Health-care reporters have been zeroed in lately on the 834 error rate, i.e. the rate of garbled or phantom enrollment data transmitted from Healthcare.gov to insurance companies as people sign up. WaPo claimed the other day that the rate is as high as one-third, but HHS, knowing a looming PR catastrophe when it sees one, has refused to give reporters a hard number. The media’s focus on that is all to the good — the higher the 834 error rate, the more chaos there’ll be next month in sorting out the big surge of applications in December — but there’s another key rate that’s being overlooked. Namely, what’s the rate of people who somehow, miraculously, have completed the sign-up process on Healthcare.gov but then failed to send a payment to their new insurer for their first month of premiums? I haven’t seen a single estimate of that yet even though it’s a crucial metric: If you don’t pay by New Year’s Eve, you’re not enrolled, even if you successfully signed up on the website. If there’s a huge nonpayment rate among new sign-ups, there’ll be a huge number of people who show up to see the doctor next month only to find, to their great confusion and annoyance, that they have no coverage because they haven’t paid yet.
That brings me to this new piece from CNN Money, from which I learned two important things. One: If you sign up but fail to pay by December 31st, it’s not a simple matter of your coverage being suspended until you pony up. Your enrollment is void and you have to re-enroll on the website in January. Imagine how well Healthcare.gov is likely to cope if, next month, there are suddenly hundreds of thousands of people flooding into the site trying to sign up again because they forgot to pay on time before. And two: At least one insurer out there is keeping tabs on its nonpayment rate and sharing that number with the media. And the results are … not good:
While the Obama administration has reported that more than 100,000 Americans picked plans in October, the first month of open enrollment, it’s not known how many of them have paid.
One insurer, Physicians Health Plan of Northern Indiana, has received payments from only about 20% of applicants, nearly all using the firm’s online portal, said Jim Brunnemer, the chief financial officer. It is sending invoices and email reminders to those who haven’t yet sealed the deal. If payment isn’t made by New Year’s Eve, PHP has been told by federal officials that it must void the application.
Another complication is that insurers also don’t have a lot of time to process applications and send out ID cards. The timeline, particularly over the holiday week, will prove “challenging” for some companies, one industry executive said.
Yesterday I guesstimated, based on the most recent enrollment numbers, that something like 1.5 million people will sign up by December 23rd. Not every insurer will have a payment rate as poor as the one in Indiana cited above, but even if you triple it and assume 60 percent are paying on time, that’s still 600,000 people — roughly the population of Washington D.C. — that went to the trouble of signing up and then, for various and unknown reasons, didn’t complete enrollment by tendering payment. Maybe that’s because they’re short on cash right now, maybe they meant to pay and simply forgot, or maybe they didn’t read the fine print and thought they wouldn’t be expected to pay until January. My guess is that most of them fall into the last group. Which means all hell’s going to break loose next month.
…unless the White House comes up with another “workaround.” They’ve already proved that they’re willing to overpay insurers temporarily in the interest of kickstarting enrollment; why wouldn’t they also offer to cover the first month of premiums for new enrollees who forgot to pay so that the missing revenue is available to insurers? Enrollees could pay the feds back later, maybe by having the value of those premiums withheld from their tax refunds in April if need be. (That’s how the mandate penalty will be collected, after all.) Given how lawless O has been in suspending the employer mandate and un-canceling plans, and given his willingness to perform frantic triage on the law politically by extending deadlines regardless of the policy consequences, it’s hard to believe he’d allow the nonpayment problem to wreak havoc next month. That’s the last thing Democrats need once they’ve finally made it past December 23rd and caught their breath over the holidays. Obama’s going to do something to “solve” this problem too. With your money, of course.
Back to the 834 problem, though. To prepare for today’s daily media conference call with HHS, watch Bob Laszewski’s interview with Megyn Kelly from last night. The key bit is the end of the clip when Laszewski insists, contra the White House’s claims that they improved the back end of Healthcare.gov as part of the big site upgrade before the November 30th repair deadline, that the 834 error rate was just as high on Monday of this week as it’s been in the past. If he’s right and that doesn’t change soon, insurers will have an unholy mess on their hands next month in sorting out hundreds of thousands of indecipherable enrollments. But look on the bright side: Even a low rate of accurate data is better than zero — which is what it is right now for Medicaid enrollments transmitted from Healthcare.gov to the states. Stay tuned. Exit quotation: “The third aide, who works for a [Democratic] senator up for reelection in 2014, said the White House had ‘s–t the bed.'”