“The biggest problem now is that the glitches and other technical problems will discourage all but the most eager applicants from signing up for insurance in the exchanges – meaning that older people with pre-existing medical problems will persist in applying while younger or healthier people will throw up their hands and give up,” said Joseph Antos, a health care expert with the American Enterprise Institute. “Without those younger, healthier people in the risk pool, insurance companies stand to lose a lot of money.”
In order to control insurance costs, the Obama administration estimates that 2.7 million young Americans must enroll through the exchanges for private coverage. The government helps to subsidize the cost of the insurance, but it would also charge a tax penalty for those without insurance.
For the first month alone, the Obama administration projected that nearly a half million people would sign up for the new health insurance markets, according to an internal memo obtained by The Associated Press.
ENROLLMENT FIGURES A MYSTERY
The administration has refused to release enrollment figures from the federal exchange that services 36 states. However, some independent experts peg the number as miniscule – and certainly a fraction of the half million projected by the administration. The Advisory Board, a research and consulting firm, has tracked enrollment through the 15 state-based exchanges, estimating that at least 50,082 people picked a plan and 183,088 had applied for coverage.
Right now, uninsured people have until Dec. 15 to sign up for coverage that would begin to take effect Jan. 1. That deadline may not be realistic if the computer glitches continue and many are forced to submit paper applications for insurance.
Yet extending the deadline is fraught with problems, because insurance companies would receive fewer months of premiums in 2014 than they had planned for when calculating their rates. Laszewski warns that delays in fully implementing Obamacare could last for many weeks or even months, depending on how serious the Internet problems are.
He urged Health and Human Services Secretary Kathleen Sebelius to bring in a top flight technology experts from the outside to assess the problems and recommend solutions.
“And so if that means taking it down for two months, you take it down for two months,” Laszewski said. “If that means taking it down for a year, you take it down for a year.
“My concern is that the Obama administration is thinking about this in political terms, not operational terms,” he added. “If they take it down for a couple of months, the Republicans will win the news cycle for two frickin’ days. Who cares?”
A REAL REASON TO DELAY
Mark T. Bertolini, CEO at Aetna, told CNBC last week that the administration moved too quickly to launch the site before it had been adequately tested, and that if he had been in charge, “I would have” delayed implementation.
"I think the bigger issue is, will enough people sign up to make it work?" said Bertolini. Aetna, like other insurers, is counting on enough young and healthy people enrolling in the plans to offset the costs that come from providing benefits to older, sicker Americans.
Bertolini elaborated on how the system has failed: “When you implement a project of this size, the first thing you do is unit testing, then application testing, then you do integrated testing, then you do scalability testing, and then you do user testing. And that plan is usually a lot longer than some of the application development itself. That's happening on the fly. We didn't get code drops until about a month before the system went live.”
At this point, the more likely move would be to delay the individual mandate for one year. The Obama administration invited charges of hypocrisy when it delayed the employer mandate until 2015. Republicans argue it’s unfair to excuse businesses from providing health insurance but charge individuals a tax penalty for not carrying tax coverage.
There are concerns that the tax penalty, which scales up over time, is too small at $95 next year to force Americans to purchase insurance. The penalty – that will be imposed by the Internal Revenue Service -- is expected to raise $5 billion in 2015, when people pay their taxes for 2014, according to CBO estimates.
But with no penalty for being uninsured, some experts anticipate that the costs of insurance would increase as the healthy hang back from the system and the sick flood it.
The HousE Energy and Commerce Committee will hold a hearing on Thursday on the problems besetting Obamacare titled "Implementation Failures: Didn't Know or Didn't Disclose?" However, the administration says it will withhold enrollment data until next month. For now, administration officials are pretty much keeping a lid on its efforts at damage control.
“Nobody has any idea what’s going on behind the wizard’s curtain - literally,” Laszewski said. “So for any of us to make any kinds of projections as to how long it will take them to fix this is just impossible.”