(Bloomberg) -- The number of people enrolled in private insurance plans through Obamacare’s federal and state exchanges may total less than 100,000, a lower-than-projected tally that could threaten the program’s viability unless the U.S. can repair its flawed exchange website.
Officials are set to report numbers this week for both the federal exchange and the 14 sites run independently by the states. While there was an early U.S. goal of about 800,000 sign-ups nationally for the first two months, health officials have recently said they anticipated lower initial enrollment that would increase over time.
About 49,100 people have enrolled at 12 of the state-run sites, the Washington-based consultant Avalere Health said Monday in a report that didn’t include Oregon, California or Massachusetts. About 40,000 to 50,000 more have signed up through the federal exchange, The Wall Street Journal reported, citing two sources it didn’t identify.
“We’re talking about 20 to 30 transactions per day, per state leaking through the system, it’s so bad,” said Bob Laszewski, an insurance industry consultant based in Alexandria, Va., in a telephone interview.
More congressional hearings on the rollout of the Patient Protection and Affordable Care Act are set to start tomorrow in the U.S. House. While enrollment is expected to be a key target for Republicans who control the panel, they have signaled they’ll also raise questions about the insurance exchange site’s risks to customer privacy.
The federal website opened for business Oct. 1 without undergoing a full security test at the direction of Marilyn Tavenner, the administrator for the Centers for Medicare & Medicaid Services, which runs the exchange.
Agency officials including Henry Chao, the deputy chief information officer, recommended Tavenner give the exchange the go ahead without a full test, according to a Sept. 27 memo released Monday by the committee.
A Sept. 3 memo from Chao’s boss, chief information officer Tony Trenkle, outlined several security risks and said it was possible “security controls are ineffective.” Chao told the Oversight Committee he wasn’t aware of the memo when he recommended Tavenner approve the opening of the site, according to partial transcripts of the panel’s private interview with Chao, who is scheduled to testify Wednesday.
Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, said in a Senate hearing last week that “the site was designed with the highest standards in mind” and complies with U.S. guidelines for data security.
Lowering expectations
The exchanges are intended as the primary way for as many as 25 million uninsured people to buy health coverage under the 2010 health care law. The Obama administration in the past month has been lowering expectations for enrollment because of website outages, garbled data and other flaws plaguing the government-run marketplaces.
The Congressional Budget Office projected 7 million people would enroll through 2014. Based on the enrollment so far, the exchanges would have to sign up about 100,000 people a day to “get anywhere close” to that number, said Dan Schuyler at Salt Lake City-based Leavitt Partners, which serves as consultant to several state exchanges.
“Right now is when you’re going to see folks transitioning from window-shopping to actual purchasing,” Schuyler said. “The question is, have they resolved all the issues that they need to in order to sustain that type of enrollment?”
Joanne Peters, a spokeswoman for Sebelius’s agency, wouldn’t disclose any official government data. She compared the enrollment situation to the debut of the Massachusetts health insurance expansion in 2006, a model for the federal law, which saw only 123 people enroll in its first month.
“We have always anticipated that initial enrollment numbers would be low and increase over time,” she said in an e- mail.
High participation in the exchanges is critical to the success of the law.
“They need to have a smooth path to enrollment before they go out and aggressively advertise or use the bully pulpit to get people to sign up,” said Dan Mendelson, the chief executive officer of Avalere Health.
Americans have until Dec. 15 to enroll in coverage that starts Jan. 1. Those who don’t find health insurance by March 31 may have to pay a fine of as much as 1 percent of their income.
Delay sought
“Whether it’s higher costs, fewer choices or simply website glitches, it’s becoming more clear with each passing day that this law isn’t ready for primetime and should be delayed,” Sen. Orrin Hatch, a Utah Republican, said in a statement.
Memos from administration staff meetings showed that 248 people enrolled in their first two days of the exchanges as software errors shut out customers. Sebelius recently apologized before two separate congressional committees for the botched rollout and said at least “a couple of hundred functional fixes” are being made.
Jeffrey Zients, the former Office of Management and Budget official that President Barack Obama appointed Oct. 22 to help sort out the website problems, has said the site will work smoothly by the end of November.
Mendelson of Avalere Health said enrollment in new programs often begins slowly before it can build momentum.
The 49,100 people who enrolled in Obamacare plans on 12 state-run insurance exchanges through Nov. 10, represent 3% of the 1.4 million people projected to sign up in those states by the end of 2014, Avalere Health said Monda.
New York’s exchange reported 13,300 people enrolled in plans through Nov. 10, the most among 11 states and Washington, D.C., that have shared data, Avalere said. Washington state had the second-highest enrollment at 7,300.
The problems with the website are becoming a political liability. The law, pushed by the Democratic president, was passed in 2010 with only Democratic votes when the party controlled both houses of Congress. Sixteen Senate Democrats met with Obama at the White House Nov. 6 to discuss “challenges with implementation” and other lawmakers have begun proposing legislation that would delay or alter some aspects of the law because of the botched rollout.
U.S. officials have blamed some of the site’s troubles on unanticipated customer demand that overwhelmed the computer systems. Other issues can be traced to the race to construct an online insurance exchange by Oct. 1 that spurred the Obama administration to use an expedited bidding system limiting its choice of a builder to just four companies.
The administration has identified a number of software flaws, criticized CGI Group Inc.’s handling of the work, and named UnitedHealth Group Inc.’s Quality Software Services unit as the lead contractor, overseeing CGI’s work. The government also has pulled in engineers from Google Inc., Red Hat Inc. and Oracle Corp. to help get the website working.
