The Obamacare Glitches Continue

In the real world, the health law is still struggling.



Obamacare, you may have heard, is working just fine. "It turns out it's working pretty well in the real world," President Barack Obama said of the health law in a speech at a fundraiser last week.

If so, the public hasn't caught on yet. A new poll from the Associated Press finds that just 31 percent of the public approve of the way the president is handling health care.

Obama's fellow Democrats aren't exactly enthusiastic either. Just 36 percent of Democrats campaigning for Congress this year have explicitly supported the health care law, according to research by a pair of scholars at the Brookings Institution. This is the party that passed the law and is home to virtually all its political support—and yet a majority won't fully stand by the law in public.

Why not? Perhaps because the evidence for its success is so underwhelming. It's true that the worst-case scenarios that seemed plausible last year, when the exchange system crashed, failed to occur, and also the law has posted some successes in recent weeks: low premium growth, 7.3 million paid enrollments, an increase in insurer participation in the exchanges.

But the law has also continued to generate a steady stream of bad news—more glitches, more failures, more misfires, more unhappy providers and customers, with more challenges on the way as the second open enrollment period begins. And even the success stories are not quite as positive as the headlines make them out to be.

Startup costs associated with the law are higher than expected or previously reported, according to a Bloomberg Government report out last month. Including the price tag for an associated electronic health records program, getting up and running has cost some $73 billion so far, the study estimated.

Cancellations of individual insurance under the law, which affected millions last year despite Obama's repeated promises to the contrary, will continue. Hundreds of thousands of cancellations, some of which are held over from last year, are expected before the beginning of 2015.

And while last year's catastrophic health exchange failure isn't likely to be repeated, the system remains dysfunctional. Critical back-end payment systems that were supposed to be completed last year won't be finished until at least 2015. Many state exchanges remain troubled. Minnesota, one of the states that struggled with the task of running its own system, just lost the biggest insurance carrier on its exchange. Even Connecticut, which ran its exchange technology well enough that it is now exporting versions to other states, has had to deal with unexpected technological flaws that must be fixed before the system can be implemented elsewhere.

Glitches minor and major continue across the health system, affecting both individuals and providers.

The Internal Revenue Service (IRS), for example, interpreted the employer coverage requirements in a way that could make it difficult for more than 1.9 million Americans to afford coverage, according to an estimate by the American Action Forum, a conservative policy group.

Medicaid enrollment is responsible for much of the law's coverage expansion—in New York alone, it's up 11 percent—and yet the program's longstanding problems with doctor access persist. In a September report, the Health and Human Services Inspector General reported that, as The New York Times put it, "the Obama administration and state officials have done little to ensure that new beneficiaries have access to doctors after they get their Medicaid cards."

Access issues are not limited to Medicaid, though. In California, which has more Obamacare enrollees than any other state, the "state's largest health insurers are sticking with their often-criticized narrow networks of doctors, and in some cases they are cutting the number of physicians even more," according to the Los Angeles Times.

Some top health care providers are having trouble making the law work too.

One of the law's most anticipated delivery system reforms, the creation of Accountable Care Organizations (ACO), continues to struggle. The health law spurred the creation of a Pioneer ACO program, a shared savings scheme between hospital systems and Medicare intended to encourage cheaper, more effective care through a more holistic payment system. The Pioneer providers were intended to showcase the program's effectiveness; instead, they have show how hard it is to make the program work. None of the nation's most celebrated ACOs joined to begin with, and of the 32 systems that did sign up, 13 have now dropped out. The most recent system to quit described the program as "financially detrimental."

Recent independent federal assessments of the law have not been kind. In particular, the Government Accountability Office (GAO)—a federal watchdog organization—has delivered a series of sharply critical reports about the law over the last few months. After conducting a sting operation, the GAO reported in July that nearly all of its attempts to fraudulently access subsidies through the law were successful, despite the administration's promise that a functional verification system was in place.

Last month, the office also found that, despite years of warnings from members of Congress, the federal health exchange system created under the law still contained major security flaws. "Significant weaknesses remain that put these systems and the sensitive, personal information they contain at risk of compromise," a GAO official told Congress.

Another September GAO report found deficient financial reporting for costs incurred related to the law. Information regarding expenditures on advertising, public relations, polling, focus groups, and other categories of spending was either not provided or could not be verified, and the processes used to track and report this information were "inconsistent with certain federal accounting and internal control standards."

This is not a record of success. It's a record of troubled program design and administrative failure. There's a lot that's not working in Obamacare—from the financial management to the technical operations to the organizational innovations that were supposed to help overhaul the system.

It's not just that so many problems persist. It's that even the stories supporters tout as successes are precarious at best.

Yes, average premium growth on benchmark plans is quite low; but many of the most popular and least expensive plans from last year are seeing large hikes, with average increases of 8.4 percent and many raises beyond 10 percent.

Yes, insurer participation in the exchanges will rise by 25 percent next year; but the administration hasn't said whether those insurers will serve urban areas that already have high competition or fill out underserved rural markets. Those insurers are likely attracted by the law's generous cushioning for insurer losses—but according to yet another September report from the GAO, as well as the Congressional Research Service, the administration does not have the authority to backstop insurers next year without additional congressional approval.

And yes, the administration counts 7.3 million paid enrollees; but that was on a single day in August, before hundreds of thousands were set to lose coverage or subsidies as a result of failing to file additional paperwork verifying citizenship or income.

Expanding sign-ups in year two, with a shorter time-frame and the most obvious candidates already signed up, will only be more difficult. Indeed, the administration is unsure about whether it can meet next year's enrollment target. Health and Human Services Secretary Sylvia Mathews Burwell said last month that federal officials are reassessing next year's goals.

Perhaps the administration should reassess the law's overall performance as well. Despite Obama's confident assertions to the contrary, in the real world, Obamacare is still struggling.