It was a dark and stormy rollout
By James Katzaman
Last summer, I was taking my continuing education courses, including one class entitled "Obamacare." The instructor taught the facts and left little doubt that he favored the Patient Protection and Affordable Care Act. He highlighted Obamacare benefits, especially the fact that PPACA had already been the law of the land for several years. He noted that the pressure of health care opening up to millions of previously uninsured Americans was already holding down costs for medical services.
Then he added — in a teachable moment — that the Obamacare rollout would not go smoothly because big government programs rarely start well. Around the room he repeatedly asked each of us, “Obamacare will what?”
“Will not go smoothly,” was our oft-repeated reply.
He cited previous examples of rocky rollouts, notably Medicare in 1965 and Medicare Part D in 2005. Here's Bloomberg's look back at Medicare’s almost comical start-up:
“For starters, few in the government seem to have realized that more than 45 percent of those born between 1890 and 1920 couldn’t prove their age because they lacked birth certificates. While the government accepted other documentation, such as military records or naturalization records, some pretty unorthodox records ended up being used. The New York Times reported that in one case, a man ‘bared his chest as a last resort. Tattooed there was the date of his enlistment in the Navy and the date of his birth.’ Another applicant dug up his mother’s tombstone and carted [it] into the local office, arguing that it constituted proof of his age. This, too, was accepted.”
The Medicare Part D debut might have been less troublesome, but only by comparison. Yet, in both cases the kinks were eventually worked out and both programs are now endorsed by millions of people.
That said, could the PPACA launch have been more thoroughly messed up? It certainly did not go smoothly. Out of millions of uninsured Americans, little more than 200 enrolled on the Healthcare.gov website, as reported by Reuters at the end of October:
“Enrollment in health insurance plans on the troubled Obamacare website was very small in the first couple of days of operation, with just 248 Americans signing up, according to documents released on Thursday by a U.S. House of Representatives committee.”
In an unrelated story, that same week, almost 1,800 people won $100 or more in Powerball. Yes, a lottery game offered better odds for success than a government website.
Only in the last few weeks have the dire stories of the website rollout been compiled and publicized, most notably by a comprehensive article in Time magazine. It notes that the website that was supposed to accommodate hundreds of thousands of applicants at one time actually had a capacity of only several thousand. The word “glitchy” became a colossal, all-too-common government understatement, making the slang word as notorious as “hanging chads.” Even the president purportedly asked about Healthcare.gov, “Can it be patched and improved to work, or does it need to be scrapped to start over?” Very few, if any, federal heads rolled in the wake of the rollout debacle. The same could not be said at the state level, where individual health insurance exchanges mimicked the Healthcare.gov disaster. Managers in Oregon, Nevada and Hawaii quit, were fired, or were asked to resign. Closer to my locale, there has been an incessant drumbeat of discontent since the director of Maryland’s exchange resigned, the contractor was fired and costs to run the website have risen an additional $30 million.
In the latest wrinkle, as the Washington Post reported, “Only nine Marylanders have signed up for temporary, retroactive health insurance made possible by emergency legislation aimed at helping people who tried to get coverage through the state’s faulty online health insurance marketplace, encountered problems and were stuck with medical bills to pay.”
Maryland officials said that low number is good, signifying that thousands of tough cases had already been accepted, thanks to the good work of the health insurance exchange. That government-speak might be plausible if the state and federal exchanges had not trashed their credibility during their abysmal start-ups.
Since its bleak first weeks, the performance of Healthcare.gov has improved, especially since the end of November. That smattering of good news is tempered by a parade of delays as employers try to comply with PPACA. The Wall Street Journal reported House passes individual mandate delay bill The figures, however, are down for health insurance agents and brokers, specifically their commissions. AIS Health had a sobering lead in its report:
“Blue Cross and Blue Shield plans, as well as many other insurance carriers, continue to reduce commissions paid to outside brokers and agents in an effort to reduce overhead. Just a few years ago, commissions of 20 percent were common among independent brokers and agents. But such rates were substantially reduced in 2011 in response to the medical loss ratio provisions of the Affordable Care Act.
“Brokers tell The AIS Report that rates continue to shrink due to uncertainty about the public insurance exchanges and an increase in the number of sales channels. Given the thin margins on exchange-based coverage, and in the individual market in general, Blues plans and other carriers see commissions as one place they can reduce expenses, the brokers contend.”
In response to that story, a broker I work with replied in an email, “Depressing. And this is why several of our long-term brokers have already left the business.”
PPACA is a many-headed beast, depending on your perspective. Will this government-as-insurance-agent behemoth eventually right itself and live up to its affordable care moniker? Possibly. Are insurance agents and brokers on the endangered species list? Selfishly, we hope not. No matter who you are, one thing is assuredly true: This rollout did not go smoothly.