(Updates exchange performance in sixth paragraph.)
By Alex Nussbaum
Oct. 2 (Bloomberg) -- Obamacare’s opening day drew millions of consumers to the law’s core insurance exchanges, offering supporters and investors hope that if the websites can stay up and running, customers will follow.
In New York, officials said their exchange had 2.5 million visitors in its first half hour yesterday. California reported as many as 16,000 hits a second. And U.S. officials recorded 2.8 million visitors to the federal website, healthcare.gov, even as it fought technical problems much of the day.
The difficulties with the online insurance marketplaces gave new ammunition to Republicans who say the Affordable Care Act doesn’t work. President Barack Obama countered that the volume gives “a sense of how important this is to millions of Americans,” and administration officials said marketing of the exchanges will now start to pick up steam.
“Anything short of a calamity on day one is a victory,” said Dan Mendelson, chief executive officer of Washington-based consultant Avalere Health LLC. “It’s all about message and repetition, and making sure it’s accessible.”
While the federal site, which serves 36 states, was inaccessible for much of yesterday, administrators “added capacity and made adjustments” to put it back into service by late afternoon, Marilyn Tavenner, administrator of the Centers for Medicare & Medicaid Services, told reporters. She declined to say how many people enrolled in plans through the site.
Day two opened with some improvement. The federal exchange was open for business as were most of the state-run markets. Sites were still down or experiencing delays in New York, Nevada, Oregon and Washington State.
“This’ll be a shake-out cruise, there’ll clearly be bumps,” Peter Bielenson, chief executive officer of Baltimore-based insurer Evergreen Health Co-Op, said in an interview with Bloomberg Television today. The company was “deluged with calls” on the first day.
“Like every new law, every new product rollout, there are going to be some glitches in the sign-up process along the way that we will fix,” Obama said yesterday at a White House event.
Opponents of the startup said the delays and frozen websites were, indeed, calamitous. And it remained unclear how much the wave of interest would translate into enrollments. While Connecticut’s site had 28,000 web hits as of 4 p.m. yesterday, only 167 people applied for coverage, said Kathleen Tallarita, a spokeswoman with Access Health CT, the state’s exchange.
If the technical issues aren’t quickly fixed, they may spur a backlash, said Douglas Holtz-Eakin, a former Congressional Budget Office director who is now president of American Action Forum, an advocacy group that opposes the law.
“To have something that doesn’t work after two-and-a-half years is pretty underwhelming,” Holtz-Eakin said in a telephone interview.
Republican lawmakers, who’ve resisted appeals to increase funding for the law, called for a one-year delay. “We should have never gotten to this point,” U.S. Senator Orrin Hatch, a Utah Republican, said in a statement. “The Obama administration should have acknowledged the ample warning signs of problems in the exchanges.”
The political battle over the law enacted in 2010 will continue as Democratic supporters and Republicans opponents put their spin on events. The dispute triggered the first U.S. government shutdown in 17 years yesterday, as Republicans demanded delays in the law as a price for approving a new budget bill.
Investors seemed convinced of the law’s viability, at least for a day. Insurer and hospital shares climbed amid the signs of high interest in the exchanges.
Health Net Inc., the Woodland Hills, California-based carrier with a heavy presence on its home-state exchange, led insurers, rising 3.6 percent to $32.84 at the close of New York trading yesterday. Indianapolis-based WellPoint Inc., the biggest seller of coverage to individual Americans, gained 3 percent to $86.11. The biggest U.S. hospital chain, Nashville, Tennessee-based HCA Holdings Inc., climbed 4.3 percent to $44.60.
“People who own these stocks want reform to work,” said Sheryl Skolnick, a health-care analyst at CRT Capital Group in Stamford, Connecticut. “The fact that there’s a lot of intensity, if not outright demand, for using these exchanges and getting insurance should drive these stocks up.”
The exchanges are a centerpiece of a law designed to cover more of the 48 million uninsured Americans. The websites are supposed to help consumers access federal subsidies and choose from a menu of private insurance plans that take effect Jan. 1, when the law requires all Americans to obtain insurance.
