States on ObamaCare’s Insurance Exchanges: How the Heck Do You Build These Things?

Politico reports that states are worried about the cost and complexity of building the health insurance exchanges as required by the new health care law:

States view the project as an enormous undertaking, requiring them to design a system, develop the information technology and put it into action in just three years amid tight budgets. In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate.

“As we’ve been out with the states talking about 2014 and the possibility of as many states as possible doing their own exchange, they’re most concerned about the IT piece, [saying] it’s going to be expensive and it’s going to take some time,” said Joel Ario, director of health insurance exchanges at HHS’s Office of Consumer Information and Insurance Oversight.

I’ll be curious to see what those five states come up with. In particular, I’ll be interested in seeing how the exchanges deal with income verification, which will be required to determine subsidy levels for individuals buying insurance through the exchanges. Tax returns seem like the most obvious method. But last year's tax returns wouldn’t capture a recent income shock, like a job loss, that might move someone out of employer-sponsored insurance and into an exchange. The law also requires that the subsidies be based on family income, not individual income, which means that spousal salaries will have to be determined as well. And of course all of this will have to be determined very quickly and with an extremely high degree of accuracy for the 24 million people the Congressional Budget Office estimates will end up purchasing insurance through the exchanges by the end of the decade. If the exchanges end up approving even a small number of subsidies where they aren’t due, or not approving subsidies where they are, state officials will hear about it.

Lots more on the complexities of exchange design in my October piece on how the health care overhaul affects the states

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  • Barely Suppressed Rage||

    Threadjack:

    Death by caffiene.

    Caffiene will be the next regulated "dangerous" substance.

    Of course, when you buy raw caffiene powder and then take 32 times the specified dose, I guess you're kinda asking for trouble.

  • Wind Rider||

    Society would be so much better off if the overwhelming response to such idiocy was "what a dumbass", instead of the hand wringing and headless chicken little dance that we have to put up with.

  • kinnath||

    Without following the link, all I can say is "Darwin Award!".

  • Jason||

    I think it's more than 32 times the specified dose. It sounds like he took something closet to 2 tablespoons, which is 6 teaspoons (US -- I'm assuming the measurements have been converted to US units) which is 96 times the specified dose.

  • kc||

    "In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate."
    Hmm -- I'm not an IT expert, but why would you need 5 states to create exchanges? To pick the best one, or what? and why not just create one for all the states to use? or better yet, just build on what Massachusetts has already done? or at least learn from what Mass has done, what works and what doesn't. Their process seems heavily paper/people involved, not very automated, and takes about 30 days from application to approval, then another 2-3 weeks until the first subsidy check arrives, as long as there are no problems. Not good, but certainly not horrible. They ask for recent 1040 and also for proof of current income, and if/when income changes, you submit proof of the change.

  • ||

    I’ll be curious to see what those five states come up with.

    Personally, I'm hoping for 5 different wordings of "Go Fuck Yourselves."

  • Fist of Etiquette||

    Several states, such as Wisconsin, California and Pennsylvania have already formed task forces to start setting up the exchanges and other reform-related programs.

    Three states with extra time and money to spend.

  • Jason||

    Gotta keep those government employees busy!

  • kc||

    +100

  • kc||

    sorry meant to reply to wylie --
    "go wylie, go wylie"

  • Typical Liberal||

    I predict the usual cries of "more reform is needed" (for the next 100 years) and "it's underfunded" (as is every single liberal program).

  • Jason||

    When is there enough reform?

    When is a liberal program properly funded?

  • Mr. Bentley||

    These exchanges are going to fail big time. It's another piece of ObamaCare that will not get implemented, one way or another. Massachusetts should be first with the exchanges since they are doing so well with their version of ObamaCare.

  • fish||

    Hey ObamaCare supporters...this is the difference between running for office and actually occupying it. All that Tony stiffening nonsense that make you feel so beneficent actually needs to work in the real world. How many waivers are left in your stack.

    Tools.

  • Old Mexican||

    In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate.

