• A guide to being appropriately neurotic about exchange glitches and enrollment

    First-week glitches were easy to brush off. Now that we’re rounding into the third week, the glitch narrative is turning toward back-end (insurer) problems that make initial “we didn’t build for this kind of traffic” issues look rather cosmetic.

    Haziness about enrollment-to-date further complicates just how concerned we should be by the exchanges. HHS has said that they won’t release enrollment data for the federally-faciliated marketplaces (the ones run through healthcare.gov) until sometime in November. States are offering up information a bit more quickly; you can check with the Advisory Board for regularly updated estimates.

    So, how do we judge the situation? I’m no coding guru, so I can’t comment on how big the technical obstacles actually are, but there are important contextual details to keep in mind. Like these:

    What day is it today? There’s a sequence of dates important to the full rollout of the exchanges. For all of the bad news we’ve heard, it’s still only October—early enough that I haven’t settled on a Halloween costume yet. Here are the dates that matter:

    • October 1: The exchanges went live, though this was an arbitrary pick by the administration, not a legal deadline.
    • January 1: Insurers need to be ready to initiate coverage for anyone who enrolled before December 15. This means that back-end problems with registration and payment need to be sorted out, or beneficiaries might run into problems when they seek care.
    • February 15: People need to enroll in plans by mid-February to avoid the mandate penalty. Key caveat: the penalty is pro-rated for the time a person spends uninsured, so people who sign up a few weeks late won’t incur the full cost of the annual penalty. Plus, that penalty is very low in the first year, the greater of $95 or 1% of income. It also doesn’t apply to those who qualify for a hardship exemption.
    • March 31: The open enrollment window is scheduled to close at the end of March, but this is another thing that could be targeted for change if the bugs aren’t ironed out soon.

    “7 million” is a CBO enrollment projection, not a critical threshold. You’ll hear that the administration has a marketplace enrollment goal of 7 million people, and that’s true. It’s also wholly lifted from a CBO projection; it’s not a floor for financial viability of the exchanges. If that sort of critical threshold exists, I haven’t seen it— and it wouldn’t be designated at the national level, anyway. The Associated Press obtained a September 5 memo from HHS that details state-level enrollment goals for October, but they’re also patterned on CBO’s projections.

    Exchange success will play out at the state and insurer level. Far more important than aggregate national enrollment is state- and plan-level data. We worry about enrollment because we worry about risk pooling: will there be enough healthy individuals to balance out the sicker and more expensive patients? That happens at the level of independent insurers, though reinsurance will buffer unexpected adverse selection in early years.

    Beyond technical difficulties, marketplace success is likely to vary across states because of political and cultural forces beyond the administration’s reach. Hypothetically, national enrollment could wildly exceed CBO’s expectations—but if that enrollment is concentrated in states receptive to Obamacare, intransigent states might continue to face hurdles.

    The number you’re jumping to conclusions about: is it marketplace accounts, applications, or actual enrollment? The number of accounts created is a useless metric—we don’t know how many of those are just curious observers. The number of people who “applied” is still nebulous; the premium still needs to be paid and processed. Even “enrolled” numbers need to be weighed carefully: processed applications could represent families, not just individuals. When you see that exchanges have enrolled “at least” a certain number of individuals, that’s the variable tripping up their estimates.

    Age and health status matter. Balanced risk pooling is way more important to exchanges’ viability than total enrollment. As more detailed data becomes available, you’ll see people picking apart demographics. The White House has said that they aim to enroll 2.7 million young adults in the first year, again, rooted in the CBO’s estimates. Expect to see people using age as a proxy for determining whether insurers have an adequate mix of healthy and sick beneficiaries. This is imperfect—health status is really the more important metric, because the age band and tax credits mitigate the cross-subsidy from young to old—but it’s probably all we’ll have for awhile.

    Adrianna (@onceuponA) 

    • I’d like to suggest two, related causes of the “glitches”: the absence of federal (uniform) standards for health insurance and the absence of plan details on the federal exchange. With surprisingly little reaction among the experts, the administration decided not to adopt federal (uniform) standards for health insurance. I understand the decision was partly driven by politics and partly driven by policy, the latter a concern about adverse selection and death spiral. The result: a large variety and number of health plans within each category (bronze, silver, etc.). Superficially, that would suggest that the decision makers were right: by not adopting federal (uniform) standards, insurers have responded with many choices. But as Frakt frequently reminds readers, too many choice paralyzes consumers, including consumers of insurance who find a mind-boggling variety and number of plans available on the exchange. Assuming the consumer isn’t paralyzed, in order to obtain detailed information about the particular plan she prefers, including whether her physician is a participant in the plan, she must leave the federal exchange and go to the insurer’s web site; the federal exchange doesn’t include that information. Unfortunately, most insurers’ web sites seem to have been created to confuse not inform; indeed, most don’t even include the list of participating physicians in a particular plan. In sum, if the consumer isn’t paralyzed by the array of plan choices and isn’t discouraged by her visit to the insurer’s web site, and if “glitches” in the federal site don’t send her into the ether, then she just might purchase a plan. My point is that the decision not to adopt federal (uniform) standards has far-reaching consequences, some not so good.

      • In all other industries with this type of consumer-facing complexity, agency roles have emerged to pair consumers with the right products and services. The fact that we don’t have that role here should tell us we’ve done something horribly wrong.

        • What do you mean by “agency roles?” The exchanges have Navigators, and almost all businesses have used brokers when selecting what health insurance options to provide for their employees.

    • It seems to me pretty likely that if we are still having glitches by february, there will be some kind of exemption made for people attempting but unable to use healthcare.gov, simply because if they don’t then people would have a totally winnable lawsuit against the government.

    • the lack of transparency should be the most worrisome

    • I am just waiting to hear admissions from the cheerleaders that the predictions of problems were correct. In the lead up to Oct 1, there were many pointing out how unready the system was. They were shouted down as recalcitrant naysayers. Many besides our embattled HHS Secretary declared that everything was ready for a smooth opening. Any retractions from those people? Silence?

      We will see how well things work. Just remember, it is not as if all should work perfectly once people sign up. There are still many back office things that have to take place, and that appear no where close to ready. For example, if it is this hard to figure out who has signed up for what, will the insurance companies get paid? Will people actually be covered? Will anyone, patients, providers, or the government, know what they are covered for, or what it costs?