Why Washington state's health exchange problems go much further than you think they do

Posted by: pat 4 years ago

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Summary

Problems with Washington state’s health exchange website go much deeper than the obvious error messages, slow performance, and overwhelmed customer service staff.  By failing to even ask applicants for all relevant components of income, the site is rendering invalid eligibility decisions and tax credit calculations.  It is automatically enrolling too many people in Medicaid and it is telling them to expect tax credits that will need to be repaid when 2014 taxes come due.  In order to correct this, the site will probably have to make everyone who has applied for coverage re-apply once they fix the site to accurately collect all required components of household income.

What's being reported

If you read the articles in the press, you might think everything is dandy with Washington's health exchange website.  Sure the site was so slow and bogged down that hardly anyone could log on in the first few days, but those problems are thankfully behind us.  If you read the posts on the site's Facebook or Twitter pages however you still see many people complaining about persistent "3000" series error messages preventing them from completing their applications, or the persistent challenge of reaching anyone in the customer support organization.  Whereas in the first few weeks you could call customer support and hear a message telling you the current wait time is 90 or more minutes, now the message just says they simply cannot accept your call now.  Email support is inconsistent, with no ticketing system in use to acknowledge receipt of your request and random response times varying from a few hours to never.  But at least we can log in and complete an application (most of us), as opposed to the poor saps who are trying to do anything on the Oregon site, or the Federal site that many states share.  This brings up another question I won't address, which is why did we even let states build their own exchanges?  I suspect that gets into politics and rent seeking behaviors on the part of lobbyists trying to get their piece of the ACA pie, with a little bit of Not Invented Here syndrome thrown in for good measure. 

These are all problems that are obvious to anyone who encounters them.  You know when the system gives you a cryptic error message that it isn't working.  You know when you can't get an answer to your questions that things aren't operating as expected.  And to be honest I'm OK with this level of problems.  Any new big system like this will have a tough launch.  Could they have done a rolling launch or Beta period to mitigate these risks?  Probably.  Could they have done gold-plated stress and load testing to avoid them?  Probably.  Would it be worth the up-front cost?  Maybe not...sometimes it is cheaper to just take your lumps and fix things as opposed to taking 10 years and even more $billions to build something that works perfectly on day one.  I am OK with the government trying to make smart decisions about value for money and not always paying the big bucks to achieve a perfect launch...if that's indeed what they did in this case. 

There is a second order set of defects with the site that go much further than these obvious issues we've heard about.  These second order problems are insidious in that it is impossible to know the scope of their impact, but I will go out on a limb and predict that every single application will need to be revisited to correct them.

Missing data leads to bad decisions

The problem is that the site is not asking applicants for all of the information about income and deductions that it should.  This I know for a fact from my personal experience, and it has been validated by an employee at the state Health Care Authority who confirmed that the site fails to collect all of the income and deductions required to make its decisions about eligibility and tax credit amounts.

The Affordable Care Act requires Medicaid eligibility and tax credit decisions to be based on your household's Modified Adjusted Gross Income (not just adjusted, but modified too!) which sounds complicated but really boils down to taking line 37 from your form 1040 and adding a handful of things back in.  The best definition of this is this one-pager from the Berkeley Labor Center.

The site is very specific when it asks you for income.  You need to list each employer with their address and your income from each employer.  You need to tell it about self-employment income and dividend income.  It asks for information about how much we contribute to our Health Savings Account.  When something is this specific in asking for things, in general most people do what it tells them to do.  We know it is a complicated process (otherwise why would this site have required paying the good people at Deloitte over $50 million to build it?)  We know it will pull in past and future actual tax returns to its decision algorithm.  So we plug in the exact numbers it asks for and let it do its thing.

