The Truth About Obamacare’s Exchanges

Maggie Mahar at The Health Beat Blog writes bout the exchanges.

Paul Krugman: “There are two remarkable things about this kind of doomsaying. One is that the doomsayers haven’t rethought their premises despite being wrong again and again — perhaps because the news media continue to treat them with immense respect.”

If you Google “Obamacare,” “Exchanges,” and “Disaster,” more than 20 million articles will pop up.

One month into a six-month enrollment process, the Media Pundits have spoken.

In truth, there are two tales to be told: one that is getting widespread coverage, and one that is not.

The stories that you are Not hearing come from folks like Michael Cadigan, the president of a New Mexico law firm who enrolled his firm’s four employees the day his state’s Exchange opened. “I thought it was going to be an administrative nightmare,” he confesses. Instead, he quickly found a policy “that will cost $1,000 less a month than I’m currently paying.”

Or, Randall Bennett: His family will be paying more for the coverage he signed up for in Utah’s Exchange, but it will be significantly better than what they had before. This year, Bennett reports he has been paying a $420 monthly premium with a $2,000 annual deductible. Next year, he’ll be paying a $720 premium, but the deductible will be only $500 and his family will be getting maternity and dental coverage — something they couldn’t get in the individual market before Obamacare came along.

As for the application process, Bennett says: “Before, trying to get insurance was so difficult that surprisingly even with all of the bugs, I still found [the Exchange website] simpler (In the past, people attempting to buy their own coverage in the individual market had to provide carriers with detail medical information, in order to prove that they were not suffering from a pre-existing condition. Under Obamacare, that isn’t necessary. Insurers can no longer use your medical records as an excuse to jack up your premiums.

“So for us this is a huge win,” Bennett concludes, “because we’re paying what we think is fair. And yes it’s more than before, but we actually have coverage that we like now.”

As of October 24, Cadigan and Bennett were just two of some 700,000 Americans who have filed applications in the Exchanges. The truth is that Obamacare’s websites are working– though not in all states.

Make no mistake: enrolling millions of American in Obamacare represents an enormous challenge. But we know that it can be done — because it is being done, and done well– in many states.

Unfortunately this is not a story that sells newspapers, especially when a program is as controversial as Obamacare.

State vs. Federal Exchanges

The marketplaces that are working best are in states that chose to set up their own Exchanges.

Originally, conservatives in Congress argued that states should be able to construct—and control– their own online sign-up sites. The Affordable Care Act offered them that opportunity.

But after thinking it over, 26 states (24 of them led by Republicans) refused. In these 26 states, it was left to the Feds to run “Healthcare.gov.”

Health IT pioneer Fred Trotter says he is “not at all surprised” by what happened next: Computers and human navigators have been overwhelmed by the sheer size of a sprawling project. Technical glitches have created virtual gridlock.

“When you get a tremendous amount of traffic going to any site on the internet a single computer can’t handle it,” Trotert told Ezra Klein in a recent interview. “You have to have more than one computer sharing a task. At modern sites like Amazon and Ebay . . . the main innovation they’ve pioneered is using lots of computers at the same time to answer one query.”

Trotter explains Washington’s mistake: Congress looked at Amazon et. al., and said: “’They do these amazing things and we should do that, too.’ They didn’t realize what a tremendous amount of invention has gone on at sites operating on that scale.”

And Healthcare.gov isn’t just trying to sell books: “They’re trying to do something entirely new.”

Comparing Obamacare to the Medicare Part D Roll-Out

New is hard.

Back in 2005, Medicare Part D, the prescription program for seniors was a minor version of “new” and in the early weeks, its roll-out was equally fraught. The Washington Post described what sounds like a slow-motion train wreck: “The original debut date was Oct. 13, but officials delayed it, citing the Jewish holiday, Yom Kippur. Next it was promised on Oct 17, but that day, too, came and went without personalized plan comparisons being available.” A news briefing promised the site would be up in the afternoon. It didn’t happen. Senior citizens were not able to use the website to compare prescription plans until November.

