No ‘new day’ for Obamacare – Pacific Research Institute

No ‘new day’ for Obamacare

The first insurance policies sold through Obamacare’s exchanges went into effect this month. As they did so, Health and Human Services Secretary Kathleen Sebelius proclaimed “a new day in health care for millions of Americans.”

But the actual numbers tell a different story.

Let’s start with the figure most frequently brandished by the administration – 2 million. That’s the total number of Americans that signed up for an exchange plan in the fall of 2013. Roughly 1.1 million did so in the 36 states relying on the federally run website; the remainder were spread throughout the District of Columbia and the 14 states running their own exchanges.

Two million is better than zero. But it’s also about 40 percent less than the 3.3 million the White House predicted would sign up by the end of 2013.

Even at the current rate, the exchanges will likely fall short of the administration’s target of 7 million by March.

What’s more, that 2 million figure only represents sign-ups – not enrollments. Many of the people that have submitted an exchange application don’t actually have insurance coverage yet.

Indeed, according to federal law, exchange plans don’t kick into effect until the patient has paid the first month’s premium. Many haven’t yet done so.

Officials in Washington and Nevada say that only about half their users have made their first premium payment. Scott and White Health Plan, an insurer on the Texas exchange, reports that it has received the activating payment for just 35 percent of its new beneficiaries.

If these trends hold for the broader exchange population, many of those 2 million are in for a rude surprise when they show up at the hospital or doctor’s office. They may think they have insurance – but they don’t.

As Larry Levitt, a senior vice president at the Kaiser Family Foundation, put it, “The biggest risk now is people thinking that by picking a plan, that they’re insured, when, in fact, the final step is paying the premium.”

That’s not the only reason the Obama administration’s sign-up figure is tainted. Although federal officials have fixed many of the technical glitches facing users, there are still problems transmitting enrollee information to insurers on the back end of the websites.

When a person signs up for coverage through the exchange, the government is supposed to send what’s called an “834” form with his or her information to the insurance company whose health plan he or she selected.

Through the first two months, the exchange websites had tremendous difficulty passing along these 834s. The system routinely sent information to the wrong insurer, relayed duplicate files, or failed to submit the form altogether.

In December, the administration claimed that “missing 834s” were now “close to zero.” The Centers for Medicare and Medicaid Services estimate that some 15,000 applications did not reach insurers because of these back-end problems.

But that guess is based simply on the difference between the number of enrollments the administration tallied and the number of 834s it sent out. It does not account for any forms that were passed along to insurers with errors.

Consequently, many Americans are clueless as to whether they have coverage. The Associated Press has reported confusion among residents of Connecticut, Massachusetts, California, Texas and Pennsylvania who have applied for insurance but not yet received bills, insurance cards, or other confirmation of their status.

Even if most of the administration’s 2 million sign-ups turn into honest-to-goodness enrollees, Obamacare’s impact on the coverage rate could still be negative. According to an AP analysis, at least 4.7 million people have had their existing policies canceled, in part because they did not comply with the law’s expansive new rules requiring coverage of certain benefits.

Insurance consultant Robert Laszewski counts 1 million cancellations in California – 700,000 of which are not eligible for subsidized coverage through the state’s exchange. The situation is similar in Washington – 260,000 cancellations, 130,000 of whom must buy new, likely more expensive, coverage on their own.

By the end of this year, Laszewski expects 80 percent of those in the individual health insurance market to lose their existing coverage.

As 2014 rolls on, the White House would have you believe things are looking up for the online exchanges. Don’t believe them. The lies and incompetence continue apace.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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