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The Obama administration promised a fully operational health insurance marketplace by the end of November. More than the promise, it was necessary for the government to deliver a sustainable insurance exchange that can stand the deluge of Americans just waiting to pounce on it for enrolling before December 23, the extended deadline for signing up for insurance that kicks in on January 1, 2014.

The Good News – Week #7

Let’s start with the improvements made by the website. Since our last update , the website has considerably improved. It has now fixed major stability issues and is allowing people to get on the system, submit their applications, apply for subsidies, and exit. The newfound smoothness in the site is attracting many more people. According to the available numbers, the enrollments have increased about three times the amount from earlier weeks. Another improvement is in the processing of information, with backroom error rates going down and showing a major improvement. However, that’s all that has been done till now. From a different perspective, this is not that good.

The Bad News – Week #7

While the enrollments are definitely going up, they are nowhere close to the original target set by the administration. For instance, to meet the 7 million signup target set by the administration, a health plan would have to enroll about 100,000 people by March 31. However, even after all the improvements, the numbers for enrollments have grown from 10-15 from a few weeks back to 40-50 per day. If this pace continues, health plans would be able to signup 12,000 people by the end of March, way short of their original 100,000 target.

The background errors and dropped transaction numbers are even more abysmal. While these numbers have gone down, they are still too high for handling a large number of customers that are expected to get on the system in the first 23 days of December. The failing transactions would create a feedback loop of recurring customers, ultimately increasing the load on the system and increasing the number of background errors even further. Even from an average-based perspective, the situation does not look good.

The incoming windfall of consumer activity on the websites is another major challenge. From December 1 to 23, the officials expect almost a million will try to enroll on the system, putting massive pressure on a mildly stable system. Further, the administration is admitting that exchange platform might not be able to support that load with the administration stating that the system can support 50 thousand concurrent users.

As of now, 30 to 40 percent of the back office processes need to be revamped to meet the increased demand of the website. Some of those systems are not fully ready. For instance, the process that will handle subsidy payments to health plans is not ready. Similarly, the accounting systems, which are basic back offices systems, are still under construction. This lack of preparation will expose wide gaps in the strategy of technical officials when the marketplaces see large scale activity from December 1-23.

Another problem lies in the recent cancellation notices that have been sent to consumers whose health policies do not comply with ACA requirements. Such consumers are lining up on health exchanges for getting coverage before the penalties are pinned on them. Although the Obama administration has suggested an idea for fixing this problem by lengthening the expiry period, this move hasn’t gone well with the health payors and state regulatory authorities. In a nutshell, the payors and state agencies are ready, but the government isn’t.

Next Steps for the Administration

In this situation, the most suitable plan of action is to make the exchange work and support the millions of Americans that still need to enroll. Since it will be a large scale usage of the system, even the small percentage of transaction errors can cause a major dent into the performance of the platform. Without fixing these transaction errors, which are resulting from broken background processes, the administration cannot expect a functional website.

Therefore, the key to marketplace success would be to fix the back office processes and errors in the coming weeks. If the government is able to treat them as a top priority task and fix them in time, their performance is going to pull the overall performance of health insurance marketplaces through the gauntlet.

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