The federal government is open and paying its bills, which means you can start looking at the other big story from the past few weeks: The startup of Obamacare’s marketplaces. But to fully appreciate what’s happening, you need a split screen.
On one side is the story you’ve heard so much about. In 36 states, the Department of Health and Human Services (HHS) is operating the new insurance marketplaces, where non-elderly people without employer benefits can buy coverage on their own. This part of the rollout has gone … really badly. Two weeks after the sites went online, people are still have trouble setting up accounts and logging onto the system.
HHS is working feverishly to make improvements and the system's performance has improved incrementally. But people are still getting hung up at the initial stages, which means they never get the chance to apply for financial assistance and shop for plans. A study following web traffic showed a sharp drop-off in users at each successive stage of the online application process, which suggests the system was stopping a lot of people from moving forward. And that’s just the part of the system visible to consumers. Insurers say that the system is producing some incorrect information about the few people who make it through the process—a fixable problem, for sure, but a warning that other flaws may yet lurk undetected.
Administration officials have said they never expected so many initial visitors and that the high demand is a good sign. Both claims are true. But the system quite obviously suffers from serious design flaws. I’ve spoken to about a half-dozen developers in the week and they pointed to some of the same problems that experts in the Wall Street Journal, Washington Post, Kaiser Health News, and Slate identified previously. It's hard to know how much of the second-guessing is accurate. But there's a broad consensus about one early source of trouble. As a story in the Journal explained, the site initially required visitors to create accounts before shopping, because a tool to allow anonymous browsing wasn't ready on time. Establishing an account is among the more complicated tasks the website must perform—it requires sending information back and forth between multiple systems, all through secure channels. The result was a bottleneck.
In fairness, federal officials operated under tremendous political and logistical constraints, the kind few outsiders can grasp. Private developers don't have the same stringent standards for privacy and security, for instance. And given the enormous challenges of trying to integrate so many systems—some new, some old—nobody seriously expected the launch of Obamacare’s federal websites to take place without glitches. But few expected this many problems. And nobody seems quite sure when things will get better.
You can get a sense of what real people visiting the sites are seeing by reading dispatches from Sarah Kliff and Phil Galewitz, two reporters who have spent the last two weeks trying to apply. (Kliff finally succeeded; Galewitz got only as far as the account creation process, and that was after 63 tries.) You could also listen to some of the law’s “navigators”—the official counselors, most of whom work for non-profits, who are advising people on coverage options and how to enroll. Here’s, Vicki Tucci, who works with the Legal Aid Society of Palm Beach County, Florida, and who spoke recently to TNR reporter Mimi Dwyer:
There’s long periods where it will just be a wait, then the system will kick you out, or it won’t let you go any farther--that kind of stuff … You can only get to a certain point in the process and then it shuts you out … Most people are frustrated. Last week we had a week full of appointments scheduled and we’ve had to reschedule those appointments. Today I had to reschedule a woman for the second time.
People trying to get insurance have been remarkably patient, which tells you something important about how dysfunctional and frustrating the old insurance market was. In fact, one of the most insightful analyses of Obamacare’s federal site came from John Green, co-producer of Vlogbrothers—who tried applying for insurance via an Obamacare exchange (one the federal government is running for Indiana) and then compared the experience to applying for insurance the old way, via an insurance company website. Even with the delays and server errors, he found, Obamacare was quicker and easier—mostly because, under the old system, he had to reconstruct several years of his medical history down to every exam and test.
But at some point patience will run out—and delays will start to affect who’s signing up for insurance.
So that’s the part of the story you’ve heard. But it’s not the whole story—not by a longshot.
Obamacare’s architects assumed that most states would opt to run their own marketplaces, with federal officials running only a few. The assumption proved wrong: Pretty much any state with a Republican governor or Republican legislative control said no, adding to the administrative burden on HHS. But 14 states plus the District of Columbia are managing their own markets. Mostly it’s places you would expect—progressive outposts like California, Washington, and New York—where Obama and his policies are most popular. But Kentucky, where a Democratic governor and group of dedicated officials have worked diligently to deliver the law’s benefits, is also on the list.
Some of these states are still having major problems: Hawaii, which relied on the same contractor as HHS, seems to be in the worst shape. But the websites in other states are now running and, while it's difficult to get a precise sense of how each one is operating, most appear to be functioning well. They may have more traditional glitches, like random error messages or delays in certain features. (California had to hold off introducing a tool that allows people to check provider networks online.) And most had trouble on the first day or two. But since that time they've been running more smoothly.
One of those states is Connecticut, where Kevin Counihan, chief executive of Connecticut’s health marketplace, told me last week that
The system has been working well and consistently since Tuesday afternoon on October 1. We were down from 12:30 until 2 that day, for a fix, but we’ve had no problems since. We are able to process applications through enrollment and we don’t have issues with wait time.
As a result, Obamacare in these places seems to be working more or less like it's supposed to work. Consumers are getting opportunities they never had before—to shop for insurance plans, each one with clearly defined benefits that make true comparisons possible, and to receive substantial financial assistance that provides many with thousands of dollars a year in assistance. And, from the looks of things, people are taking advantage of it. The Advisory Board, which is tracking state figures, says that about 180,000 have completed applications for insurance and, of those, 50,000 have enrolled.
Those figures don't say much about whether Obamacare in these states will meet goals for enrollment. It's way, way too early to make that judgment. But the figures suggest that the technology in these places works. And people using the sites say the same thing. “The system is working well—we can’t complain,” Licelot Miguel, a navigator in New York, told Dwyer. (Miguel emphasized that she was speaking for herself, not on behalf of her organization.) The first day was tough, Miguel said: It seems some browsers weren’t working. But now the slowdowns tend to be human rather than technological, Miguel said, because people need 15 or 20 minutes to choose the right plan. “When you get through to the end, it’s like oooooh. People get excited.”
