How Well Are Obamacare's State-Run Exchanges Actually Working?


Photo credit: Scott Smith (SRisonS) / Foter.com / CC BY-NC-ND

As problems with Obamacare's federal exchange system have continued, supporters of the health law have turned to a backup argument. Sure, the law is struggling due to technical problems, but in the states that decided to set up their own exchanges, it's actually going reasonably well. California, in particular, is being singled out for its high enrollment numbers—numbers that some reports have said put the state on track to hit its enrollment targets.

The reality of the state-run exchanges is a little more complicated. There's no question that the state systems are, on the whole, working better than the federally facilitated exchanges. But serious problems continue to plague a significant minority of the state-run exchanges. And even states said to be success stories may not be quite as successful as claimed.

The argument that state-run exchanges, put in place by state governments that wanted to make the law work, predates the October launch. Obama himself made a version of the argument during the last week in September, when he went to Maryland to give a speech about the law, and to tout its state-run exchange.

But Maryland is one of the states that has struggled most to get its exchange up and running. The technical troubles are significant enough that it turned to paper applications and other workarounds. But it's not getting the sign up numbers it was hoping for. As The Washington Post reports, just 1,278 people signed up for private coverage in the state during October, and another 465 in the first week of November. Those low numbers, the Post piece notes, "raise questions about whether Maryland will achieve its enrollment target of 150,000 by the end of March."

Maryland has at least managed to get some people to the final step of the private plan enrollment process. The same can't be said for Oregon. Not a single person has enrolled in private coverage through the state's broken exchange, according to Reuters. The state exchange—which The Washington Post once described as "the White House's favorite health exchange"—was delayed before the October launch, and has never gone online. And there's no sign that it will in the foreseeable future. Reuters says that its marketplace is "out of commission and unavailable to the public indefinitely." I suspect the White House isn't too thrilled anymore.

These aren't the only state-run systems that have had or still have serious problems. As The New York Times noted last week, Hawaii's site went down on launch day, didn't come back online for weeks, and "users continue to report problems." Vermont's exchange system does not yet process individual payments for insurers, which presumably complicates enrollment. Vermont's system was built by CGI Group—the same contractor that botched the federal exchanges.

So it's not all flowers and rainbows in the state-run exchanges. And even where things are going relatively well, there are still problems. In Washington state, for example, a pricing glitch means that about 8,000 people are finding out that they'll be eligible for a smaller federal subsidy for their insurance than they were initially told. One of those people was a woman whom President Obama highlighted in a speech as being able to finally obtain affordable insurance. Her new, revised price is so high that she now says she expects to remain uninsured.

In other states, like Kentucky, Connecticut, and California, the demographic mix of people signing up for plans appears to skew old, which could pose longer-term problems if the insurance pools turn out to be more expensive than expected.

And that's presuming that any of these states actually hit their enrollment targets. The Los Angeles Times reported this week that the numbers so far suggest that California is on track to meet its 2014 enrollment goals after a "sharp increase in November."

But the enrollment numbers released for the state so far don't actually say how many people have completed the enrollment process. An HHS report on Obamacare signups from last week counts 35,364 individuals as having "selected a Marketplace plan" in California, which means they've dropped it into their online shopping cart. A Los Angeles Times report from last weekend merely describes people as having "selected" health plans.

And there appear to be issues with income and subsidy verification as well. The same HHS report lists the  number of people determined "eligible to enroll in a Marketplace plan with financial assistance" as not applicable; that data is available in most of the other state-run exchanges. Last weekend's Los Angeles Times report noted significant problems for enrollment assisters. One potential applicant told the LAT that "You can look, but you can't use the website to do the income calculation."

That's what Obamacare's state-run exchanges look like. Even where they appear to be working, it's not clear they're working all that well.