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Massachusetts healthcare exchange fails; state seeks more Obamacare funds

Massachusetts’ Obamacare exchange has failed, even though Massachusetts adopted an individual health-insurance mandate in 2006, and thus had a built-in advantage over other states in handling Obamacare’s requirements. The New York Times reports:

The board of the broken Massachusetts health insurance exchange voted on Thursday to support a state plan to buy new software to help people enroll in coverage, while also preparing to join the federal marketplace if the system is not ready by fall.

But insurers complained about the plan, and several members of the exchange board expressed concerns about the cost — an estimated $121 million, on top of tens of millions already spent on the broken exchange, known as the Health Connector.

As Forbes observes,

Massachusetts appears to be preparing to throw good money after bad, as it has already petitioned the federal government for an additional $121 million more in federal funding (on top of $170 million in federal funds already wasted) to pursue a dual-track strategy

As NPR notes, “The state passed its own health care law back in 2006 mandating near-universal insurance coverage,” so “Massachusetts had a head start in bringing health coverage to the uninsured.”

Yet Massachusetts threw in the towel Tuesday on the problem-plagued online marketplace that was supposed to make health insurance shopping a snap. The state concluded the Massachusetts Health Connector can’t be salvaged . . . So the state is looking at a two-track fix involving an off-the-shelf website making use of technology that worked in other states and HealthCare.gov, the federal site, as a backup. Massachusetts is the latest state that was gung-ho on health overhaul to concede that it had failed to make it simple for people to enroll online. Oregon, after botching its exchange, decided to switch to HealthCare.gov. Maryland, another eager adopter of the Affordable Care Act, is turning to Connecticut to right its failed exchange. How did these states run into such trouble?

NPR quoted Dan Mendelson, CEO of the consulting firm Avalere Health, attributing the failure partly to “failures of the federal I.T. infrastructure” and the fact that the state systems are interdependent with the federal one.

“Look, it’s hard to build a reliable I.T. platform when your partner [the federal government] is not giving and receiving data properly,” he says. Yes, some states pulled it off. California, for one, did pretty well. “They invested heavily, started earlier and had good contractors,” Mendelson says of the states that succeeded at building their own exchanges.

(Saying California did “pretty well” is true only in relative terms. As the pro-Obamacare Los Angeles Times noted, “Since Obamacare policies took effect Jan. 1, many [California] enrollees have complained that doctors won’t take their insurance even though the physicians were listed as part of their network on the state website and by their health plan.” Moreover, “California’s health insurance exchange said about 14,500 people have to redo their online applications for Obamacare coverage because of a software error.” But compared to states like Oregon, California is a success).

As Politico notes, before Obamacare, Massachusetts’ state health insurance exchange worked. “Massachusetts built the model of a state-run exchange in 2006, a result of the health care reform” law passed by a Democratic legislature and signed into law by then-Gov. Mitt Romney. “The RomneyCare exchange, which helped the state provide health coverage to more than 97 percent of residents,” was a precursor to ”the Obamacare version. Massachusetts is the second state to begin that transition. Late last month, Oregon opted to scrap its $200 million system and join the federal exchange.”

As we discussed earlier, Maryland spent $125 million on an Obamacare exchange that didn’t work and is “broken beyond repair.” Washington, D.C. has imposed a one-percent health insurance tax to pay for its costly Obamacare exchange.

Obamacare is expected to make healthcare costs soar, notes Bloomberg News. And state Obamacare exchanges have cost an awful lot more than expected per enrollee. As Forbes explains,

Obamacare appears to be in a fierce race to beat Cash for Clunkers to become the poster child for mismanagement of federal taxpayer resources:

  • In the first open enrollment period, the State of Hawaii spent nearly $25,000 in federal funds per enrollee who signed up for coverage on its Obamacare Exchange.
  • For every dollar in premiums for Exchange-provided coverage, federal taxpayers paid 94 cents in various subsidies to either enroll people or encourage them to purchase coverage on the Exchange.
  • Premiums on the Exchanges would have more than doubled in 10 states had the federal amounts used to set up the Exchanges been incorporated into premiums rather than paid separately by taxpayers.

As Avik Roy points out at Forbes,

One of the silliest talking points in defense of Obamacare’s underperformance to date is that it has been Republicans’ fault. “If only Republicans would implement the law of the land,” goes the line, “Obamacare’s enrollment figures would be much better than they are.” It turns out that the numbers tell exactly the opposite story. The states that didn’t set up their own exchanges are, on average, signing up many more people than their supposedly pro-Obamacare counterparts.

The exchanges also aren’t doing much for the previously uninsured: Only 14 percent of the people signing up on them were previously uninsured. On the other hand, people keep getting their insurance canceled. A 56-year-old Arkansas resident notes that “Obamacare canceled my health plan, and increased my premiums by 50 percent, but at least I’ll have maternity care” due the healthcare law’s mandate that anyone regardless of age or gender have maternity care coverage. And although she doesn’t drink or do drugs, “Obamacare forces me to pay for substance abuse treatment.”

Obamacare contains large marriage penalties and work disincentives. Those work disincentives will add $200 billion to its cost, driving up budget deficits. Obamacare has reduced hiring and replaced full-time workers with part-timers, triggering opposition from once-supportive unions. It has also caused layoffs in medical device manufacturing. Two physicians wrote in The Wall Street Journal that Obamacare will be “bad for your health,” because it has harmed “investment in medical devices” and will have “devastating” effects on medical innovation, a conclusion echoed by Harvard Medical School’s dean.