Where Obamacare Ends and Private Insurers Begin

The White House has always promised the ACA isn’t a government takeover of health care. They’re about to find out if anyone believes them.

WASHINGTON, DC - DECEMBER 11: Health and Human Services Secretary Kathleen Sebelius testifies during a House Health Subcommittee hearing on 'PPACA (Patient Protection and Affordable Care Act) Implementation Failures: What's Next?' in the Rayburn House Office Building on Capitol Hill, December 11, 2013, in Washington, DC. Sebelius has called for an investigation into the management and contracting decisions that went in to the botched rollout of the HealthCare.gov website. (Photo by Rod Lamkey/Getty Images)
National Journal
Sophie Novack
Dec. 12, 2013, midnight

{{ BIZOBJ (video: 4620) }}

Health and Hu­man Ser­vices Sec­ret­ary Kath­leen Se­beli­us prom­ised Wed­nes­day that the back-end prob­lems of Health­Care.gov would be re­solved in time for the in­sur­ance cov­er­age tak­ing ef­fect on Jan. 1, set­ting an­oth­er high bar for the ad­min­is­tra­tion as it at­tempts to re­cov­er from Af­ford­able Care Act’s rocky rol­lout.

“We cer­tainly have a plan — and we have vet­ted it and dis­cussed it with in­surers — that they are very com­fort­able with to get them their re­im­burse­ment,” Se­beli­us said at the House En­ergy and Com­merce Com­mit­tee hear­ing on the status of Obama­care im­ple­ment­a­tion.

With front-end en­roll­ment on the fed­er­al web­site func­tion­ing much bet­ter after the ad­min­is­tra­tion’s self-im­posed Dec. 1 dead­line, at­ten­tion has in­creas­ingly turned to the site’s crit­ic­al back end, which sends health care shop­pers to the in­surers that will ul­ti­mately provide them with cov­er­age.

Er­rors in con­sumer data forms sent to in­surers, com­bined with the fact that much of the pay­ment sys­tem is still be­ing built, have raised con­cerns about the in­ter­ac­tion between the fed­er­al web­site and in­sur­ance com­pan­ies. If those in­ter­ac­tions go awry, some in­sur­ance shop­pers may be giv­en the im­pres­sion they’re covered without hav­ing been fully en­rolled.

However, Se­beli­us as­sured the com­mit­tee Wed­nes­day that the sys­tem im­prove­ments are con­tinu­ing.

At Health­Care.gov‘s launch, the er­ror rate for such forms was around 25 per­cent. Now, that er­ror rate has dropped to about 10 per­cent. Se­beli­us said that HHS is cur­rently hand-match­ing con­sumer and in­surer re­cords to catch er­rors in the auto­mated sys­tem.

“There’s a manu­al work­around, I would say, for vir­tu­ally everything that isn’t fully auto­mated yet,” Se­beli­us said. “It is in place, it just will be manu­al un­til the auto­ma­tion is fully com­plete and we’ve tested it and make sure it works. But in the mean­time, the pay­ment sys­tem will ab­so­lutely go for­ward.”

But try­ing to ex­plain the web­site’s back-end func­tion­ing takes the ad­min­is­tra­tion in­to sticky ter­rit­ory, as of­fi­cials try to draw a line between the Af­ford­able Care Act and private in­surers — a task made par­tic­u­larly dif­fi­cult after years of crit­ics claim­ing the law is a “gov­ern­ment takeover” of health care.

The ex­changes, after all, are not in­sur­ance pro­viders. In­stead, they are portals through which private cit­izens can — and, un­less they want to pay a fine, must — buy in­sur­ance from private in­sur­ance com­pan­ies.

After en­rolling in the web­site, in­di­vidu­als are in­sured once they have se­lec­ted their plan and paid their premi­um to the in­sur­ance com­pany. In­surers will then re­ceive a tax cred­it and cost-shar­ing re­im­burse­ment for eli­gible con­sumers start­ing in mid-Janu­ary, ac­cord­ing to Se­beli­us.

That dis­tinc­tion caused no short­age of con­fu­sion and con­ten­tion at the sec­ret­ary’s Hill ap­pear­ance Wed­nes­day.

“What if that pa­tient doesn’t make the premi­um pay­ment?” asked Rep. Mi­chael Bur­gess, R-Texas. “You said they’re covered Dec. 23, but they nev­er write the check. They nev­er make the pay­ment.”

Se­beli­us re­spon­ded: “Then they’re not covered. They are not en­rolled. We did not take over the private in­sur­ance mar­ket. People will pur­chase in­sur­ance from in­sur­ance com­pan­ies.”

But even as the ad­min­is­tra­tion struggles to draw the line, their own meth­od of meas­ur­ing par­ti­cip­a­tion in the ex­changes fur­ther mud­dies the wa­ters.

When HHS re­ports the ex­change en­roll­ment num­bers, it in­cludes those in­di­vidu­als who have se­lec­ted a plan but not yet paid as en­rolled. HHS main­tains that this is be­cause the gov­ern­ment’s role in the pro­cess ends once the con­sumer chooses a plan, at which point they work dir­ectly with the in­sur­ance com­pany.

But it is also a polit­ic­al ex­pedi­ency, as a nar­row defin­i­tion would fur­ther lower en­roll­ment num­bers at a time when the ad­min­is­tra­tion is already lag­ging far be­hind its goals.

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