The success of some (not all) states shouldn’t spare the federal sites from scrutiny. It’s possible, for example, that federal procurement and contracting policies limited HHS to a universe of information technology developers that were good at delivering winning bids—but not so good at making modern websites. It’s also possible that cabinet agencies are not set up to run these kinds of operations well, at least not on such a large scale and under such a strict timeline. In the future, conservatives will cite the early problems of Obamacare's federal websites when they express skepticism of large federal programs. They might be right when they do.
The Obama Administration also has questions to answer. Implementation did not appear to suffer from neglect or indifference. Countless officials, staff, and contractors put in long weeks and long hours. Chief of Staff Denis McDonough told people he spending two hours a day on it. (Presumably he still is.) But a recent New York Times story painted a devastating picture of project management, with officials ignoring internal warnings or refusing to heed them. And it sounds like things got worse in the weeks leading up to October 1, as the likelihood of a severely flawed launch grew. Here’s what I heard from somebody direct knowledge of what was happening behind the scenes:
I'd call myself a committed liberal and I was totally unprepared for the realities of a bureaucratic environment. What really surprised me was that, as October 1 approached and the reality of the malfunctioning software sunk in, the desire to avoid being blamed seemed at the forefront of leadership's mind. If that's your goal, then the bureaucracy is the ultimate environment for skirting responsibility. Which meant communication up the chain totally broke down as no one wanted to admit how bad things were.
But if these past two weeks appear to reflect poorly on the federal bureaucracy and the Administration managing it, they shouldn’t reflect poorly on health care reform itself—which, after all, has worked in Massachusetts and seems to be working in the states running their own operations. The success of states like Kentucky and New York and Connecticut and California are important for their own sake: By my count, they constitute about a fourth of the national population. But they are also important for what they show about how the law can work, once the technology piece is in place.
Larry Levitt, a senior vice president of the Kaiser Family Foundation, puts it this way:
It’s important to separate the law itself and what it will mean for people from how it’s been administered in the early going. Implementation was always going to be uneven across the country, with a number of states actively putting up roadblocks. It’s still way too early to come to any judgment, but there do seem to be some individual states that are having successful launches.
One reason it's too early to draw judgments is that the administration still has time. Open enrollment lasts until March 31. To get coverage that will start by January 1, consumers must enroll by the middle of December. The best evidence we have about enrollment patterns comes from a New England Journal of Medicine paper written by economists Amitabh Chandra, Jonathan Gruber, and Robin McKnight. They examined the Massachusetts reforms, during the first year, to see who signed up and when. Most people waited until the last minute—the point at which delay meant incurring financial penalties under the mandate. Relatively speaking, the latecomers were more likely to be young and healthy people, the ones whose support the system needs to function properly. That’s good news, because it suggests the most tentative consumers—the ones least likely to wait out website delays—haven’t started shopping yet.
Massachusetts provides another lesson: Early logistical and technological problems aren’t the end of the world. Stephanie Mencimer recalled the history recently in Mother Jones:
After the law went into effect in Massachusetts, state offices were totally overwhelmed by the number of people clamoring to sign up for insurance, or what the state's Medicaid director dubbed the "stress of success." Lost paperwork, computer glitches, confusion over who was eligible for what, and not enough staff to handle the workload meant that in those early days, consumers could wait several months after submitting an application to finally get coverage. So many people were trying to enroll in the expanded Medicaid program that the Medicaid agency ended up with a months-long backlog of applications.
Medicare Part D, the prescription drug benefit that the Bush Administration introduced in 2006, had its own problems at the start. Now the program works seamlessly. “We saw the same kind of challenges in Part D and they sorted themselves out,” Karen Ignagni, the head of America’s Health Insurance Plans (AHIP), told me recently. She would know. One reason the Bush Administration was able to correct the problems of Part D is that groups with a stake in success, like the insurers, lent a hand. Insurers are doing the same thing now—in no small part because the high web traffic suggests a large market of new and enthusiastic buyers. “I can tell you, based on calls and emails and other kinds of contacts, like through brokers, the interest is very high,” Ignagni says. “And we’re seeing enrollment coming through and that’s growing.”
Obamacare is a more ambitious enterprise and, as such, its problems appear to be more significant. And Ignagni, like administration officials, has a rooting interest in the new system's success. (Her members want and need the customers.) But she is absolutely right to make a big deal about the apparent enthusiasm. The architects of Obamacare weren't simply trying to build websites, after all. They were trying to build a whole new health care system. And, up until now, they've been mostly successful. A few million young adults have gotten health insurance through their parents' policies. Hospitals are reducing readmissions, apparently in reaction to the law's new incentives. Setting up insurance marketplaces was always bound to be more complicated, just because it requires reinventing the existing market. But that effort has also achieved more than most people seem to realize. Insurers are offering competitive premiums, lower even than projections had suggested. And it's for a product—comprehensive insurance, available to anybody at uniform prices—that in most places insurers never offered before.
That leaves just one, final challenge: Making sure people can actually buy the insurance, and apply for the federal subsidies, so they can get the security they've craved for so long. It's no minor thing: Given the depth of problems at the federal sites, there's obviously a lot of work to do. And if it's months, rather than weeks, before the federal sites are working, the administration will need to consider other actions—whether it's quickly developing alternative methods of enrollment, extending the open enrollment period beyond March 31, or even offering short-term extensions and exemptions from the mandate in those states where people can't enroll easily. (Dan Diamond and Jonathan Chait discussed those possibilities recently.) But the administration still has plenty of time to get this right, just as some states have already.