The flood of news stories over the past two days about the problems with Obamacare’s exchanges, and the companion opinion pieces – some even from the left – calling for the administration to delay the individual mandate and fix the exchanges all seem to indicate a trend that I expect to accelerate rapidly over the coming month. Yuval Levin outlines the issues:
If the problems now plaguing the system are not resolved by mid-November and the flow of enrollments at that point looks like it does now, the prospects for the first year of the exchanges will be in very grave jeopardy. Some large advertising and outreach campaigns are also geared to that crucial six-week period around Thanksgiving and Christmas, so if the sites are not functional, all of that might not happen—or else might be wasted. If that’s what the late fall looks like, the administration might need to consider what one of the people I spoke with described as “unthinkable options” regarding the first year of the exchanges… The tone of the CMS officials who spoke with me was a kind of restrained panic. Among the insurance company officials (who, I should stress again, work in the Washington offices of some large insurers, and so are basically policy people and lobbyists), there was much less restraint. The insurers are very, very worried about the viability of the exchange system—especially but not exclusively at the federal level.
Sarah Kliff echoes this today at the Washington Post. Most on the left would prefer an extended open enrollment period, or some kind of exemption application, as opposed to a real unilateral delay:
In a situation where the open enrollment period was extended, perhaps through the summer, there could still be an individual mandate fee that would nudge consumers to enroll a bit earlier. This situation still wouldn't be as ideal to insurers: Each month that open enrollment continues is another one where shoppers can employ the buy-en-route-to-the-ER strategy.
One other option on the table would be using the individual mandate exemption process to give people a way out from the fine. Right now, there are a number of ways to get an out from the individual mandate. If you belong to a religious group that objects to health insurance or live abroad, for example, you're not required to pay the fine. An exemption also exists for those who cannot purchase affordable insurance coverage through the marketplace. That's defined as a plan that costs less than 9.5 percent of an individual's income. What if a shopper can't find that plan, because the Web site wouldn't work? There's some thinking that they might be able to apply for an exemption from the penalty because of those hurdles.
Phil Klein has more on how this could play out. From talking to people within the IT space, it really seems that the problems are more fundamental than anyone thought at first: the latest round of glitches involve flawed data, duplicate enrollments, spouses categorized as children, and more. Front end problems and load-related issues are one thing, but the data is the exchange, really – if it’s not right, they don’t work. And fixing it may require taking the whole enterprise down for an extended period, perhaps months.
Keeping in mind that the pressure for delay will be intense from the states where exchanges are not functioning a month or more from now – which would likely include every state in the federal exchange – and that insurers will insist that they can’t delay the mandate without also delaying the goodies (pre-existing, community rating, etc.), there are a couple of things that I think could come next. Here are, broadly speaking, five different scenarios:
1. The White House could call for/implement via executive order or some other unilateral step a real delay of the individual mandate, just owning the problem or framing it as “we won’t enforce the penalty for 2014” (likely bringing on a lawsuit from insurers, unless you find a way to make them whole).
2. The White House could call for an expansion of the open enrollment period (but that wouldn’t solve the problem of a ton of people getting dinged with penalties after the Feb 15th date we – and the admin! – apparently just learned about; it doesn’t really matter that they’re pro-rated, you’d have millions getting hit by it).
3. With the White House’s blessing, Harry Reid could advance a “carveout” measure of some kind – exempting certain states from having to abide by the mandate – i.e., if your system can’t enroll most people, we won’t ding you (obvious problem: huge legal issues, hard to see how you could advance this through the Congress, though it would exempt mostly red states). One alternate way to do this would be to increase Medicaid eligibility temporarily, to cover anyone not able to get insurance for a calendar year. But states with strained Medicaid programs would push back hard against that.
4. With the White House’s blessing, a Gang of Insert Number Here with some vulnerable/moderate Dems (Manchin, Landrieu, Pryor, Begich, Heitkamp, Warner… maybe Baucus?) could press for a package of “fix the exchanges” legislation, which could conceivably offer Republicans a chance to pass delay while appropriating more funding for the exchanges – something like: delay the mandate, delay some of the goodies, and take the exchanges offline and give them more money to fix them.
5. POTUS, convinced that he’s in a powerful position in the wake of the shutdown, could refuse any and all delays and privately threaten any Democrats who consider proposing them. Obamacare is the law of the land.
Which of these are we likeliest to see? I expect options 1 and 5.