Sunday, November 10, 2013

How Disastrous is Obamacare?

The normal description for Obamacare's launch to date is "disastrous."  This refers to two things -- badly malfunctioning software, and individual purchasers seeing their policies canceled and replaced by more expensive ones.  Yes public opinion on Obamacare either remains unchanged or has shifted slightly in favor of it.

I would say these things are related.  In some ways, the start up problems may even have been a public relations advantage.  After hearing vague, horrifying rumors about Obamacare, the latest stories are changing it from a mysterious menace to something more concrete -- a website for the uninsured to buy insurance that isn't working very well.  Most people's reaction to a website for the uninsured to buy insurance will presumably be that it is good if it works and bad if it doesn't work.  As for people seeing their policies cancelled, many if not most will be able to do comparably well on the website, if only it works.  People who are able to replace their policies with a perfectly good alternative on the exchange will presumably forgive the inconvenience of having their policies cancelled.  But if the site does not start working, they will not forgive.

Anecdotes are flying madly about.  I will give my own.  When I signed on as early as October 12, the site was sluggish.  Each question I answered was followed a most annoying delay.  The delays were long enough that I got tired of watching the revolving circle and played a round of solitaire.  When I got back from the solitaire, it had always completed its work.  Other than its sluggishness, it was not too different from completing any other long internet application.  But I did not reach the point of applying for subsidies, mostly because my financial future was too uncertain.  I do not know what would have happened if I had applied. It has gone faster on more recent visits, but I still have not known enough about my future to see if I qualify for a subsidy (probably not).

But an anecdote is just that -- one person's experience.  The government hopes to sign up 7.5 million people. What matters out of so large a number are the statistics.  What do they tell us?  So far as I can tell, nothing very encouraging.

There are several stages of applying.  One is to create an account.  (That was as far as I got).  The next is to determine one's eligibility for a subsidy and apply for one.  Next, one chooses an insurance plan and submits an application to the insurance company.  Finally, one makes an initial payment and is formally enrolled.  Not everyone who takes one step necessarily decides to take the next.  Some people may open accounts but not apply for subsidies.  Some may apply for subsidies but decide not to enroll.  This was especially a problem earlier on when people could not anonymously browse for rates, but had to create an account just to look at them.  The system has since been modified to allow window shopping without an account.*

The latest statistical account I have seen was for October 25. It reported a 90% success rate in creating accounts, but only a 30% success rate in "completing an application."  "Completing an application" means determining eligibility for subsidies.  I am not clear whether this means getting the subsidies approved, or merely calculated.  Clearly a 90% success rate is nowhere close to acceptable (it means failure 10% of the time, which is much to high), but it can be reasonably described as functional.  A 30% success rate means at least three attempts before it works, which can't really be described as functional, but is in the category of seriously dysfunctional, rather than completely non-functional.  The number of "applications completed" in the sense of applications for subsidies on October 25 was 700,000, about half of them through federal exchanges.  Assuming another 50,000 in the last six days of October (not an unrealistic number given the general rate they were coming in) and the applications completed would be about 10% of the goal in the first month out of six, or about 60% of the way there.  That is less than one might hope for but not disastrous.

What is disastrous is the "back end," i.e., connection between the exchange and insurance companies.  So far as I can tell, that portion is truly non-functional.  The information coming in is so bad that companies are resorting to hand processing, which, of course, cannot handle anything close to the volume hoped for.  The number of people actually signed up is negligible.  This is what the government hopes to have fixed by the end of November.  I do not know enough about tech to know either (1) whether that is in any way realistic, or (2) what sort of error rate the system can tolerate and be considered functional.  Stay tuned.

I will note one slightly encouraging thing I learned.  My impression was that the December 15 deadline was the deadline to get insurance in 2014, and that any insurance purchased after that date would merely avoid the fine and would not actually take effect until 2015. I did not see the point.  People who sign up don't just want to avoid a fine; they want actual insurance.  But apparently I was wrong.  Applications must be submitted by December 15 to get insurance on January 1, 2014.  Sign-ups after that date will provide insurance in 2014; there will merely be a two to six week delay.  But this could be truly disastrous for the sickest people of all -- ones in "high risk pools" set to be cancelled at the start of next year when the new insurance is supposed to take effect.  These are people who can't afford even a few weeks lapse in coverage.  Which makes me wonder.  Even assuming the best, and that everything is perfect by November 30, just how much volume can the system handle in those 15 days?  Can it truly sign up everyone in a high risk pool in that amount of time?  Really, we should be working frantically to extent the high risk pools, just to be sure.

Finally, a bit of supposedly good news from Kentucky, the state with the best functioning exchange, actually strikes me as discouraging.  The governor boasts that they are signing up 1000 people a day, and the first month statistic bear that out.  Signing up 1000 people a day for the next six months would be a total of 180,000.  Kentucky has 640,000 uninsured.  Signing up 1000 people a day amounts to about 28% of the total -- a significant dent in the number, but well short of a majority.  Even more discouraging are the composition of people signed up.  Of the slightly over 30,000 people signed up in the first month in Kentucky, 27,854 signed up for Medicaid.  Only 4,631 signed up for private insurance.  That does not bode well for the success of the program.

*Although when I tried to browse for New Mexico, it referred me to the New Mexico site, that did not let me browse.

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