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Obamacare’s Mugged by Reality Moment

Nov 4, 2013, Vol. 19, No. 08 • By JAMES C. CAPRETTA
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As  metaphors go, “train wreck” turned out to be pretty apt. That’s how retiring Democratic senator Max Baucus described his expectations for the implementation of Obamacare at a hearing last April. If anything, he could be accused of soft pedaling the fiasco that has been on full display since the beginning of October.


Jason Seiler

The main entry point into Obamacare for citizens in 36 states is, an online portal through which consumers are supposed to enter personal information and then shop for health insurance. But is so poorly constructed that it is essentially useless as an enrollment system. This is a website the Obama administration had three years to build. It is absolutely essential to making Obamacare work, if it is going to work at all, because the program relies on broad enrollment, especially among young and healthy Americans, to keep premiums low for everyone else. Administration officials note that applicants can apply by phone and submit paper applications to get the process started, but that approach takes weeks to complete and eventually the information must still go through the same automated systems. Without a functioning, Obamacare will never get off the ground.

The 14 states that chose to construct their own exchanges have been modestly more competent at building the front-end user interface than the federal government. But even these states must rely on federal systems to determine eligibility for subsidies financed by federal taxpayers. And those “back-end” federal systems are as badly mangled as the entry point for consumers into the federal portal.

The result is that Obamacare’s launch has been far worse than a dud. For the moment, the program is at a standstill.

The administration is trying to convey momentum by pointing to unverifiable estimates of nearly 500,000 “applicants.” But these numbers are meaningless. One of the main problems with is that it requires any curious consumer to submit an “application” and establish an account before looking at the insurance options, including the premium amounts and cost-sharing requirements. How many of the 500,000 supposed applicants are people who have other insurance today but want to see what Obamacare has to offer? And how many of these applications are for people who will decline to enroll once they see the high premiums they must pay, or are households with incomes that will put them into Medicaid instead of the federally facilitated or state-run insurance exchanges?

A clearer picture of what is happening emerges from data provided by the participating insurers. After all, if someone actually enrolls in a health insurance plan, and by so doing agrees to pay a monthly premium for the coverage, the insurer selling the product surely knows this and has the consumer’s relevant information. From numerous media reports, it is clear that insurers have so far received only a trickle of enrollees—maybe in the thousands, but far, far less than 500,000. The applications that have been received by insurers have made it through the entire process only because low volume has allowed the transactions to be completed through direct contact with the customers. The automated systems have been utterly unreliable and therefore are not trusted by the insurers.

There is no prospect that these enrollment systems will be fixed anytime soon. The surest sign of that came with the administration’s announcement that it has recruited the IT industry’s “best and brightest” to help repair the problems. The thought that outside, unpaid advisers could parachute into a multiyear IT project and untangle the mess in a matter of weeks could only come from people unfamiliar with the actual operational realities of the federal government. The truth is that fixing the problems will almost certainly require another massive investment in software programming, and probably with the same contractors who wrote the first batch of bad code. Switching now to a whole new team of players would only delay any possible fix by months.

It remains possible that the administration could pull these systems together into a minimally functioning whole by late November or early December. Doing so would be a near-miraculous feat, given the complexity of what’s involved. But it’s possible.

But that wouldn’t be the end of Obamacare’s woes. The other reality now emerging is that millions of Americans are going to be pushed into these exchanges against their wishes, and they aren’t going to like what they see.

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