is worse than you think

Yuval Levin’s heavily reported piece on the state of the Obamacare exchanges must be read in its entirety. They are, he reports, an utter disaster. Government officials are in “a kind of restrained panic”, while among insurance industry people “there was much less restraint”. No one believes that the system can be fixed in time, and the need for some sort of delay is taken as granted.

One serious problem that has not been widely circulated is the fact that it is not impossible to use the system, just extremely difficult. This makes for a severe problem with adverse selection. It means that those who do use the system will be those who are most motivated; that is, the most expensive people. On the contrary, the purpose of the exchanges was to get a lot of cheap people into the system, so that they would subsidize the sick and infirm. If only the sick and infirm are getting it, it could bring health insurers down.

Another problem is that the back-end of the system — which reports data to health insurers — doesn’t work either. (More on that here.) This has been largely masked by the fact that hardly anyone has been able to use the system anyway, but if they manage to fix the front-end, this will be a severe problem. Levin reports that it doesn’t seem easy to fix:

CMS officials and the large insurers thought at first that the garbled data being automatically sent to insurers must be a function of some very simple problems of format incompatibility between the government and insurer systems, but that now seems not to be the case, and the problem appears to be deeper and harder to resolve. It is a very high priority problem, because the system will not be able to function if the insurers cannot have some confidence about the data they receive. At this point, insurers are trying to work through the data manually, because the volume of enrollments is very, very low.

Levin also reports that while some of the state exchanges work on the front-end, they all have problems on the back-end.

POSTSCRIPT: Megan McArdle adds a few more ways in which is worse than you think. One of them is this: The White House says you can always register by phone if the web site isn’t working, and there’s a prominent “apply by phone” button on the web page now, but you can’t really. The people at the call center use the same computer system as the web site. And that’s if you actually get to talk to a human; most people get referred back to the web site.

POST-POSTSCRIPT: The actual Obamacare phone number is 1-800-F1UCK-YO. Well, at least they made it easy to remember.

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