The odds that healthcare.gov will be working well by late November seem shakier by the day. A new story in the Washington Post quotes “an official with knowledge of the project” who said the system was still struggling with high volumes of customers. It’s just one source and, obviously, the definition of “working well” is a subjective matter. The system already performs better than it did a few weeks ago, with more fixes on the way. But given what’s happened so far—and the obvious technical challenges remaining—it would be foolish not to take the Post's reporting seriously. There's a very real chance healthcare.gov will not be sufficiently functional in time to process applications from the millions of people whose insurance lapses at the end of the year.
Are there contingency plans under discussion? Yes. They have been for some time, although every option comes with its own set of complications. For starters, the marketplaces could rely more heavily on alternative methods of enrollment, particularly “direct enrollment” from insurers and through online brokers like ehealthinsurance.com. From the get-go, Obama Administration officials assumed that at least some people would get insurance this way. And they designed healthcare.gov with that possibility in mind. It is supposed to have a special portal—in effect, a side door into the federal online system for people buying insurance directly from insurer websites. As I understand it, the idea is that you’d apply for insurance at a company website or broker, you’d get sent over to healthcare.gov to figure out whatever financial assistance was available to you, and then you would take that determination back to the insurer or online broker—where you’d be able to enroll and buy a policy, potentially at a discounted price.
The process would obviously be even more straightforward for people who knew they weren’t eligible for federal programs or assistance. They could apply online, through company websites and online brokers, as they do now. The only difference would be time: The new process would be much quicker, since they’d no longer have to go through the process of submitting a medical history and waiting to hear if the company will cover them.
But if Obamacare advocates and architects always planned for this option, they never wanted to rely on it too heavily. Among other things, they worried it would slow progress on another goal: Creating a more competitive marketplace. For that competition to take place, people have to compare benefits and prices. People are more likely to do that if they have all the information in one place, in a format that allows for easy and useful comparisons. The danger with direct enrollment through insurers is that applicants will check out one company’s options and never realize other companies might have better alternatives. That’s obviously not such a problem with the online brokers, but officials had separate worries about relying too heavily on those sites. For example, could they be counted upon to make sure consumers understood what they were buying?
At this point, however, transforming the existing, opqaue market into a more competitive, transparent one must come second to making sure everybody can get coverage on time. That’s why administration officials have been huddling with insurers about how to make more use of direct enrollment. Step one is to make sure that “side door” enrollment works smoothly. It doesn’t fucntion well right now, because—you guessed it—it relies on the same information technology system that powers healthcare.gov. Fixing that portal, which techies tell me is called an "application programming interface," is high on the administration's to-do list. But it's not clear (to me) whether improving the portal might require design modifications—or to what extent its success depends upon other, ongoing repairs to the federal website.
Another option—one that's come up in reporting by the the Post and the New York Times—is to devise some kind of provisional subsidy determination that insurers and brokers could use to calculate prices. But that option also has its drawbacks. A major challenge for the federal website—and some of the state websites, too—has been accounting for complex family situations. In a house with people who have different immigration status, or extended families living together, or people with unsteady incomes, figuring out subsidy eligibility is difficult. And it's not just subsidies. The systems must also figure out who is eligible for other federal programs, like Medicaid and the Veterans Administration health system. Medicaid eligiblity rules vary by state and can be incredibly convoluted.
Any system for making provisional calculations is likely to make some mistakes. Insurers don’t want to be financially liable for those errors, but neither does the administration. It’s not a big deal if the error rate is relatively low, but that's a substantial "if." In fact, people working on implementation seem pretty skeptical that provisional calculations can work, although it’s difficult to know how much they are posturing for what may become a negotiation over dollars.
Direct enrollment isn't the only alterantive for getting people insurance. The Administration is already encouraging more people to use call centers and paper applications. This isn't a panacea: These methods also depend on healthcare.gov, since the personnel entering information from paper applications or calls use the same system that consumers do. But those personnel can theoretically make better use of time, by batching applications, waiting for results, and easing peak loads on the servers. Many of the remaining possibilities—like stretching the open enrollment period—would involve changes either in regulations or legislation. These possibilities all carry risks, particularly for the insurance companies. Then again, those risks might be preferable to the alternatives. That's a separate discussion, for another time.
You can see why, for everybody, the preferred option is still the original plan: To have most people sign up through healthcare.gov. It may yet happen. But if it truly takes a "Hanukkah-time miracle," as Jonathan Chait calls it, the site's peformance in late November and early December may not be good enough—and it will be time for the "break-the-glass" plans, none of which are ideal.