The administration is seeking to get about 7 million people to buy policies through the exchanges in the open enrollment period that runs through March.
Both the uninsured and those trained to help them enroll expressed frustration over yesterday’s delays.
In New York City, Madelina Aviles found herself unable to enroll in a health plan after the state’s insurance website went down. The 60-year-old Bronx woman said she’d been uninsured since shortly after losing a job in January, forcing her to put off medical treatment for a pain in her arm.
While Aviles found an exchange plan for less than $100 a month, an “awesome” result, she wasn’t able to immediately enroll because of the website’s technical problems, she said in an interview at the Community Service Society in Manhattan, a nonprofit health organization.
While the delay was a disappointment, Aviles said she would keep trying.
Teajai Kimsey, 49, of Wichita, Kansas, runs the website Internet Idea Girl and is uninsured. When she logged on to healthcare.gov yesterday morning, it took her about five minutes to get into the system, she said. Then the security question didn’t work and a drop-down bar failed.
“If you don’t know the web well, it will be really discouraging and leave a bad taste in your mouth,” Kimsey said in a telephone interview. “They have some first-day bumps. I’m more tolerant, I know this happens.”
In Maryland, Rebecca Wener and Apoorva Srivastava had a week of training to become exchange navigators in preparation for yesterday’s start. They expected to have a busy morning signing people up for insurance at Community Clinic Inc., a Silver Spring health center that serves the uninsured.
Instead, they handed out fliers and tried to set up appointments for patients to come back later and sign up online.
“It’s a glitch,” said Srivastava, who expected to take patients to a computer, where they could learn what subsidies they’d be eligible for, and where they could sign up. “In training, they described the rollout as a 1972 Honda. It will get there, but it won’t have all the luxuries.”
Maryland is one of 14 states, and Washington, D.C., that constructed their own health exchanges. Because of technical issues, Maryland pushed back its opening from 8 a.m. until the afternoon, joining similar actions by other states that struggled during yesterday’s debut, overwhelmed by high volumes or technical bugs.
While problems persisted, the state sites improved their performance throughout the day. Colorado officials said at day’s end about 1,500 people had created accounts on their exchange. In Kentucky, 1,235 people completed applications for insurance. In Minnesota, 100,000 people visited the site by mid-afternoon.
In California, the state with the most uninsured Americans, few problems were reported. “We are having huge volume,” said Peter Lee, the exchange’s executive director. “We are live. Our state workers are answering the phone.”
Staff members from eHealth Inc., approved by the government to sign up customers through the federal exchanges, fielded calls from Hawaii, Texas, Michigan, Illinois and New York, among other states. Many people seemed unaware that new insurance plans under the law didn’t kick in until January, said Nathan Teater, who was working the phone as a TV monitor nearby displayed a message urging workers in the call center at Gold River, California, to “Keep Calm and Enroll On.”
“Everyone knows today’s the day, information-wise,” Teater, a customer service representative, said in an interview. “I don’t think the Jan. 1 start date sank in.”
After the initial rush, things will settle down and the law will see the kind of gradual enrollment that occurred with the rollout of the Medicare Part D prescription drug program in 2005, said Joel Ario, managing director of Manatt Health Solution, a Washington-based consulting firm that advises insurers, and a former director of the federal Office of Health Insurance Exchanges.
“It’s still too early to tell how serious the glitch problem will be,” Ario said in an e-mail. “But one of beauties of online systems is the ability to continually improve them, not like printing a million inaccurate brochures that have to be tossed.”
The government shutdown that began yesterday didn’t delay the exchanges because they’re funded largely through mandatory spending not affected by the budget battle.
People eligible for coverage can go to healthcare.gov to find their state’s insurance exchange. Monthly prices for the lowest-tier of plans average $249 nationwide. People with incomes less than about four times the poverty level will get discounts on their premiums by way of tax credits. For a family of four, that means those with incomes of less than about $94,000 qualify for the credits.
Enrollees don’t have to complete the process until Dec. 15 to guarantee coverage on Jan. 1. About two-thirds of uninsured people said they plan to buy medical coverage next year rather than pay a fine, according to a Gallup poll published Sept. 30.