Jack Hoadley, a researcher at Georgetown University who has studied the Part D program since before its launch recently told the Washington Post’s Sarah Kliff: “It was pretty regularly a source of frustration just like what we’re experiencing now.”

When seniors called the 1-800 Medicare phone number for help, a review found the agency “responded to calls accurately and completely only about two-thirds of the time.” At the time, the Washington Post reported that an annual booklet sent out to seniors called “Medicare & You” contained “inaccurate details about some of the prescription plan choices.” CMS later had to post a chart on the Web site with the accurate information

Yet the Part D “disaster” didn’t make front-page headlines. It was a Republican plan, and enough Democrats had voted for it (however reluctantly), to make it appear bi-partisan.

Applications vs. Enrollments

This time around, the supposed “failure” of the Exchanges has become a political cause celebre, with Republicans emphasizing how few Americans have actually chosen a plan in the Exchange, completed their enrollment and paid their premiums. (A person is not truly considered “enrolled” in a private health care plan until she has paid the first month’s fee, which many people still have not done since the insurance does not start until Jan 1. News stories that focus on “paltry enrollment” rarely mention this fact.)

But in the early stages of a new program, what is important is not how many have finished the application the process, but how many have begun.

Wen Avalere Health, a private data analysis firm, took a close look at Part D enrollments, it found that two-thirds of Medicare beneficiaries who enrolled in a stand-alone Part D plan didn’t sign up until after coverage began on January 1, 2006. Twenty-two percent signed up in the final month of the open enrollment period. It can take time to select a plan.

“People are slow to purchase coverage when new programs begin, and if past programs are any guide, we expect most exchange participants will wait until after January 2014 to enroll,” Caroline Pearson, vice president at Avalere Health explains. “This suggests that if early website problems are resolved before the end of the year, they should not meaningfully decrease the size of these new exchange markets.

Trotter’s Solution

Still, Health IT expert Fred Trotter thinks the government should have taken a different approach to the Exchanges. He believes that reformers should have enrolled people in phases: “They didn’t draft everyone for Vietnam all at once,” he observes. “They should’ve said people born in January can now get health insurance. Then it should’ve expanded to everyone born in the first quarter . . .”

I would suggest that inviting people to participate in jungle warfare is rather different from offering them access to medical care. Sick Americans who can’t afford the medications they need have been counting the days. You can’t tell someone he must wait seven months simply because he was born in November.

Exchanges Run By the States- A More Manageable Project

A “phase in” of enrollment in the Exchanges was not possible, either politically or practically. But breaking the project up into smaller chunks would have helped.

Fourteen states—plus D.C.—elected to run their own marketplaces, and their experience shows that when the challenge is scaled down, Exchanges can work

Nineteen days into the five-month enrollment period, 500,000 Americans had filed applications to buy insurance, and more than half lived in those 14 states. Even in large states like California and New York—the marketplaces are humming.

As of October 23rd, New York had enrolled thirty-seven thousand people, more than twice the goal H.H.S. set for New York for the entire month of October.

Don’t Believe What You Read—(Even in the New York Times)

Yet, Media Matters observes, the mainstream press has focused almost exclusively on the problems at Healthcare.gov, “at the expense of stories showing that the exchanges have allowed many people to successfully access affordable . . . coverage.”

NOTE TO READERS: I originally wrote this post for HealthInsurance.org. What you have just read is an expanded version of the first half of that post. To read the rest, and find out more about:

– a front-page New York Times article that relies entirely on anonymous sources,

– differences between how younger and older Americans view the Exchange glitches, and

– where the Exchanges are working,

Click here and Scroll down to the paragraph that begins: “As an example, the media watchdog calls out a Wall Street Journal editorial claiming that website failures “have all but disabled Obamacare.”