Last week a lot of information was revealed about Obamacare and it's not good.

One Wednesday, December 11, the House Energy and Commerce Subcommittee on Health held a hearing entitled,” PPACA Implementation Failures: What’s Next?”  The sole witness was the Department of Health and Human Services (HHS) Secretary Kathleen Sebelius.  Her testimony can be found here.  Accompanying her testimony was a report issued by the Office of the Assistant Secretary for Planning and Evaluation, “Health Insurance Marketplace: December Enrollment Report.”  It provides data on national and state-level enrollment information for the Health Insurance Marketplace, also called a health insurance “exchange.”

While lots of facts and figures were released, the most important one was missing: How many people have contracted with and paid for a healthcare plan.  One needs to parse the information that HHS provides when it comes to their data “highlights” on Obamacare for the period between October 1 and November 30.  Figures such as there were 3.9 million visitors to the state-based or federal healthcare websites or 5.2 million calls were made into the call centers don’t mean very much when it comes to obtaining insurance coverage.

The statistic that is being touted by the administration and Obamacare supporters is “365,000 have selected a plan through a state-based or federal marketplace."  But that is akin to a customer going to Amazon.com, selecting three books and placing them in the shopping cart.  Unless the books are purchased, the number three doesn’t mean much.

During the hearing, Chairman Joe Pitts of the Energy and Commerce Health Subcommittee asked Secretary Sebelius how many of the approximate 365,000 people that have selected  a plan would have health insurance coverage in effect on January 1, 2014.  Her reply was once they have paid their premium, they will have coverage.  When pressed, she would not give the number of people who have purchased a plan.  She later clarified that her term “enrolled” really means “chosen.”  You can view that discussion here:

Due to the botched October 1 Healthcare.gov roll-out, the administration extended the deadline for enrollment from December 15 to December 23 in order give people more time to be covered by a healthcare plan on January 1.  The date change and the Secretary’s evasive response to Chairman Pitt’s question regarding paid enrollment numbers certainly prompted the chairman of the full committee, Fred Upton, to ask a follow-up question.  He asked for HHS to provide paid enrollment numbers to the committee between Christmas and New Year ’s Day.  The secretary responded that because the deadline to pay January’s premium had been extended to the end of December, the department would not have the numbers during the Christmas break.  She did add the department would provide the numbers as soon as they are available.  You can view the discussion here.

But within hours of the secretary returning to her office, the Department of HHS announced that the final enrollment day had been further delayed, from December 23 to December 31.  It also issued an interim final rule forcing insurance companies to “accept payment through December 31 for coverage that will begin January 1,” and urged “issuers to give consumers additional time to pay their first month’s premium and still have coverage beginning Jan. 1, 2014.”

Not only that, the rule, among other requirements, strongly encourages “insurers to treat out-of-network providers as in-network to ensure continuity of care for acute episodes or if the provider was listed in their plan’s provider directory as of the date of an enrollee’s enrollment” as well as “strongly encouraging insurers to refill prescriptions covered under previous plans during January.”

The Wall Street Journal puts it this way in their December 13 editorial:

The White House seems to understand that hundreds of thousands of patients may soon discover that they face gaps in coverage through no fault of their own, but because their old plan was canceled and the exchanges malfunctioned. Some will have life-threatening illnesses, or be diagnosed as such, and require certain advanced or continuous treatments that they will not be able to obtain.  ObamaCare will be blamed and rightly so, which is why the White House wants to transfer political accountability to the insurers.

HHS says the new rules are only suggestions to ensure "a more seamless transition," but there's nothing voluntary here. The regulatory fine print reveals that HHS intends to kick insurers off the exchanges if they don't obey.  Having destroyed the old individual market, HHS will only certify the new "qualified health plans" if insurers "adopt policies to prevent disruptions in treatment of episodes of care."

This means that HHS is also mandating that insurers treat out-of-network doctors and hospitals as in-network providers. Other ObamaCare benefit and redistribution mandates have raised prices, and the White House leaned on insurers to keep premiums down.  The only cost-control tool at their disposal was to shrink to narrow low-reimbursement networks that exclude specialists, academic medical centers and children’s hospitals, much like Medicaid.

It’s ironic these new rules should come from a government agency that bungled the roll-out of the president’s signature policy initiative, which that they had three years to prepare for, are now expecting insurance companies to turn-on-a-dime to implement the changes.  It is highly unlikely they will be able to do so.

What will make the insurance companies’ task practically impossible is the back-end of the website, the part that transfers information from the consumer to the insurance companies.  While the front end of the website, the part consumers interact with, has been improved, much of the back-end has not been built.

Here are some important excerpts from insurance guru Bob Laszewski’s December 12 blog regarding this aspect of the Healthcare.gov website:

• Health plans I have spoken to are also worried about the people who have enrolled so far paying for their coverage.  If an enrollee does not pay their first month's premium by December 31, their enrollment will be void.  So far, the health plans I have spoken to have seen only about 20% of their enrollees pay their premium
• As of this week, the 834 transaction error rates (enrollments sent from the government to the health plans) are better than they were in October and early November but are still running in the 5 percent to 10 percent range – a place they have been for a number of weeks now.
• The Obama administration has still not built the reconciliation computer system needed to clean up the remaining enrollment data issues between HealthCare.gov and the health plans.  The health plans have been told to expect an electronic file in the next few days, containing what the feds think are the health plan's enrollments through November.  The plans will then have to figure out how to reconcile the two lists and then fix the problems.  Many plans will have thousands of enrollments to reconcile. There will be another such file coming in January for the December enrollments with likely tens of thousands of more names to reconcile.  That means that any December errors will have to be fixed before people can be covered, thereby creating additional customer service issues until the files can be cleaned up.
• The feds can't pay the insurers their premium subsidy payments because a payment system has not yet been built.  The government is asking the health plans to prepare their own bill and send it to the government for a preliminary payment until this is resolved.

It's obvious there are huge problems awaiting millions of Americans in January.  Plus, based on Laszewski's information, if only 20 percent of enrollees have paid for their premium that means of the 365,000 persons “who have selected a plan” a likely guesstimate is only 73,000 will have insurance coverage on January 1.  What is becoming increasingly clear is more people may have lost insurance due to Obamacare and will struggle to get re-enrolled than those that have gained coverage for the first time.

And, with the last-minute rule change and the coming chaos in January, the Obama administration has a convenient scapegoat for their incompetence.