Obamacare Glitch No. One: Verifying Eligibility
Business + Economy

Obamacare Glitch No. One: Verifying Eligibility


On Oct. 1, federal government IT specialists will fire up one of the most  technologically complex government websites in history – one specially engineered to grant uninsured Americans access to a virtual market of affordable health insurance policies.

And if all goes as planned, millions of people--from healthy millennials in their 20s and 30s to seniors with chronic health problems--will be able to compare the premiums being offered by a handful of insurance providers in their states, determine whether they qualify for a federal subsidy, and finally purchase a plan.

As part of this “seamless,” one-stop shopping approach that President Obama has boasted about in speeches at the White House and around the country, applicants will have to enter some basic information about themselves -- their annual incomes, residency status and citizenship. Once that information has been entered, applicants will be presented with a number of potential plans and their premiums.  After clicking one, a new window will open, routing the customers to the insurance company that offers the plan.

This process is a red flag for opponents of President Obama’s Affordable Care Act, which was enacted in March 2010 Earlier this month, the Washington Post reported that health insurance marketplaces will not be required to verify consumer claims. The Obama administration said “it would significantly scale back the health law’s requirements that new insurance marketplaces verify consumers’ income and health insurance status. Instead, the federal government will rely more heavily on consumers’ self-reported information until 2015, when it plans to have stronger verification systems in place.”

This announcement gave more ammunition to critics who fear that a delayed and untested verification process is an open-invitation to cheat and have the government subsidize health care for those who could afford to pay the going rate.

Controversy over Obamacare has raged over the historic measure from the outset. Critics charge that Obamacare will result in higher premiums for many Americans, particularly young people, and that it likely will prompt businesses to lay off millions of workers or scale back their hours to get around the new law.  Others complained that the law was too complicated, and that businesses would have trouble meeting deadlines for providing insurance to their workers.

But none of that will matter unless the federal government and cooperating states can successfully launch the new Websites in all 50 states and the District of Columbia on schedule, and right now there is some serious doubt about that. The White House has already delayed the employer mandate, as well as requirements to confirm income status.

While the process described above might sound simple, the backend mechanics of making it happen are not. The Health and Human Services Department and the Centers for Medicare and Medicaid Services (CMS) are in the process of building and testing a complex “Data Hub” that will enable applicants and government officials to access a wide array of information that is  essential to making the on-line insurance exchanges  work.

The head of the CMS testified last week that construction of the system is on schedule and those technicians have built and tested 95 percent of the system.  "CMS has already completed development and the majority of the testing of the Hub services required to support open enrollment on October 1, 2013," Marilyn Tavenner, administrator at CMS told Congress last week.


But the Government Accountability Office, the federal watchdog agency warns that the project is behind schedule, and the Obama administration is behind in creating exchanges in 34 states that have refused to do so. 

In testimony before the House last week, Alan R., Duncan, the assistant inspector general for audit at the Treasury department, warned that the government might miss its deadline.
Treasury officials are “concerned that final integration testing for all of the various agency systems, communications, and the Federal and State Exchanges will be difficult to complete before the start of the enrollment process in October 2013,” Duncan said. “The lack of adequate testing could result in significant delays and errors in accepting and processing ACA applications for health insurance coverage.”
A health care expert for the GAO seconded Duncan. While much progress has been made in establishing the regulatory framework and guidance required for this undertaking, said John E. Dicken, “nevertheless, much remains to be accomplished within a relatively short amount of time.”

Not all of the assessments are so gloomy.  Cindy Gillespie, senior managing director at McKenna Long and Aldridge who is working with states and health plans in preparation for the launch, said that while some elements of Obamacare will not be ready for primetime, the pieces needed to make it work would be in place.

"What always happens when you have a big event like this is as you go along getting ready for it, you begin to focus on what you can actually get done, what’s mission critical. What do you have to do on day one to have success?" Gillespie told the Fiscal Times last week.  "They’ve been figuring out what their primary mission is to start and they’ll add the rest as they get to it."

The information Obamacare enrollees have to enter is quite simple. But the process to verify this information is extraordinarily complex.

The “Data Hub” under development is actually a massive computer router that will funnel a mind boggling array of data from the Internal Revenue Service, Treasury Department, Health and Human Services, state welfare agencies and scores of private data collectors to determine whether applicants are eligible for federal subsidies.


The Hub is one of the two technological pillars supporting Obamacare. The other is the exchange on which people will actually purchase insurance. Sixteen states and the District of Columbia have set up their own exchanges. But the federal government is responsible for creating exchanges in the 34 other states that have refused to cooperate. According to Gillespie, they’re behind.

“The federal government came later to the table and has to do 34 all at once,” she said.

Because of this delay, the federal government has delayed one key part of implementation in the states that are not cooperating. According to Gillespie, when enrollees finally choses a plan, they will not sign up for it in an exchange. Instead, a new window will pop up, directing her to the site of the insurance carrier.

“When they pick the one they want, the plan for the federal exchange is to link them over to the carrier website and enroll over there,” she said.

According to Dan Schuyler at Leavitt Partners, a consultancy helping to construct states exchanges, enrollment remains the biggest challenge. The White House is conducting a campaign-style “get out and enroll” effort in the coming months.

The difference between success and failure comes down to one number: 2.7 million. According to a Washington Post analysis last week, that’s s how many healthy people between the ages of 18 and 35 need to sign up for the new marketplaces to hold down premiums, based on estimates that 7 million people will join in the first year of operation.

But Schuyler said the greater challenge would be getting people who have had little interaction with the health care system to sign up.

“There is so much education and outreach that needs to be done. There are tens of millions who haven’t purchased health insurance before. They’re going to be doing this for the first time,” he said. “Many people haven’t been to a doctor. Many haven’t bought health insurance. Many of them won’t understand the information about health care pans. You’re going to have numerous individuals who won’t be able to complete the process.”

“Every exchange is supposed to have a call center, navigators and assisters. But we’re talking about getting these people trained by October 1,” he added.

Schuyler also warned about troubles surrounding Medicare eligibility.

“Everyone who goes to an exchange has to go through some Medicare qualification,” he said. “The Medicare system speaks one language. The exchange system speaks another. And neither hears very well.”

Yet even with these challenges, Gillespie believes Obamacare will eventually succeed.

“Once you have enrollment going, then they’ll figure out everything else and add it over time,” she said. “The decisions they’ve been making for months fit that strategy. Once you get enrollment, everything else starts to work out eventually.”

Obama himself has cautioned, “Even if we do everything perfectly, there will still be glitches and bumps.”