Economics, Health Care

What we learned about Obamacare today: Jan 17, 2013

1.) AEI’s Scott Gottlieb talks “The ‘conversion rate’ on,” saying “This Obamacare number that nobody is talking about may be the most revealing”:

According to government tallies, 44.5 million people called or visited state and federal websites they said, presumably indicating broad interest in the new benefit. But we also know that only 2.2 million people have signed up for Obamacare. Factoring in all of the professed web traffic, this would mean that the number of people who signed up (but didn’t necessarily pay) for an Obamacare health plan amounts to a conversion rate of less than 5% of the Obamacare web traffic. And this is among consumers who had the patience to navigate the faulty Obamacare web portals.

This data strongly suggests that eligible consumers, who take the time to kick the tires on Obamacare, don’t like the products that they’re finding in the exchanges. They’re browsing, but not buying…. Obamacare’s rate of converting web traffic into customers would place the program on par with the click through rates enjoyed by Internet banner ads, and well below sales figures on other e-commerce sites…. The day the Obamacare data was released, I was coincidentally meeting with Jonathan Bush, the CEO of Athena Health. So I put the question of conversion rate to him, since he sells a specialized service into the healthcare space. He said that the conversion rate for Athena’s web site, for doctors who visit the site to evaluate Athena’s suite of services and then make a purchase, is 22%.

The problem is that the Obamcare plans aren’t attractive to consumers. They were designed in Washington to suit political prerogatives rather than being designed in the marketplace to meet the demands of consumers. They’re laden down with costly mandates that leave the products too expensive. The plans try and make up for these costs by using narrow networks of cheap doctors and closed drug formularies. Despite the skinny networks, the plans still leave consumers with big premiums and deductibles. Washington managed to simultaneously degrade the coverage, and make it more expensive.

2.) The Washington Examiner says “Congress should stop insurer bailout before it starts”:

A provision of the law known as the “risk corridors” program guarantees a taxpayer bailout to insurers who lose money through their participation in Obamacare. Here’s how it works: Each year, insurers have to estimate their expected losses. If an insurer does better than expected, the company has to pay HHS, and HHS will, in turn, compensate insurers who do worse than expected. How much could this cost federal taxpayers? Unfortunately, that remains a mystery. In its original cost estimate of Obamacare, the Congressional Budget Office essentially ignored the program by assuming that the payments among insurers and HHS would be a wash. Insurers won’t have an idea of the final risk pool on the exchanges until open enrollment ends on March 31. Beyond that, under regulations issued by HHS, insurers aren’t required to submit all the information related to the risk corridors program until “July 31 of the year following the applicable benefit year.” That would mean July 31, 2015.

It’s worth keeping in mind, however, that the risk corridors program was intended to help any given insurer that was stuck with a disproportionate percentage of individuals with high medical claims. It wasn’t meant for a scenario in which there are massive industrywide losses. In such a case, the taxpayer exposure could be huge. Under the program, if an insurer’s losses are 103 percent to 108 percent over the target amount, the federal government would absorb half of those losses — and for losses that exceed 108 percent, the government would cover 80 percent.

3.) security update:

  • “A top security officer told Congress there have been two, serious high-risk findings since the website’s launch, including one on Monday of this week, CBS News has learned…. In another security bombshell, [Teresa Fryer, the chief information security officer for CMS] told congressional interviewers that she explicitly recommended denial of the website’s Authority to Operate (ATO), but was overruled by her superiors. The website was rolled out amid warnings Fryer said she gave both verbally and in a briefing that disclosed “high risks” and possible exposure to “attacks”…. This is the first time a government insider has gone on record challenging the administration’s insistence that there were no worrisome security concerns.”
  • David Kennedy, founder of security firm TrustedSec, told members of the House of Representatives Science Committee that only one of 18 issues he reported in November had been fixed, and even then he identified ways that attackers could bypass the remedy. Kennedy didn’t discuss specifics of the vulnerabilities out of concern that details would make it easier for criminals to exploit the weaknesses. Generally, he said some of the weaknesses leaked usernames, e-mail addresses, and other data contained in user profiles onto the open Internet, making it possible for unauthorized people to access the information using Google or other search engines….In November, Kennedy warned of 18 vulnerabilities. Since then, he said he has learned of at least 20 more from fellow researchers.”

