Short-term fix on ObamaCare subsidies: Pay now, check later
posted at 10:01 am on December 4, 2013 by Ed Morrissey
If this sounds familiar, it’s probably because HHS is going to use the same strategy for insurer subsidy payments that the IRS plans to use for paying tax credits. Both strategies are born out of necessity driven by incompetent systems development, too:
President Barack Obama’s administration has found a short-term fix to pay insurance companies for plans selected on HealthCare.gov, the not-yet-complete government website used to shop for insurance required under Obama’s healthcare program.
The Centers for Medicare and Medicaid Services (CMS) has not yet finished building the part of the website that would transfer billions of dollars in subsidies for plan premiums and cost-sharing payments to insurance companies. …
The administration is planning a “workaround” for payments, said Daniel Durham, vice president for policy and regulatory affairs at America’s Health Insurance Plans.
What will the “workaround” be? Well, the insurers will tell HHS what taxpayers owe them in subsidies, and, er … HHS will cut checks with no questions asked:
Health plans will estimate how much they are owed, and submit that estimate to the government. Once the system is built, the government and insurers can reconcile the payments made with the plan data to “true up” payments, he said.
“The intent is to make sure plans get paid on time, which is a good thing,” Durham told Reuters.
It’s only a “good thing” if they get paid what they’re actually owed. That’s what insurers need to meet the demand for provider payments that will start on January 1. But don’t think that insurers will get off easy in this arrangement. First, this is almost designed to produce massive confusion on what is really owed, and may tie up future subsidy payments for months as HHS disputes the claims and holds back payments, confusion and counter-claims created by the early payments and the fact that HHS can’t verify income levels independently at the moment.
But there’s another reason for the insurers to hate this. HHS just gave them less than four weeks’ notice that they will have to build their own infrastructure to deal with HHS’ failure to build the back end on time:
The fix puts an additional “burden” on insurance companies, already taxed by having to double-check faulty enrollment data from the HealthCare.gov system.
Now, companies need to quickly put together financial management systems to make the payment estimates, so they can be paid beginning in January, he said.
In other words, this is incompetence on an expanding scale — and everyone’s paying for it except the incompetents. So far, anyway.
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