According to the Affordable Care Act (ACA), the state exchanges should be ready on October 1 to begin enrolling people in the exchanges and processing requests for subsides and tax bigstock-Waiting-In-Line-34279943credits to purchase health insurance.  But doubts have been raised about this happening as originally envisioned.   One state, Oregon, has already announced its exchange will not be fully functional on October 1.  Others directly involved in exchange development have voiced concerns over missed deadlines.  Both the General Accounting Office and the Health and Human Services Inspector General have questioned the readiness of the central data hub. Even Covered California, the exchange deemed most likely to succeed, went through a rough patch.  If California, the state that began development soon after passage of the ACA and received the largest federal grants could be having a tough time, one can only imagine what’s going on in states that just started development this year.   Some say delays in online enrollment for health insurance and applications for financial assistance don’t really matter since coverage won’t begin until January 1, 2014.  But it does matter.  If exchange delays or malfunctions significantly reduce the number of uninsured people able to purchase health insurance there will be serious consequences.

The health insurance exchanges form the backbone of the healthcare reform bill.  They are the instruments that make possible the promise made by the creators of the ACA: that health care be accessible for everyone.  Through the exchanges, people who aren’t insured through an employer or by the government can purchase health insurance; and it’s through them that these people can apply for financial assistance to lower the cost of their insurance.  The exchanges were envisioned as an easy-to-use, efficient, and accessible way to purchase health insurance comparable to how well Travelocity and Amazon and serve as internet marketplaces for goods and services.  Verification of the enrollees’ qualifications to use the exchange and to receive financial assistance would be done through automated systems and government data records.  If 21 million people across the country need to purchase health insurance, there could be no better way to do it.

But the  ACA calls for a lot of information to be collected.  Even given an online computerized exchange system, the process will take some time.  Details about each family member’s age, sex. citizenship, years of residency, sources of current income, estimation of next year’s income, places of employment,  and health issues along with the names, addresses, and social security numbers must be recorded.  Although this year states are not required to be rigorous in verifying the information given, some forms of proof will be required as well.  For a small family of 3 this is 7 pages of information with each additional family member requiring another page of information.

Once through the gauntlet of information gathering and verification,  choosing the best insurance plan will be the next hurdle for enrollees.  The health insurance plans offered differ in how much their monthly premiums cost and how much of the medical costs the plan will cover.  The plans with the highest premiums will cover 90%  of medical expenses while the cheapest will cover just 60%.  Deciding which of the plans is best depends on income and the medical needs of the individual or family.   Working through all this will take time…. a lot of time.

Without a computerized online system like an exchange, all this information has to be entered and processed on paper and later laboriously re-entered into a data file all by hand.  People and organizations must be found and trained to shepherd people through the process.   The states always planned to have some people available to process applications when the use of an internet exchange system was not feasible but without any automated exchange system, states will be under pressure to hire and train many more of these enrollment helpers.  Phone banks must be set up and locations identified where people can call and go for help in enrolling.

And here is where the problem lies.  In order to keep costs down, as many uninsured people as possible must be enrolled in health insurance plans.  Because insurance companies must accept everyone regardless of their physical condition, it is imperative that young healthy people be persuaded to purchase health insurance as well in order to cover the costs of the sickest. In fact, the Obama Administration estimates that of the 7 million uninsured estimated to purchase insurance for 2014 through the exchanges, about 2.7 million 18-30 year-olds will need to join if the health care program is to work. But the process could take hours.   This means people lined up, waiting their turn.  It means being put on telephone holds.  Bottom line:  The people most willing to go through this much trouble are the ones needing health care the most.  Healthy people, especially the young, will take their chances and go without health insurance.   This will not only reflect badly on the health care reform bill but greatly increase the cost of insurance.  In the insurance business, this is called a death spiral.   To prevent this, the designers of the law mandated that everyone have health insurance;  but the penalty for not having insurance will never come close to what it would cost to purchase it.  Last summer’s Supreme Court decision, affirmed the mandate but by calling it a tax, limited legislation that would raise the penalty enough to force people to buy insurance.  The ACA is in trouble unless those exchanges are up and running and easy to use.