Obamacare Exchanges Are Struggling - Millions Of Americans Faced A Tax Shock

Today in Washington, D.C. - May 1, 2015:
The House convened at 9 AM today. They immediately moved to H.R. 2028 — "Making appropriations for energy and water development and related agencies for the fiscal year ending September 30, 2016, and for other purposes." The then approved 5 amendments and defeated one amendment and moved to vote on the bill. The bill passed 240 - 177.

The House adjourned at 12:01 PM and will reconvene on at 11:30 Am on Tuesday, May 5, 2015.

Yesterday the House passed:
H.R. 2029 (255-163) — "Making appropriations for military construction, the Department of Veterans Affairs, and related agencies for the fiscal year ending September 30, 2016, and for other purposes."
H.J. Res. 43 (228-192) — "Disapproving the action of the District of Columbia Council in approving the Reproductive Health Non-Discrimination Amendment Act of 2014."

The Senate is not in session today and will reconvene at 3 PM on Monday, MAy 4, 2015. At that time, it will resume consideration of the president’s veto message of S.J. Res. 8, a congressional resolution disapproving of the National Labor Relations Board’s (NLRB) new rule allowing ambush union elections. A vote on overriding that veto is expected at 5:30 on Monday.

Liberals continue to insist loudly that Obamacare has been an unqualified success, perhaps in the hope that if they say it often enough, it will become true. On Monday, Senate Democrat Leader Harry Reid declared, “ObamaCare is a smashing success.” (Part of his evidence was an opinion column by The New York Times’ Paul Krugman.)

Of course, the reality is that Democrats’ unpopular health care law continues to struggle, to complicate Americans’ relationship with their doctors and health care, to contribute to higher premiums and higher costs, and fails to live up to the promises made about it by its supporters.

According to The Washington Post, “Nearly half of the 17 insurance marketplaces set up by the states and the District [of Columbia] under President Obama’s health law are struggling financially, presenting state officials with an unexpected and serious challenge five years after the passage of the landmark Affordable Care Act.

“Many of the online exchanges are wrestling with surging costs, especially for balky technology and expensive customer-call centers — and tepid enrollment numbers. To ease the fiscal distress, officials are considering raising fees on insurers, sharing costs with other states and pressing state lawmakers for cash infusions. Some are weighing turning over part or all of their troubled marketplaces to the federal exchange, HealthCare.gov . . . .

“States have received nearly $5 billion in federal grants to establish the online marketplaces used by consumers to enroll in health plans under the ACA. The federal funding ended at the beginning of the year, and exchanges now are required to cover their operating costs. Most exchanges are independent or quasi-independent entities. For most of them, the main source of income is fees imposed on insurers, which typically are passed on to consumers. . . .

“Most exchanges have operating budgets of $28 million to $32 million. One of the biggest cost drivers is call centers, where operators answer questions and can sign people up. Enrollment can be a lengthy process — and in several states, contractors are paid by the minute. An even bigger cost involves IT work to correct defective software that might, for example, make mistakes in calculating subsidies. . . . ‘A lot of people are going to want to know: What happened to all those taxpayer dollars that went to these IT vendors?’ said Sabrina Corlette, project director of Georgetown University’s Center for Health Insurance Reforms. . . .

“In Minnesota and Vermont, officials are so fed up with costly technical problems in their exchanges that they are considering handing over some or all of their functions to the state or federal governments. Lawmakers in Oregon abolished the state exchange in March, long after it was essentially turned into a gateway to HealthCare.gov. In Rhode Island, the legislature is considering a fee on health plans that would go up or down based on the exchange’s operating costs. In Hawaii, which has one of the most problem-plagued marketplaces, the exchange needs $28 million to fund operations until 2022, when it is projected to become self-sustaining, officials say. Without the money, ‘it’s going to be very difficult to keep the doors open,’ said Jeff Kissel, executive director of Hawaii Health Connector. As a backup plan, officials are talking to the Obama administration about a possible federal takeover of the marketplace, said an administration official who declined to be named because of ongoing talks. . . .

“Some state lawmakers express frustration that exchange officials either don’t know whether their marketplaces will eventually be self-sufficient or are reluctant to say. ‘Basically, the exchange is teetering and the question is, “Can this be shored up?”’ said Republican Sen. Ellen Roberts, who chairs the committee with oversight of Colorado’s exchange board. The cost of running the exchange’s call center is expected to reach $21.3 million for this year, well above a previous estimate of $13.6 million. . . .

“Some critics say the states’ problems show that supporters of the law underestimated the practical difficulties of setting up the exchanges. The states are facing ‘execution problems more than political resistance problems,’ said Thomas Miller, a health-care policy expert at the American Enterprise Institute.

“In Vermont, where the system’s cost is projected to balloon to almost $200 million by the end of the year, officials are eyeing a move to the federal marketplace if things don’t improve. Officials from Vermont, Rhode Island and Connecticut met recently to explore banding together in some sort of regional effort. In Maryland, where the exchange’s technology problems were so daunting that officials turned to Connecticut for help, officials expect to have enough revenue to cover operations for the fiscal year that begins July 1. If not, the exchange would need to ask the governor for more funds. . . .

“Even if some state exchanges wind up handing the reins to HealthCare.gov, doing so is not free. Each exchange would have to be made compatible with the federal marketplace at a cost of about $10 million per exchange, Wadleigh said.”

Meanwhile, as the recent tax season it was discovered that 5.5 million Americans owed the IRS money thanks to Obamacare. The editors at Investors Business Daily wrote earlier this week, “Providing still more evidence of how ObamaCare is ‘working,’ most enrollees learned this year that they had to pay back a huge chunk of their insurance subsidies. . . . So much for ‘affordability.’ H&R Block now figures that two-thirds of ObamaCare enrollees who got subsidies had to pay at least some of it back. And the average payback was $729. So roughly 5.5 million ObamaCare enrollees had to return, on average, almost a quarter of their premium subsidies. Given that these subsidies are available only to families with modest incomes, that's got to hurt.”

H&R Block found that “[a]lmost two-thirds of tax filers who received insurance via the state or federal insurance Marketplaces had to pay back an average of $729 of the Advance Premium Tax Credit (APTC), cutting their potential refund by almost one-third, according to analysis of filing data . . . . With current Marketplace enrollment figures at 11-plus million there is potential for more taxpayers to have to repay a large portion of the APTC during next year’s tax filing season, according to Mark Ciaramitaro, vice president of H&R Block health care and tax services. ‘There was quite a bit of new ACA-related complexity for taxpayers to deal with this tax season,’ Ciaramitaro said. . . . ‘This season saw general ACA-related confusion, incorrect or delayed 1095-A information documents, and overall anxiety regarding refund impacts,’ Ciaramitaro said. ‘With many taxpayers now receiving coverage documentation, more taxpayers who will experience APTC reconciliation and the doubling of penalties, unfortunately we should expect taxpayer anxiety and confusion to continue next year.’”

The IBD editors add, “Why all the subsidy mistakes? Because ObamaCare uses a Rube Goldberg subsidy scheme that requires enrollees to predict next year's income. If they guess too low, their insurance subsidies will be too high. Overestimate their income and the subsidies will be too low. H&R Block also found that the average penalty paid by the uninsured last year was $178. That no doubt was also a surprise to many who thought it would be just $95.”

Discussing the Republican Congress’ budget yesterday, Senate Majority Leader Mitch McConnell pointed out that the budget “provides a tool for the Senate majority to repeal a failed policy of the past — Obamacare — so we can start over with real, patient-centered health reform.”

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