Healthcare.gov may be working better and somewhat faster for consumers attempting to enroll in plans, but a new wrinkle has emerged: there is no payment mechanism for insurers to get cash from the federal government subsidies.
The Centers for Medicare and Medicaid Services (CMS) confirmed the problem Tuesday night. The mechanism would enable the government to pay billions of dollars to insurance companies for subsidized and cost-shared plans has yet to be built—and experts say consumers may get squeezed in the meantime.
Healthcare.gov has been plagued with error messages and glitches since its Oct. 1 debut that have prevented consumers from signing up for insurance. The White House set a November 30 deadline to fix the problems. Now, CMS claims the site can now handle 50,000 visitors at a time, and up to 800,000 consumers a day.
There have also been issues with insurance companies receiving 834 forms, which detail a customer’s eligibility for a subsidy.
It is standard practice in the insurance industry to consider a person “enrolled” when they make their premium payment—which is why this latest ‘fix’ is so crucial.
Julia Bataille, CMS spokeswoman, told reporters Tuesday the government would make these payments to insurers for tax credits and cost-sharing on time.
"We are committed to making sure they get paid in January and we will continue to work with them on that process," Bataille said.
While it is a good sign that the administration is pushing to have insurance companies paid in a timely matter, it may not be realistic, says Yevgeniy Feyman, Manhattan Institute Scholar.
“For big insurers, it will be easier to set up a ‘workaround’ financial management system to calculate what the government owes,” he says. “For co-op insurance companies, which are smaller, and many times nonprofits, they may not have all of the resources to do these calculations on their own with less than a month to go .”
Individuals have less than three weeks to enroll in a plan by Dec. 23 if they want to have their coverage start by Jan. 1. So while consumers may be holding up their end of the deal in paying their premiums, this fix hinges on the government holding up its end of the bargain and covering for the subsidies. If the government fails to pay the insurance companies premium tax credits by Feb. 1, Feyman says coverage may be adversely impacted.
“If you have insurance with Aetna (AET), they can’t withhold benefits for non-payment for more than three months,” he says. “If they aren’t getting their premium payments, they technically have three months before they can kick you off.”
Under the Affordable Care Act, every individual in the country must have insurance by the end of open enrollment period, beginning on April 1, 2014. After that point, if a person fails to have coverage for up to three consecutive months, he or she may be fined up to $95 a year, or 1% of their annual income, whichever is higher.
There are two ways to consider “non-payment” Feyman says, and consumers might not always be to blame. It depends on whether insurance companies are considering non-payment on the governmental side the same thing as they view non-payment from a consumer, were the plan not subsidized.
In the interim, consumers will have to hope that if they pay their portion of the subsidy, that they would still be covered—even if the governmental hasn’t paid their share.
The real sticking point here is cost-sharing, says Larry Kocot, Brookings Institution visiting fellow, in which consumers have portions of their medical bills subsidized.
“If cost-sharing is prepaid and the estimate is wrong, let’s say the insurance company miscalculated the amount they are owed in subsidies, that is where it gets more complicated,” Kocot says. “This is difficult, because there are more entities involved than just the beneficiaries and providers,” he says, referring to the government and the physicians who would be entangled in the billing process.
He adds that it is in everyone’s best interest to move in a timely fashion to resolve the payment issue. “There is the potential for the consumer to get squeezed in the middle if either party isn’t holding up their end of the bargain.”
In the meantime, if an individual’s coverage is withheld, they can pay out of pocket at minute clinics and the like to get care.
“They can visit clinics in urban areas and pay a few hundred dollars for vaccinations and check-ups if they desperately needed them, and it wouldn’t be breaking the bank,” he says. “But if you are in a rural area, and your coverage is withheld, you are pretty much screwed.”