Obamacare Insurance Workaround Reveals Law that Remains Unfinished, Unaccountable, and Unworkable

The latest tweak reveals how much of the health law's basic architecture is still incomplete.



In October, when it became clear that Obamacare's online enrollment system wasn't functioning, President Obama gave a speech in which he told people who wanted to sign up to contact call centers instead, or fill out pen and paper applications.

This week, the administration announced that it would be employing another manual workaround, this time for critical insurer payment systems. In this case, it's not because the payment system is broken. Instead, it's because the part of the system that is supposed to both calculate how much money the government owes insurers in premium subsidy and cost-sharing payments and make the appropriate payments simply hasn't been built yet.

What hasn't been built can't be used, but insurers need to be paid in order for the system to function. So the administration has decided to require insurers to estimate how much they are owed and submit payment requests manually. Later, after the systems are built, the plan is to sort out the details and figure out the exact amounts that should have been billed, then reconcile any differences.

Because it deals with the insurance industry side of the system, this temporary, technical tweak will probably garner far less attention than the ongoing problems with the consumer side of the federal exchange system. But the on-the-fly patch offers a revealing moment for the law all the same, one that highlights how unfinished, unaccountable, and unworkable the health law continues to be.

On the most basic level, the newly proposed patch suggests how much work remains on simply constructing the essential technical infrastructure necessary to make Obamacare's exchange-based insurance scheme work. Some 30 to 40 percent of the functionality remains incomplete, according to Henry Chao, the Medicare technology official who oversaw the development of the exchanges. And the features that remain to be built are vital to the system's functionality.

The core service that health insurers provide is paying for eligible claims by beneficiaries. But if insurers don't get paid themselves, they can't cut checks for those claims. Some of the larger insurers could finance delays, at least for a little while, but as former Medicare official Kevin Lucia tells Reuters, smaller insurance plans, which are heavily represented in the health law's exchanges, aren't well equipped to do so. Plan providers need that money, and they need it soon if they're going to be able to actually provide insurance to their plan members.

The fact that these critical systems haven't been built—months after the launch of the exchanges and with just weeks to go until insurers need to start being paid—makes it clear that the implementation effort still lags far behind. And if the rollout of portions that remain incomplete resembles the rollout so far, that means there are lots of new problems still to come.

But it's not just that there's a lot of work still to do. The insurer payment workaround also highlights how much of Obamacare's buggy implementation is still being managed on a temporary, ad hoc basis. The administration is flying a broken vessel without a flight plan. 

Significant delays started early this year, when the administration decided to hold off on implementing the single most critical part of the small-business exchange system. Then, in mid-summer, reporting requirements for employers, along with the employer mandate and income verification requirements, were delayed too. Since the launch of the law, we've seen further delays in the Spanish language website, Medicaid data transfer systems that are necessary to facilitate coverage, and the federal small-business exchange, which has now been completely delayed by a year. Last month, the White House proposed an administrative tweak in response to public anger over a wave of plan cancellations, one that, if it has a significant effect, could further undermine the health law's enrollment scheme. 

The legal authority to implement many of these changes is dubious, but the administration seems more concerned with charging ahead than with accounting for legal niceties. As with the insurer payment tweak, if need be, they'll sort it all out later. 

These aren't the signs of an administration that is prepared to effectively handle the rollout of the largest and most complicated domestic policy in a generation; quite the opposite. They're the signs of an administration that is struggling keep its signature initiative afloat, somehow. They're just making it as they go along, and hoping that eventually it all works out. 

Will this latest workaround buy the administration some time? Perhaps. Insurers seem to prefer it to the alternative of not getting paid. But buying time is about all it will do.

It's also worth remembering what happened the last time Obama pointed people frustrated with the online system toward a manual alternative: It turned out that the call centers and the pen-and-paper enrollments he said could help move people through the enrollment process were dependent on the same broken web system that was causing all the problems in the first. It was a workaround that didn't work. Ultimately, what the long list of tweaks, delays, and temporary patches to the law suggest is that, as passed, written, and envisioned by its Democratic authors, the law itself doesn't work either.