The Consequences of Obamacare's Incomplete Federal Exchange



The back-end to Obamacare's federal exchange system, which processes critical payment and enrollment information and communicates with insurers, was originally supposed to be complete when the exchanges went online last fall. Then, when the system crashed, completion was pushed off until January of this year. Then it was moved to late spring. Now it's been held off until sometime next year. 

This hasn't received that much attention. But it's not without consequence. For one thing, it means that a lot of enrollment and payment information that was supposed to be tracked and recorded by the system is hard to come by. The administration is paying insurers based on estimates, and the exact details will all be worked out later.

As Robert Laszewski, a health policy consultant closely linked with the insurance industry, told Inside Health Insurance Exchanges (via Michael Cannon of the Cato Institute), "The Obama administration has no idea how many people are currently enrolled [in exchanges] but they keep cutting checks for hundreds of millions of dollars a month for insurance subsidies for people who may or may not have paid their premium, continued their insurance, or are even legal residents." 

Now, the administration has said it plans to cut off subsidies for as many as 310,000 people who did not verify their citizenship information by the end of last week. Only about 70,000 had responded, some unknown number of which remained unresolved. As it stands, some of those people will have to repay the government for the subsidies they mistakenly received come tax time next year. 

Citzenship isn't the only complicating factor. A large number of people receiving subsidies under the law have incongruities related to their income information.  

This may be one reason why the administration stopped releasing enrollment reports earlier this year—the drop/add is a mess, especially without a proper system to track it. 

Maybe this all gets ironed out. But it's likely to be a rather ugly process.