4.) Kaiser Health News has a segment “Explaining’s problems”: “Gary Cohen, the head of the federal online marketplace, answered questions on Capitol Hill Thursday about the rocky rollout of Mary Agnes Carey and CQ Roll Call’s Melissa Attias discuss.” Check out the full discussion, complete with audio, here.

5.) HealthCare.Gov’s back-end system is still being built: “A top Obama administration official told Congress Thursday that the automated system to send payments to insurance companies is still under construction and didn’t offer a completion date, media outlets report.” Read more at this KHN round-up, which includes “Washington Wire: Under Construction:’s Payment System,” and “HHS Feared Contractor Would Derail Obamacare.”

6.) “Obamacare small-business plan lags behind in face of cost,” says Alex Wayne at Bloomberg:

Enrollment in Obamacare health plans for small businesses is off to a slow start, leaving in doubt whether the U.S. program can attract enough customers to satisfy insurers…. Complicating matters is the government’s failure to complete the online exchange for small businesses; in 36 states, there will be no website offering ready information on the plans until November.  The program is supposed to help insure the 31 million people who work at companies with fewer than 50 employees. In Kentucky, just 14 companies signed up for Obamacare’s small business plans as of Jan. 1, while Colorado enrolled 101, and Connecticut 106…. Part of the lag can also be blamed on SHOP plans that are too expensive, with premiums as much as 90 percent higher than what some firms paid last year…. Small businesses also face no deadline to enroll, unlike individual Americans shopping for themselves…. The smaller the company, the less likely that its workers are offered health insurance, according to the Kaiser Family Foundation, a Menlo Park, California-based nonprofit that studies health issues.

7.) Yuval Levin and AEI’s James Capretta write on “Unwinding Obamacare”:

It is important to understand how crucial the prospect of a taxpayer bailout of insurers is to the future of Obamacare. Insurers facing the prospect of participating in the exchanges in 2015 without the backstop of a taxpayer bailout would be forced either to price their products properly (and therefore likely well above their 2014 premiums) or withdraw from the exchanges altogether. Either way, the law will become even less attractive to middle-income and moderate-wage households who get little or nothing in subsidies. Insisting on budget neutrality or repealing these provisions would, like the elimination of the individual mandate, not only make good political sense but also help to speed the unwinding of Obamacare, which is essential to the ultimate repeal of the law and its replacement with a real reform of American health care.

8.) This doesn’t sound good: “Some applicants for Obamacare wrongly identified as incarcerated…. The problem is that they aren’t in prison, and for some, never have been, according to Kathleen Tallarita, a spokesperson for Access Health CT, the state exchange that administers ACA health care applications in Connecticut. The Federal Data Services Hub is responsible for incorrectly identifying some applicants as being incarcerated, according to Tallarita.”

9.) News from North Carolina: “The A.C.A., also known as Obamacare, requires employers with 50 or more full-time workers to provide health insurance benefits, or face a tax penalty. However, a January 10 blog post from the U.S. Department of Treasury, volunteer firefighters, emergency workers, and paramedics will be exempt. This means that taxes won’t be going up and the number of firefighters in the area will stay the same. The last time we spoke to Leland Fire Chief John Grimes, he was worried that more than half of his 100 volunteers would have to be let go, because under the proposed regulations, the fire department would not have been able to afford insurance for them…. No word yet on when this ruling will become official.”

10.) USA Today reports that “The House on Thursday backed a bill that would require the Obama administration to report weekly on how many Americans have signed up for health care coverage as Republicans maintain an election-year spotlight on the troubled law.”

11.) KHN provides the latest updates on the state exchanges, including that “The Republican National Committee has filed a public records request with the Oregon health insurance exchange seeking information about the marketplace’s troubled rollout and about compensation for its executives. It plans other requests in Hawaii, Minnesota and Maryland.” Other pieces include “Glitch Hits FL Blue Enrollees,” and “80 Percent Of Connecticare Customers Paid; The Rest Get An Extension.”

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One thought on “What we learned about Obamacare today: Jan 17, 2013

  1. I visited and navigated the Obamacare website with no intention of buying since I get coverage through my employer. I almost never click on internet banner ads. So don’t count me, and the millions I may represent, as shunning the product after shopping.

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