Featured Health Business Daily Story, Nov. 6, 2013

Nov. 30 Is New Oct. 1 for HealthCare.gov; Observers Optimistic Issues Can Be Fixed

Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of federal, state and private exchanges.

By ,
October 31, 2013Volume 3Issue 19

Nov. 30 is the new Oct. 1, according to the Obama administration. That’s the date at which Jeff Zients, acting director of the Office of Management and Budget, says HealthCare.gov will be working “smoothly” for most potential applicants. Zients was tapped by the Obama administration to head efforts to get the exchanges operational.

So far, fixing problems hasn’t been easy. On Oct. 28, for example, HHS reported that contractor Verizon Terremark experienced a “network failure” that took the federal data services hub offline. The hub connects the federal and state exchanges to federal agencies that verify income and determine eligibility. The issue was resolved late that night, according to an HHS spokesperson.

Despite such problems during the first three weeks of open enrollment, industry observers contacted by HEX are optimistic that technical problems that have plagued the HealthCare.gov website are fixable. But if the federally facilitated exchanges (FFEs) aren’t enrolling applicants “smoothly and easily” by December, the outcry from the public will force some changes, predicts Cindy Gillespie, a senior managing director at the law firm McKenna, Long & Aldridge LLP. Some employers already have dropped coverage for 2014 and have told employees to find insurance on the exchange. And hundreds of thousands of others have received cancellation policies for existing coverage that won’t comply with reform law rules after Jan. 1. Moreover, many states are shutting down their high-risk pools with the intention of moving those populations into the exchanges. “This is more than an issue with the individual mandate….There are people losing insurance who need a place to purchase and get a subsidy because of the changes required by the law,” she tells HEX. “The administration doesn’t have months to fix this — they have days.”

Tom Scully, who served as CMS administrator during George W. Bush’s administration, says he was surprised by the dismal exchange launch on Oct. 1. He tells HEX that some of his health insurance clients expressed concern about potential problems. “I thought they were worrying about nothing” because CMS staff had assured health plans and Congress that everything would work on time. While Scully expects problems with the online marketplace will be resolved, he says the trouble-plagued launch will translate to lower enrollment. Scully is now an attorney at the law firm Alston & Bird and a general partner with Welsh, Carson, Anderson & Stowe, a private equity firm. “Two years from now, no one is going to remember anything about this other than that there was a sloppy rollout,” he adds.

Christopher Condeluci, of counsel at the Washington, D.C., law firm Venable LLP, agrees that the website will be fixed and that people will forget about some of the early problems. But he warns that the exchanges could wind up with fewer young and healthy enrollees than anticipated. “What is that going to do to rates in 2015 and 2016…especially in 2017 when the reinsurance contribution goes away?” he asks. “Right now, the reinsurance contribution is reducing premiums by 10% to 15%” (see story, p. 3).

Henry Aaron, a senior fellow at The Brookings Institution, agrees that problems with the website will likely be forgotten if they are resolved in time for applicants to secure coverage for the plan year that begins Jan. 1. “If they are covered, the administration will come out of this a huge winner. If they don’t, really rough political seas will lie ahead,” he tells HEX. Aaron notes that some state exchange websites — particularly Kentucky and Washington, D.C. — appear to be operating well.

But the federal website, as well as those operated by states, must offer as much transparency as possible. So far, however, transparency seems to vary from one exchange to the next. “If I live in Nevada, I can see the plans that are available and the specific prices for a person my age. If I live in New Jersey, I can’t,” says Chip Kerby, principal at the Washington, D.C., law firm, Liberte Group. “Where are all of the summaries of benefits and coverage? The continuing lack of transparency is not just a nuisance, it’s deceitful.”

Kerby suggests that the administration shut down HealthCare.gov, or at least temporarily take the enrollment feature off line. “You can’t stop arterial bleeding with a Band-Aid; you need a tourniquet. The longer HealthCare.gov continues to hemorrhage, the less credible it becomes,” he tells HEX. “It’s almost Halloween, and someone needs to pull the plug on this monster.”

Obama PR Machine Is Sputtering

Greater transparency is also needed from the White House. In his Oct. 21 Rose Garden speech, President Obama apologized for the website’s problems and empathized with potential enrollees by saying “nobody is madder than me” that the HealthCare.gov website wasn’t working as envisioned. Such an acknowledgement, combined with accepting responsibility unequivocally, is critical when trying to walk back from a crisis, says Evan Nierman, principal and founder of Red Banyan Group, a crisis management public relations firm based in Florida.

“But the administration needs to offer the public more specific information about what is being done to fix the problems, rather than speaking generally and using vague terms like ‘technical surge’ or promising that ‘the best and the brightest’ are being brought in to address the flaws,” he says. “It’s emblematic of how this administration often communicates. They have a track record of saying ‘don’t worry about it, just trust us,’ and that’s problematic.”

Nierman also says that the administration must have a stronger presence on social media sites. Since the exchanges opened, HHS has posted just 20 tweets for its HealthCare.gov page, and between Oct. 15 and Oct. 21 it didn’t tweet at all. HHS also has done little to keep up HealthCare.gov’s Facebook page. “If it’s young people they need to reach and get them to enroll, then they are not reaching them through the social media outlets that young people utilize.”

© 2013 by Atlantic Information Services, Inc. All Rights Reserved.

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