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ObamaCare Clusterfuck: Will the exchanges be able to prevent the insurance companies from gaming actuarial value?

I'm guessing no. This review of the Missouri exchange explains why. Test-Driving The Obamacare Software:

Connecture [which built MO's exchange] isn't handling the software that qualifies you to buy under the health act or verifies your eligibility for subsidies. Other companies are taking care of those. Connecture's piece is the point-of-sale program, the one that steers you through insurance choices and closes the deal.

That is, the front end.

Proponents of the health law liken the sign-up software to Expedia or Travelocity, where travelers can book flights and hotels.

Except that airline tickets are an apples-to-apples comparison, whereas insurance policies aren't based on known quantities like a seat, food (for some definition of food), and flight from point A to point B (primarily driven by cost of fuel (and/or collusion)), but are instead based on "actuarial value," which is complex, game-able, and varies wildly by vendor, as Kaiser has shown. That's why the Expedia/Travelocity comparison really amount to disinformation, and you shouldn't take anybody seriously who uses it.

It may be more like TurboTax, escorting you through requirements and choices much more complex than whether you want a flight in the afternoon or the morning.

R-i-i-i-i-g-h-t. So -- assuming the exhanges enable applies to apples comparisons, which they do not -- I can pay TurboxTax $39.95 to figure my plan out (probably more, since ObamaCare is a lot more complex than your 1040) or more likely I can go to H&R Block and pay a couple hundred smackers to deal with a human and sleep nights. (Say, no wonder H&R Block threw some cash to Enroll America!)

And now the key paragraph. And from the software developer!

"There's all sorts of wild ways that carriers can design benefits to meet the actuarial value" required by the health law, [Christopher Neuharth, Connecture's director of user experience] said. "You have to show the total cost of ownership" [by which he means the "net premium price" — after the credits are applied].

Does anybody really believe that in an arms race between the health insurance industry actuarial value devising scams, and the software industry industry implementing new "requirements and choices," the health insurance industry won't always be a step ahead?*

And how, exactly, do new "wild ways" get detected? I'd argue that will happen only after health insurance companies deny claims, and then only after citizens consumers complain, and then only after the states and/or the Federal government propose new rules, and then only after the health insurance industry gets the new rules watered down, and then only after firms like Connecture code up the new solution, test it, and deploy it: In other words, through a lengthy and entirely needless -- yet profitable -- process of human suffering.

It's just three months until the exchanges open, but the software isn't finished.

What could go wrong?

Connecture awaits tryouts by Minnesota, Maryland and the District of Columbia and more details on specific demographic groups expected to apply for coverage. It could tweak the software based on the responses, Neuharth said.

Well, like they say in the Navy: You can't buff a turd. ObamaCare doesn't need to be "tweaked." It needs to be abolished, and replaced by Medicare for all.

NOTE * Note that a constantly churning rules-making process is good for the governmental departments that write the rules, good for the software companies that revise the software, and good for the health insurance companies, too, since the constant churn creates new opportunities to game the system. Here again we have a rents-based self-licking ice cream cone.

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Submitted by marym on

If premiums or benefits of a particular actuarial-level policy are different from one state to another, or between state and national exchanges, isn’t there going to be some kind of equal protection issue? What if exactly the coverage someone thinks they need is available in another state, but not where they live, or costs more than in another state? Even without “wild” gaming, these discrepancies are going to be there.

This seems different from pre-PPACA discussions about buying insurance across state lines. Now there's the mandate, but unequal access to specific benefits at specific prices.

Rainbow Girl's picture
Submitted by Rainbow Girl on

crafting weasely products ... Thus, not sure what you mean by arm's race between these two particular actors.

I'm also not clear what "front end" means if it does not include anything substantive like helping people acquire enough information to purchase a policy that is suitable for the particular "consumer."

Also, if the subsidy eligibility is determined at the "back end" in some totally separate process, are these exchanges basically going to require you to pick a policy blindly (and commit to the premium payments, deductibles, copays, coinsurance, uncoverage) and then hope and pray that you get a subsidy? Because if the subsidy calculation doesn't figure in this "front end" process that supposedly guides "consumers" to click "buy", then that's what seems to be endemic in the design. Which would be a massive consumer fraud con that wouldn't be tolerated in any other area .... well, except credit cards (dontchya know).

Submitted by lambert on

Found this:

The proposed rule focuses in large part on program integrity with respect to qualified health plans (QHPs) offered through state-run Exchanges and federally-facilitated Exchanges (FFE). The proposed rule also addresses the resolution of certain QHP-related grievances and correction of improperly allocated premium tax credits and cost-sharing reductions .... Significant changes proposed by the rule are:

Program Integrity
State Exchanges: The proposed rule establishes oversight and financial integrity standards for state exchanges, including reporting and auditing requirements aimed at ensuring that consumers are properly given their choices of available coverage, qualified consumers correctly receive advance payments of the premium tax credit or cost-sharing reductions, and Exchanges otherwise meet the standards of the ACA.

All of the "choices" and "advance payments" are implemented in software. The choices, at least, are presented in the front end. If a "consumer" files a grievance, that triggers, after a process, a revision and redeployment of the software. What would cause a grievance? A failure on the part of the insurance company to provide coverage to expectations -- a subset of which will be scams.

FFE: The proposed rule provides details regarding oversight functions of the FFE, including records retention requirements and compliance reviews to be conducted by HHS and proposes the bases and processes for imposing civil monetary penalties in the FFE, as well as for decertifying plans from participation.

This too would be implemented in software, but because rules don't have to be translated into code it should be easier (I think).

Resolution of Grievances

The proposed rule establishes a process for resolving “cases” received by a QHP issuer operating in an FFE (i.e., grievances regarding the operation of the plan, other than advance benefit determinations). While such cases generally must be resolved within 15 days, “cases involving the need for urgent medical care” must be resolved no more than 72 hours after they are received by the QHP, unless a stricter state standard applies. A determination regarding benefit tiers or plan design may fall within HHS’ proposed definition of a “case” for these purposes, so long as it is not a claim denial, which is subject to a different process.

That's my picture for now anyhow.