    Which only tells you that the DHS does not have a clue how to create these systems, either.

    I’ll be interested in seeing how the exchanges deal with income verification[...]Tax returns seem like the most obvious method.[...] The law also requires that the subsidies be based on family income, not individual income, which means that spousal salaries will have to be determined as well.

    The subsidies are individual yet the income determination is to be based on family income? I would love to see how they are going to pull that one off...

  • Co'mon man||

    Besides more funding, wouldn't it be easier for Kathleen to just design one system for everyone? She's an expert, and all. Or, hell, even Biden. Who knows innovation and efficiency, and drug infested techno parties, more than Biden!?

  • Tman||

    all of this will have to be determined very quickly and with an extremely high degree of accuracy for the 24 million people the Congressional Budget Office estimates will end up purchasing insurance through the exchanges by the end of the decade.

    Because if the Federal Government is known for anything, it's speed, accuracy and efficiency.

  • Wind Rider||

    And thrift, let's not forget thrift.

  • ||

    What about privacy issues?
    Doesn't turning over your tax records to the exchange make it more likely that someone will illegally access them?

    There's already kind of a problem with IRS illegally handing over tax information to politicians.

  • ||

    Not to mention medical records.
    Imagine some official digging up the fact that candidate X once had an abortion, or was treated for an STD.

  • kc||

    I challenged a MA state health care bureaucrat on this and was told "but we work for the government! We can be trusted to protect your privacy!"
    yeah, right.....

  • Jason||

    At which point you remind them of all the prospective dates whose records they offered to illegally look up for you.

  • Co'mon man||

    There should be no tax returns! One, simple national sales tax. Absolutely no other taxes.

  • johnl||

    Tax returns most often have family income not individual.

  • ||

    "" I’ll be interested in seeing how the exchanges deal with income verification, ""

    Last year's W2 and the two most recent pay stubs? With the standard perjury statement at the end of the form.

  • kc||

    we're self employed, so have to produce 1040s incl Sch Cs.
    Every year.
    We have a disabled child (which is why we bother at all), so also have to produce a copy of his IEP (Individual Educational Plan). 15 or so pages.
    Every year.
    Even tho it's highly unlikely that our son will recover from Down Syndrome.
    (maybe that's what the "hope and change" is all about.....)
    Who says it's easy to sponge off all you other taxpayers? This is hard work!

  • ||

    They are foolish thinking they can overhaul health care on their current timeline.

    Hell, it took a couple of years for them to figure out, and implement NPI numbers. And that's just a provider ID.

  • creech||

    What's the penalty if a state fails to comply? Expulsion from the Union?
    Military law? Unfortunately, the answer is going to be: "This is too complicated/expensive for states to do; we need one universal exchange created at the federal level."

  • foo bar||

    the funny part is that it already exists: http://finder.healthcare.gov/

  • ||

    The answer is that they will not be exchanges at all. It was just a lie. The truth is that the government will simply mandate the terms of your insurance without any choice at all.

  • adam||

    Why can't they just scale up the Federal Employee Health Benefit Program and the Medicare Advantage program? It already works for the 2M federal employees and 8M or so medicare enrollees all across the country, why can't those be scaled up to work for 28M others? They're essentially exchanges too.

  • IceTrey||

    The states should just refuse to do it. The only stick the Feds have is money. States are not required to carry out any mandate.

    "We held in New York that Congress cannot compel the states to enact or enforce a
    federal regulatory program. Today we hold that Congress cannot circumvent that
    prohibition by conscripting the state’s officers directly. The federal government
    may neither issue directives requiring the states to address particular problems, nor
    command the states’ officers, or those of their political subdivisions, to administer
    or enforce a federal regulatory program. It matters not whether policy making is
    involved, and no case by case weighing of the burdens or benefits is necessary; such
    commands are fundamentally incompatible with our constitutional system of dual
    sovereignty.” [Printz v. US, USC, 117 (1997)]

    http://www.limitedgovernment.o.....rf5-21.pdf

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