"Do you have insurance?" or how to incorrectly ask a simple question

When I first went through the application I was concerned about one question which asks "Does anyone in your household currently have insurance."  Simple question, right?  Yes, we all have insurance that we pay for out of pocket and purchase directly from Group Health.  You would think I should answer yes to this question.  Clicking the little question mark next to the question to reveal the help text shows that the definition of insurance for this question is very narrow and does not include self-purchased insurance.  The help text clarifies that the question is asking if you have "private insurance provided by an employer, Medicare coverage, Tricare or other veteran's health insurance."  None of those describe our situation, so I am tempted to say NO, but I went ahead and answered YES for the moment.  Strangely this resulted in a decision that nobody in our household qualifies for any tax credits or Medicaid event though the income calculation from the site for our household falls squarely into the "should get a big tax credit" range.

I was later told by customer service, via email, that I should answer NO on this question if our current insurance policy expires on December 31.  Our experience with Group Health is that our policy ALWAYS expires at the end of the year.  Every year we get a letter saying "your policy is being discontinued.  please choose from the following policies all of which provide marginally worse benefits at significantly higher prices."  I change my answer to NO and resubmit the application and now get a huge tax credit, and another surprise.  Based on my application, our daughters are now automatically enrolled in Medicaid, or Washington Apple Health as it has been re-branded.  Effective today.  That was a shock.  I've never paid much attention to Medicaid, never wanted or asked for it, and now my children have no other choice but to be in the program?  Within a couple of days their Medicaid ID cards arrived, so that part of the system is working pretty effectively.  I was told by customer service that I could pull them out by calling DSHS but then I would forego any tax credits.

I didn't lose too much sleep over this however because I knew that the eligibility determination was wrong.  The income the site calculated for our household was low.  Way low.  Garbage in, garbage out.

This question is very poorly worded, and given the impact your answer has on the eligibility decision, this is a pretty high impact defect.  I am sure that many people in situations similar to mine are answering it incorrectly.  Many of the self-employed, who are one of the primary targets of the ACA, will be buying their insurance directly today, will answer this question YES, and will be incorrectly denied all tax credits.

What's Missing?

For our particular situation, the site was missing two very large components of the calculation for form 1040 line 37:  capital gains and our self-funded traditional IRA contribution.  Granted, the IRA contribution serves to reduce our MAGI, but still it is a big number that should be included in the calculation.  The omission of capital gains is a huge gaping hole in the calculation (for us at least).  I am sure that for 2013, including the capital gains will push us definitely out of Medicaid eligibility, and probably reduce most of our tax credit.  There are other things missing too.  For example I was never asked about interest income either.  It is not such a big number for us, but it is non-zero.

After not hearing anything back for days from customer service via email, and hitting the constant "we can't even let you wait on hold" message on the phone line, I fired off an email to every relevant email address I could find on the state's Medicaid web site.  Finally I received a response confirming that they found the same thing I did with the incomplete collection of income data.  I was given some instructions for plugging the capital gains into the space for reporting "pension, military retirement (not disability-related) or monthly annuity or IRA income."   Clearly this is a workaround.  I was also told that the IRA contribution is collected under the prompt for "spousal maintenance, monthly interest on student loans, moving costs since January of current year, or pre-tax retirement account payments, excluding Roth IRA contributions."   I guess I was looking for the magic IRA acronym rather than calling it a pre-tax retirement account payment.

At this point, the couple of specific issues I've brought up have been acknowledged.  I am sure they will get them fixed within a few weeks.  A bigger question is "what else?"  The problems I've brought up were very very obvious to me.  They should have been obvious to anyone who has ever looked at the first page of a form 1040 and all of the components that go into line 37.  What else is happening that is not so obvious but also wrong?

Why this might be a big deal

We now know for a fact that the site is not collecting all of the information it needs to, but it is still rendering eligibility decisions about Medicaid (including the surprise auto-enrollment) based on this incomplete data.  Due to the nature of this error, it is usually going to result in an income figure that is too low.  This will result in more people being auto-enrolled in Medicaid, and more people being told they will get bigger tax credits than they actually will when they file 2014 taxes.  Remember the tax credits are given in advance, but once you file your 2014 income taxes they will get re-calculated and trued up.  If your actual 2014 income comes in higher than the site's calculation based on your application's incomplete data, you will have to repay much of the tax credit.

