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10.30.13

Early Reactions to the ACA’s Health Insurance Exchanges

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exchange decision

 

This post was written by Fernanda Alonso, O’Neill Institute Research Assistant and Georgetown Global Health Law LL.M. Candidate ’14. For more information about this post, please contact fa265@georgetown.edu.

On October 1, enrollment in the insurance market place began. These insurance exchanges are looking to serve as organizations where people can purchase health insurance in accordance with the Patient Protection and Affordable Care Act (“ACA”). The ACA sets minimum requirements, providing marketplaces with government-regulated and standardized health care plans for individuals.[1] By creating an economy of scale for insurance, the idea is that prices will be brought down and a wider amount of choice will be given to individuals. Because the exchanges are trying to create competition to bring prices down, making insurance plans affordable, it is of great importance to have people enroll and the online sites up and running. Although people have until February 15 of next year to sign up,[2] this post provides a preliminary overview to the rollout of the exchanges.  

The initial experience with the health exchanges has differed enormously depending on whether the exchange has been done through the federal government or if the state is running its own exchange. Almost a month into the process it appears that the state-run exchanges have been significantly more efficient than their federal counterpart, with the federal exchange receiving multiple criticisms.

Federal Exchange

Thirty-six states opted to let the federal government run their exchanges, using the government’s healthcare.gov platform. The main glitch of this exchange has been its faulty design and software, making their page almost impossible to use. Reports state that the webpage has consistently failed to load and that more often than not users cannot even get past the sign-up process. It appears that the federal exchange cannot handle the large amount of web traffic it is receiving. Others have reported additional problems such as passwords being wiped or being able to successfully register, only to later have their application for coverage is refused. Insurance companies have also complained about the site, citing that they are getting faulty and incomplete data as well as receiving electronic files that cannot open or have so much missing information on new enrollees to be usable. These electronic errors are driving individuals to rely on paper applications and insurers to have to go through applications by hand, creating the possibility of a processing backlog. Additionally, it appears that there are too few individuals and staff in the federal-run exchange states. The overall concern is that people could get to January 1 with no coverage.

Due to the problems with the federally run exchange, customers who have not been able to use the site have been contacting insurance companies directly and signing up for plans away from the federal exchange. Those who do not qualify for subsidies to the exchange are buying off exchange plans more often. Also, some insurers have pulled out of the exchanges, meaning consumers may end up paying too much or face large rate increases later. In order for the exchange to work, multiple competing carriers and a competitive insurance market in all states is needed. This problem has already emerged in rural areas. Competition has been intense in populous regions and states with large cities but in rural areas and small towns there are far fewer carriers offering plans in the online exchanges. For example, many counties in Mississippi and Alabama have only one insurer giving the consumer little to no choice. The importance of competition has been made evident; a person in in rural Georgia, for example, would pay twice as much for a silver-level plan as one in Atlanta; The cheapest plan in Wyoming (with only two insurers) costs as much as the most expensive in Montana (which only has three insurers).

In terms of initial numbers, the federal exchange has been difficult to assess. As of Thursday October 24, the government said that about 700,000 applicants had been submitted so far both through healthcare.gov and the state-run exchanges (without specifying which ones had been through the federal exchange). In terms of official numbers, federal officials have announced that they will not release healthcare.gov enrollment data until mid-November (signaling numbers will then be given on a month to month basis).

State-Based Exchanges

Although some states’ insurance exchange websites have also reported initial problems, initial reports have stated a better experience overall. Kentucky and Washington, in particular, have reported that consumers have used the new information technology systems to easily shop for health coverage with other states like Minnesota, California, Connecticut, New York and Rhode Island not too far behind.

There are a few reasons that can explain the vast difference between these two systems. First, some states let consumers explore insurance options – such as costs and the pros and cons of different policies – without having to first create an online account; on the federal exchange, shoppers must first create an online account, and being able to create an account has been one of the foremost problems faced. Second, state-run sites are much smaller and receive less traffic, adding to the fact that technicians can react quickly to fix problems that arise. This has not been the case of all state-exchanges as other pages have been completely unmanageable; Hawaii officials, for example, have announced plans to re-launch their health exchange and try again because of its initial failing page. A third advantage is the funding available to do outreach and enrollment. For example, the entire state of Ohio, received just $3 million in grants to reach out to those who might need insurance compared to $24 million in Maryland (which has half as many uninsured residents). Primarily because of these reasons, enrollment in the state-run exchanges have been rising much faster than the federal exchange.

This is not to say that state-run exchanges have been problem free. Apart from faulty design and operation in some of the web pages, state-run exchanges have faced the emergence of fake sites. Companies have built websites to mislead health care shoppers into thinking they are buying on the official marketplace. Regulators in certain states have had to tell agents to change websites that seemed likely to convince costumers that they were connecting to government-run sites. Another problem is that some local exchanges, such as California’s, still don’t list doctors and hospitals, making it impossible for consumers to find out which doctors and hospitals are included in each health plan.

Because States are using different metrics and tracking different intervals, when reporting their enrollment figures, it is difficult to come up with an accurate roll-up total. There is still little to no information on who enrollees are or what plans they’re buying. It is also not clear up to this point how many people are signing up for Medicaid and how many people are signing up for private plans. Most states are not giving disaggregates but rather the total number of applicants. Only a few states have released that information. In Washington for example as of October 25 of the 35,528 people who had picked a plan or enrolled, only 4,529 were sign ups of private plans. In Minnesota 406 had signed up for private plans and 1,897 in Connecticut.

As of October 25, estimates show that 365,463 people have applied in the 15 State-Based Exchanges and at least 116,157 have picked a plan or enrolled (even if they have not yet paid their first month’s premium to complete process). This is based on the numbers that states are choosing to share and includes people who have enrolled in Medicaid coverage.

Preliminary Data on Enrollment Through the State-Based Exchanges[3]


State

Accounts Created

Total Applicants

People who picked a plan/enrolled

Date

California

≥ 125,959

≥ 16,311

 

10/22

Colorado

18,174

 

305

10/7

Connecticut

10,768

≥ 3,847

3,847

10/16

DC

12,294

≥ 1,181

 

10/21

Hawaii

≥ 1,181

≥ 1,181

 

10/3

Kentucky

51,482

≥ 33,742

26,174

10/24

Maryland

40,198

≥ 27,204

3,186

10/25

Massachusetts

25,703

7,908

 

10/24

Minnesota

18,917

≥ 11,684

≥ 3,769

10/15

Nevada

38,393

≥ 2,130

1,757

10/18

New York

 

174,000

37,030

10/23

Oregon

≥ 11,500

≥ 11,500

 

10/24

Rhode Island

7,481

≥ 2,652

2,652

10/21

Vermont

8,739

≥ 1,588

1,588

10/25

Washington

89,273

69,822

35,528

10/21


[1] These plans are ranked (bronze, silver, gold and platinum), based on their cost and benefit and depending on the individuals who purchase health insurance, they may be eligible for federal subsidies. Subsidies for insurance premiums are given to individuals who buy a plan from an exchange and have a household income between 133% and 400% of the poverty line.

[2] December 15 if they would like to begin coverage on January 1, 2014.

[3] These numbers are continuously being updated by the Advisory Board Company through data shared by the different state-run exchanges and a compilation of newspapers and social media. Numbers are available at: https://www.advisory.com/Daily-Briefing/Resources/Primers/Obamacare-enrollment-tracker

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