Brace Yourself for Obamacare Sticker Shock

You can count on Obamacare costing more than estimated.

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‘Even with the issues we've had, the lights are still on." These could have been the words of the chief purser on the Titanic, who had to put on a brave face in order to keep up the passengers' spirits after his captain's issues with the iceberg. He wouldn't have been lying. The lights stayed on for a time. Health and Human Services Secretary Kathleen Sebelius is also putting on a brave face when she tells millions of Americans who are anxious about health insurance that the lights are still on: "Even with the issues we've had, the marketplace is working, and people are enrolling."

The trouble with her reassurance is that the number of people enrolled in the first month – 106,185 through both federal and state exchanges, of which 26,794 came through HealthCare.gov – are about 80 percent less than what the administration predicted. This represents a risk that the scheme will prove unviable. The only good news for President Obama's dedication to health care reform is that the eligible applications, running at roughly a million, is a fair measure of the nation's dysfunctional system. Millions of people have been unable to secure reasonable coverage at a price they can afford.

The introduction of the website, unveiled with maximum promotion, was a disaster, despite three years of preparatory time after the passage of the Affordable Care Act (ACA). The site was frequently unusable: Systems crashed, screens froze, the data center collapsed, insurance companies were sent confusing applications, and garbled documents were sent to insurers. In turn, insurers began to fear that the exchanges would not be ready and many of the biggest companies decided not to sell plans at all. Meanwhile, no one in the White House seemed to realize what was going on. Not to mention that about half of the states declined to set up exchanges or cooperate with the federal government in running them. No wonder confusion was widespread. The sheer complexity of launching the largest new entitlement of the past five decades means we won't know for years whether or not this program will have any measure of success, not when people are obliged to buy something that proved nearly impossible to purchase. This puts the whole system at risk.

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Meanwhile, doctors have been unwilling to sign up to participate in Obamacare. In a poll conducted by the New York State Medical Society, 44 percent of the M.D.'s surveyed said they are not participating; another third said they are not sure they want to. Three out of four physicians who have signed on said they "had to" because of contractual obligations with an insurer or medical provider.

Now millions of people are receiving a letter telling them that their existing policy is going to end and will be replaced by a new policy, as required by the law. Women in particular can expect their premiums to soar by over 50 percent, according to the Manhattan Institute for Policy Research, and some employers are dropping coverage for low- and middle-wage workers.

There are other issues facing the plan. According to Jon Kingsdale, a strategic planner with both academic experience (teaching public health policy at Harvard) and industry experience (running a respected insurance exchange) there is much more to worry about than the faulty website. Kingsdale, a director of the Wakely Consulting Group in Boston, is a pragmatist who oversaw the Massachusetts health insurance exchange from 2006 to 2010 and is a supporter of the ACA. His recent analysis in The Washington Post is an urgent summons for all-hands-on-deck to deal with a huge, looming administrative challenge: to wit, how to track, bill and collect premiums when 13 million of the 17 million uninsured qualify for subsidies.

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Imagine the uproar, Kingsdale says, when maybe hundreds of thousands of these new enrollees need to see a doctor and discover they are not covered, for they can't be until the right premium has actually been accepted. There's a huge scope for error working out the sums due, as the federal exchanges offer hundreds of prices across thousands of plans. Not to mention the delays, because most of today's 15 million-plus direct enrollees pay by check and an estimated 27 percent of candidates for tax credits don't have checking accounts and pay with cash, money orders or prepaid debit cards. Moreover, having enrollees pay partial premiums while the IRS issues tax credits for the rest means twice as much billing, risking "a mounting backlog that could eventually compromise the fiscal integrity of the exchange." Furthermore, he says, there is a risk of fraud, as it has been problematic verifying consumer identities online and some unlicensed "navigators" haven't been thoroughly vetted. "And consumer protections for low-income enrollees who miss payments require complex notifications over 90 days before an insurer can end coverage," adds Kingsdale.