Another angle on this problem is that at some level the tax credit masks the cost of the policies you are shopping for.  The credit it gave us was so large that it made both the bronze and silver plans appear to be zero cost.  Why wouldn't you choose the better silver plan when given this choice?  The problem comes when your tax credit has to be paid back and you bear the true cost of that higher priced silver plan.  Once you get a tax credit, the site won't even show you the base price of each plan, only your price net of the tax credit.  

I don't see any way to fix this other than to make everyone who completed an application re-apply.  That will be a little embarrasing for the state Health Care Authority.  Public reaction won't be favorable given that the result will be people who thought they were on Medicaid being kicked out, and people who thought they were going to get free or low cost health care paying more.

All of this begs the question of what other defects lurk waiting to be found.  Given these glaring obvious defects in the site, and given that we know it was never fully load tested prior to launch, how can we have any confidence in the quality assurance that went into this complicated site?

Why this might not be such a big deal

Our family tax situation is atypical.  If all of your income is on a paycheck and W2 then the site is probably doing everything correctly for you.  Low income households don't usually have capital gains, interest income, or make IRA contributions.

On the other hand, the self-employed are supposed to be a significant portion of the target audience for the ACA, and many of them will have complicated taxes as we do.

The problem is it is impossible to know the scope of the missing data, which is why I believe everyone will need to re-apply.

Why do I care

I want to see the ACA succeed.  I want to personally benefit from the improved benefits level it mandates.  I want to get rid of the fear of being denied coverage due to pre-existing conditions.  I want for everyone in society to have lower cost health care options than the Emergency Room and to have access to preventive health care at low or no cost.  I have faith that as we eliminate the uninsured problem and get everyone into bigger shared risk pools with better access to preventive care and care of chronic conditions, systemic health care costs might get under control.  I want to eliminate the chilling effect on economic innovation that is currently caused by the prospect of giving up employer-provided health care and having to go it alone in the individual market.

That's the big picture.  At the margin of deciding what the James family is going to do for 2014, we need to choose whether to renew directly with Group Health and ignore the ACA health exchange and potential tax credits vs. taking a flyer on this new and known-to-be-faulty program with the hope of saving a few dollars.  We are committed to sticking with Group Health because we like it.  Heck, I've been under their care without interruption since about 1970.  The problem is that we also really like our Health Savings Account.  We like that it puts us in touch with our health care expenses and the value we receive for them, and we like the ~$6,400 tax deduction for our annual contribution to fund it.  All of the exchange plans are high deductible plans, but Group Health for some reason took the anti-consumer approach of only offering HSA-eligible plans direct, not through the exchange.  A customer service person at Group Health actually told me that this is because the health exchange is "just for low income people" who can't put the money together to fund an HSA.  Suspecting this was a fabrication, I asked again and was later told that the Washington State insurance commission told Group Health to only offer a limited set of plans in the first year.  Lame.  Especially lame given that the reason you go through the exchange is to get tax credits, and tax credits are maximized when you reduce your income, and one way to reduce your income is to contribute to an HSA.  Anyways, we are right at the margin (I think) of where this is a challenging decision to decide what is better for us:  go it alone with an HSA and buy direct, or forego the HSA, buy through the exchange, and hope for a tax credit that makes this decision worthwhile.  As I currently lack any confidence in the exchange site's accuracy at forecasting tax credits accurately, I think we will probably buy direct from Group Health.  It might cost us a few dollars, but that might be worth it to sit out the first year of the massive headache all of these problems trying to apply through the exchange are causing for us, including the prospect of having to update the site with our income on a monthly basis.

Am I overstating things?

Maybe.  Not everyone has capital gains, or interest income, or foreign earned interest or the other things the site never asks you for but it should.  There is also that "do you have insurance" question that is way off.

Maybe this is all normal growing pains, the things you expect from launching a big software application (a big application that is being redundantly implemented across many states).  Maybe it will all be sorted out within a month.

Maybe the state won't make everyone re-apply and just take their lumps when they file 2014 taxes.

Maybe the tea party won't make hay on these problems and use it as fodder for the "kill Obamacare" arguments.  This has all certainly been a case study in how our government fails us.

Lots of maybes.  OK that is all.

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