressional sources that HHS had been saying that this data would be out on September 19. But now, sources tell me this data won’t be ready until October 1, if even then.
In the last five years, there has been a lot of uncertainty in the economy and in people’s life. Most of it was induced by the government’s actions and new policies. But I have to say that this is taking uncertainty to a whole new level. Roy adds:
Kevin Counihan, chief of the Connecticut exchange, has publicly expressed his frustration with the Obama administration’s flakiness. “Sometimes it feels like we’re driving a car and then changing the tire at the same time,” he told the Associated Press in March. “We’re going to have a challenging enough time providing the quality of service that our residents deserve in Connecticut with the deadline that we have. If they keep adding new regulations, I’m sorry. We have to suddenly say, ‘enough is enough.’” Counihan is one of the many people trying in good faith to implement the law who says, “I wish we had one more year.”
I agree that delaying implementation for a year would beat rushing to meet the current deadlines. However, delaying for a year won’t change the fact that this is a bad law that won’t address some of the most fundamental problems with the American health-care system. And to the extent that this law was meant to give coverage to every American, it is not working. Here are the numbers acdording to the National Center for Policy Analysis’s John Goodman:
NCPA Senior Fellow Devon Herrick finds that a decade from now, in 2023, the Congressional Budget Office estimates ObamaCare will only cover about 25 million people who would otherwise be uninsured, leaving 31 million people uninsured. Senior Fellow Greg Scandlen explains that ObamaCare is likely to worsen the problem of the uninsured, even if the program is perfectly implemented.