Obamacare's Administrative Problems Were Apparent Before the Law Was Passed


credit: Barack Obama / Foter / CC BY-NC-SA

Last week's announcement that Obamacare's employer mandate would be delayed by a year seems to have come as a surprise to many of the law's public backers. But problems with the provision, and the employer reporting requirements that were delayed along with it, should not have come as a surprise. Nor should we put much stock in the administration's claim that the delay is primarily a response to concerns about the law's effect on business. The technical and administrative challenges posed by the law's complex reporting and verification systems have been apparent for a long time—even before the law was passed.

As far back as October 2009, former Congressional Budget Office director Robert Reischauer could be found telling reporters that the health law's employer requirements would be "administratively horrendously complex as well as quite intrusive," inevitably resulting in administrative headaches for both exchanges and employers.  Reischauer said at the time that he supported some form of "employer responsibility" requirement, but he predicted that the provision, as written, would be "an immense hassle on the administrative front" and would result in a "rather large new administrative burden." Large enough, it now appears, that the administration couldn't get it completed in time.

Nor was last week's announcement the first indication that the law's actual implementation was in trouble. As National Journal notes, the signs that the law will not be implemented as originally envisioned have been apparent for months. "In April," the NJ report says, "several consultants focusing on the new online marketplaces, known as exchanges, told National Journal that the idealized, seamless user experience initially envisioned under the Affordable Care Act was no longer possible, as the administration axed non-essential provisions that were too complex to implement in time." The April report that refers to says that the "administration has also indicated that, in some states, information about which people are eligible to buy through the exchange (and with how much government help) won't be instantly available." That's because the computer systems necessary to verify eligibility for subsidies were proving troublesome. Now we have an clearer idea about the extent of the trouble: The administration also announced last week that states building their own exchanges would not be required to verify income and health status information used to determine whether an individual can get subsidies.

Signs of technical trouble within the exchanges go back before then. In June of last year, the Government Accountability Office warned that the Internal Revenue Service had made only middling progress on readying the data systems necessary for the exchanges. And before that, in May of 2012, Politico reported that "even states that are solidly committed to pursuing an exchange are facing major logistical challenges in building the computer systems that will be able to handle enrollment when exchanges open" in 2014. "People fear that the technology piece is just not going to be quite there," a Georgetown University health policy expert and former Maine insurance commissioner told the paper. Those fears turned out to be right.

The Obama administration has suggested that the delay is merely a response to concerns from businesses about the provision's costs and effect on hiring, with an unnamed Treasury official telling The Wall Street Journal that the provision was delayed because it couldn't adequately address concerns voiced by employers in the time given. Those concerns may have played some role in the decision to delay the employer mandate and some of its verification and reporting requirements. But the fundamental technical and administrative difficulties associated with the law predated most of the employer concerns. And as the same WSJ report dryly notes, the official excuse—that the administration has been "engaging in a dialogue with businesses" and has responded to their feedback—left unsaid the fact that when the announcement was made, "the federal government hadn't written key rules guiding employers, according to current and former administration officials, and computer systems that were supposed to run the program weren't operational." Given the history, and the operational context, the most likely explanation for the various delays is that so far the administration simply isn't able to make the law's technical administrative requirements work.