Is Still Under Construction, And Insurers are Panicking

Less than two weeks ago President Obama held a press conference for the express purpose of spiking the football on Obamacare. Despite the troubles, glitches and delays that had plagued the law and its rollout, the president took to the stage to proclaim that they met their (lowered) goal of signing up 8 million people through the exchanges.

“The point is the repeal debate is and should be over,” President Obama said. “The Affordable Care Act is working. And I know the American people don’t want us spending the next two and a half years refighting the settled political battles of the last five years.”

But the president didn’t stop there. He claimed it slowed the growth of health care costs (it didn’t), that it was reducing the deficit (it isn’t) and that it would lower the costs of premiums (it won’t). And while the website that President Obama was lauding may have seemed outwardly fine to consumers, we learned today about just how problematic it remains for another crucial user: insurers. Politico’s Kyle Cheney reports:

The Obamacare website may work for people buying insurance, but beneath the surface, is still missing massive, critical pieces — and the deadline for finishing them keeps slipping.

As a result, the system’s “back end” is a tangle of technical workarounds moving billions of taxpayer dollars and consumer-paid premiums between the government and insurers. The parts under construction are essential for key functions such as accurately paying insurers. The longer they lag, experts say, the likelier they’ll trigger accounting problems that could leave the public on the hook for higher premium subsidies or health care costs. . .

The Obama administration posted a document earlier this month indicating that insurers will continue to be paid through an “interim” accounting process — pretty much a spreadsheet and some informed estimates — until at least September. When the permanent system eventually goes live, it could lead to a massive correction that either exposes taxpayers to more costs or puts pressure on insurance companies to raise prices.

If you’re like me you’re saying to yourself, “Wait! What? We’re moving billions of taxpayer dollars around based on a hope that the federal government is really good at guessing who that money belongs to?” Actually, yes, that’s exactly what the White House is doing. You see, the current system has no way to actually validate whether a person has actually enrolled in an Obamacare plan and has paid their first month’s premium.

That has two potentially enormous impacts. First, the government could be sending out erroneous payments to providers and insurers because they have no way to crosscheck names and eligibility. And second, without any insight into exactly what the risk profile of the people they are insuring is, insurance companies can’t truly project their costs for next year.

Either one of those outcomes could be bad for Americans. It’s a Sophie’s choice between potentially billions in wasted taxpayer money and dramatically higher insurance premiums. Unsurprisingly, insurance companies are already panicked at the thought of having to forecast next year’s premiums. Jay Hancock reports for Kaiser Health News:

With the results sure to affect politics as well as pocketbooks, health insurers are already preparing to raise rates next year for plans issued under the Affordable Care Act.

But their calculation about how much depends on their ability to predict how newly enrolled customers – for whom little is known regarding health status and medical needs — will affect 2015  costs.

“We’re working with about a third of the information that we usually have,” said Brian Lobley, senior vice president of marketing and consumer business at Pennsylvania’s Independence Blue Cross. “We’ve really been combing the data to get a first look.”

What they’re finding isn’t particularly positive. A recent Bloomberg story notes that WellPoint, the largest insurer on the Obamacare exchanges, is predicting “double-digit plus” rate increases for nearly every insurance carrier. And although uncertainty is part of the problem, Kaiser reports that, “After several years of relatively tame increases that many tie to a sluggish economy, analysts saw medical spending accelerate late last year.”

If this is a picture, as President Obama claims, of “the Affordable Care Act working,” then we’d hate to know what it would be like if it were broken.