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Obamacare Hits Snag in States as U.S. Site Finds Footing

Dec. 20 (Bloomberg) -- President Barack Obama talks about the performance of the U.S. economy, the increase in sign-ups for health insurance under the Affordable Care Act and his agenda for 2014. Obama speaks at a year-end news conference before leaving for Christmas vacation in Hawaii. (Source: Bloomberg)

From Maryland to Hawaii, Obamacare’s state-run enrollment operations are running into technical difficulties, creating new headaches for the White House even as the federal insurance website finds its footing.

While the U.S. site has seen volumes surge this month, online exchanges run by those two states, along with systems in Massachusetts, Oregon, Minnesota and Vermont, have struggled with technology delays and low sign-up levels. Massachusetts and Vermont have criticized the work of their lead contractor, Montreal-based CGI Group Inc. (GIB) Exchanges in the other four states have each replaced their top executives in the past month.

The stumbles threaten to undercut one of the few arguments favoring President Barack Obama’s health-care overhaul so far: its relatively smooth rollout in states that set up their own enrollment systems. While states such as California and New York remain bright spots, the administration can’t afford many more setbacks in the fight over the law.

“Some of these states have been committed, but it’s just been hurdle after hurdle after hurdle,” said Heather Howard, program director at the State Health Reform Assistance Network, a Princeton, New Jersey-based group advising state exchanges. “I do think those states will get there, but this is an ambitious undertaking in the best of cases.”

Photographer: Joe Raedle/Getty Images

Customers sit with insurance agents from Sunshine Life and Health Advisors as they inquire about purchasing health insurance under the Affordable Care Act at the kiosk setup at the Mall of Americas on Dec. 22, 2013 in Miami. Close

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Photographer: Joe Raedle/Getty Images

Customers sit with insurance agents from Sunshine Life and Health Advisors as they inquire about purchasing health insurance under the Affordable Care Act at the kiosk setup at the Mall of Americas on Dec. 22, 2013 in Miami.

More than 2 million people visited the federal healthcare.gov site on Dec. 23, ahead of a deadline to sign up for insurance coverage that starts Jan. 1. Thirty-six states are using the federal portal. The remaining 14 and the District of Columbia have built their own marketplaces.

Online Marketplaces

The Fate of Obamacare

The exchanges offer health plans and access to subsidies created by the law, officially known as the Patient Protection and Affordable Care Act. They’re open to consumers who don’t get insurance through work or government programs like Medicare and Medicaid.

To be sure, there have been successes in the states. Almost 157,000 people in New York have signed up in private plans, John Emery, a spokesman for the state-run exchange, said in a Dec. 24 e-mail. California has enrolled more than 400,000, said Peter Lee, executive director of the state’s Covered California exchange. Kentucky and Washington State have also had a high level of interest.

Healthcare.gov has improved since an error-plagued debut on Oct. 1. Following a “tech surge” designed to fix its software flaws, more than 500,000 people enrolled through the site in the first three weeks of December, Obama said Dec. 20.

Photographer: Andrew Harrer/Bloomberg

Government technicians deploy a queuing system when traffic at the site, healthcare.gov, approaches 50,000 simultaneous users. Close

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Photographer: Andrew Harrer/Bloomberg

Government technicians deploy a queuing system when traffic at the site, healthcare.gov, approaches 50,000 simultaneous users.

Difficult Starts

Elsewhere, there have been stumbles. In Minnesota, exchange director April Todd-Malmov resigned last week amid complaints over a bug-ridden website and long wait times at a state call center. Todd-Malmov also drew criticism for vacationing in Costa Rica last month, as the MNSure marketplace struggled. The exchange extended its enrollment deadline to New Year’s Eve and told 1,000 people they needed to reapply because of inaccurate subsidy calculations.

“MNSure must do better,” said Scott Leitz, the marketplace’s newly appointed chief executive officer, in a Dec. 17 statement.

Maryland’s exchange director resigned Dec. 6 and the state last week extended its deadline by four days, until tomorrow. Governor Martin O’Malley said the state had hired Quality Software Services Inc., the UnitedHealth Group Inc. (UNH) unit brought in to oversee emergency repairs to healthcare.gov after the federal government reduced the role of CGI Group.

Executive Changes

Hawaii’s executive director announced she was leaving Nov. 26, after earlier apologizing for the site’s poor performance. In Oregon, exchange director Rocky King took a medical leave of absence on Dec. 3. Consumers still can’t complete the entire enrollment process online. In the interim, the state has hired hundreds of workers to process paper applications.

Vermont on Nov. 21 told CGI, the contractor for the state’s Health Connect exchange, that it would dispute $1.1 million in charges for the company’s work and deduct $5.1 million in damages from the state’s payments to the firm. The board of directors for Massachusetts Health Connector, that state’s exchange, will “discuss further accountability” for CGI in January, Jason Lefferts, a spokesman for the exchange, said in an e-mail.

CGI “has consistently under-performed,” Lefferts said. Linda Odorisio, a spokeswoman for CGI, didn’t immediately reply to an e-mail seeking a response to the states’ criticisms.

‘Best Practices’

The Obama administration will “continue to work closely with all state-based marketplaces to support their work,” said Dori Salcido, a spokeswoman for the U.S. Health and Human Services Department. The agency is sharing “best practices so that citizens of every state have access to affordable coverage options.”

The problem states have had more success with Medicaid, the government program for the poor that is also expanding under Obamacare. Almost 40,000 people were deemed eligible through November, according to a Dec. 11 HHS report.

Even Massachusetts, whose 2007 exchange was a model for the Affordable Care Act, has struggled to switch to the new system. The state had enrolled 1,100 people through November and a Dec. 12 state report found “overall system performance is far from where it needs to be.”

Some of the states’ missteps mirror that of the federal government’s website. Like healthcare.gov, Oregon built its exchange without hiring an outside information-technology firm, known as a systems integrator, to organize the project.

“You really had to have somebody who understood large-scale implementation of an IT project,” Daniel Mendelson, chief executive officer at Avalere Health, a Washington-based consultancy, said in a phone interview. “Many states gave their exchange to really outstanding policy people as opposed to IT people. That’s not good. It will really not result in the desired outcome.”

To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net; Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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