The Corner

Things Still Not Looking Up in Obamacareland

Yesterday, we learned that 40 percent of the website still needs to be built. While this seems like a stunning revelation of how bad things were to start with,  I guess it can be seen as progress compared to where they started. Sarah Kliff at Wonkblog, for instance, notes that CMS has “completed fixes for two-thirds of the high priority bugs responsible with issues with 834 transactions.”

Now, I think we shouldn’t read too much into this kind of metric, because the fact that two-thirds of the fixes were completed doesn’t mean 1) that those fixes will resolve the problems and 2) that the website is anywhere near where it needs to be to function properly (the last third of the high-priority bugs could be the hardest to fix, and the whole thing may not work without fixing them.) And that’s to say nothing of the low-priority bugs.

What we also learned yesterday is that they haven’t yet built the system that would deliver subsidies to the insurers. Kliff writes:

The systems to send subsides to insurers haven’t been built. When someone does shop with a subsidy, the federal government is on the hook to pay part of their premium to the health insurance plan. Medicare deputy chief information officer Henry Chao testified before Congress today – and Bataille confirmed – that the system that will send those subsidies has not yet been created.

“My understanding of the system is we do not need that online until the middle of January, given how the payment schedule works,” she said. “It’s a back end system necessary to process information directly to issuers.”

In other words: Subsidies don’t start going out the door until 2014, so there is no need for the system to exist right now. Whether it exists in January 2014–that’s one area where we’ll have to wait and see.

At this point, you’re probably wondering whether you read these few paragraphs correctly. Sadly, you have. One central piece of Obamacare is providing billions of dollars in subsidies for people to buy insurance. But that apparently hasn’t made to the priority to-do-list for CMS or others in charge of building the website.

So, unsurprisingly, not everyone is confident that it will work in time. Politico has the following information on this point:

It also concerned insurers, who expressed worries Tuesday with Chao’s disclosure. Many of the back-end systems were meant to come online in December, so the agency hasn’t missed those deadlines yet. But the extent of the problems with are fueling doubts that the systems will be ready when they’re needed.

The functions need to operate correctly so insurers can enroll the right people in the right plans. That process, called reconciliation, has to work so people can get the care they seek starting as early as Jan. 1.

“There’s not a lot of confidence that the reconciliation process is going to be up and running in time, and given all the challenges that we’re facing with the enrollment files, that’s a big cause of concern,” an insurance industry source said. “If people are enrolling, but the back-end systems are not working, their coverage could ultimately be disrupted. They may think they’re enrolled in a plan and they’re not. They may show up at the doctor’s office and not be covered.”

So this doesn’t look very promising. The worse part, of course, is that when the website is finally up and running, Democrats may be up for an unpleasant surprise. At this point, they assume that when the website works properly, consumers will love the choices and prices they are offered. And some will. However, we know that many won’t. What happens when people realize (as some already have) that, in spite of the president’s promises, they are hit with higher premiums, higher out-of-pocket expenses, and few choices? If they’re vocal about it, as they were when they found out that their coverage was canceled, it won’t be good for Democrats.

And this, in my opinion, is one of the fatal mistakes the administration has made. Most redistributive programs rest on a large group of people paying a small amount to provide large benefits to a small and concentrated number of people. That allows politicians to hide the price of the program from people who are paying for it, while bragging about its benefits. Not so with Obamacare. In this case, a potentially smallish group of younger and healthier Americans — and the self-employed – are going to feel the cost of the law in a painful and concrete way, and they will know where the pain comes from and whom to blame for it. That’s my kind of transparency!

One more thing, as my colleague Robert Graboyes noted recently:

Someone I read recently suggested that their fatal error was in designing a system where the most badly bludgeoned demographic includes huge numbers of freelance writers, TV commentators, and bloggers. Because that group is now mad as cut snakes and they are striking with all their fangs at once. 





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