December 4, 2013

Bloomberg, Reuters: Admin Will Be Winging It With Subsidy Payments to Ins. Cos.; Megyn Kelly Nails Obama’s ‘The Law Works’ Claim

On November 19, Henry Chao, deputy chief information officer at the Centers for Medicare and Medicaid Services, told a congressional committee that “[W]e still have to build the payment systems to make payments to issuers in January” for those who have enrolled in plans through

On Black Friday, while almost no one was paying attention, Alex Nussbaum at Bloomberg News reported that “The administration is setting up a temporary process … (in which) insurers will estimate what they are owed rather than have the government calculate the bill.” Somehow, they’ll settle up (or “true up”) at the detailed level later. Tuesday evening, Roberta Rampton and Caroline Humer at Reuters covered this development. The Reuters item, which went live about an hour before Megyn Kelly’s broadcast last night, moved the Fox News host to treat it as her lead story. She gave it the serious treatment it deserved, revealed other shocking items the rest of the press has mostly downplayed or ignored, and nuked the entire idea, as claimed by President Obama, that “the law works.”

Bloomberg’s November 29 headline is weak and inaccurate — “Obamacare Payment System to Insurers Changed in Setback.” Winging it is not a “system.” What the administration is doing is necessary because there is no system.

The Reuters pair’s language also whitewashes the serious nature of administration’s latest gambit, starting with its “this is boring” headline (bolds are mine):

Short-term fix eyed for another problem with U.S. healthcare website

President Barack Obama’s administration has found a short-term fix to pay insurance companies for plans selected on, the not-yet-complete government website used to shop for insurance required under Obama’s healthcare program.

The Centers for Medicare and Medicaid Services (CMS) has not yet finished building the part of the website that would transfer billions of dollars in subsidies for plan premiums and cost-sharing payments to insurance companies.

It is part of a long technical to-do list that has so far focused on fixing the errors and lag times in the part of the website used by consumers.

Julie Bataille, a spokeswoman for CMS, said the government will make the payments to insurers for premium tax credits and cost sharing on time.

“We are committed to making sure they get paid in January and we will continue to work with them on that process,” she told reporters.

… The administration is planning a “workaround” for payments, said Daniel Durham, vice president for policy and regulatory affairs at America’s Health Insurance Plans.

Health plans will estimate how much they are owed, and submit that estimate to the government. Once the system is built, the government and insurers can reconcile the payments made with the plan data to “true up” payments, he said.

“The intent is to make sure plans get paid on time, which is a good thing,” Durham told Reuters.

Now, (insurance) companies need to quickly put together financial management systems to make the payment estimates, so they can be paid beginning in January, he said.

The insurance companies have a whole 27 days with two major holidays intervening to get this done. What does that say about the government’s attitude towards customer-vendor relationships?

Kelly was apparently unaware of Bloomberg’s Friday report, and treated the Reuters story as breaking. Other than that shortcoming, the first eight minutes of Kelly’s broadcast last night, with the help of Forbes writer Avik Roy, lit up the screen. Just watch:

Choice lines (among very many):

Kelly: “The administration (has been) forced to admit a huge failing in the system.”
- Kelly: “We’re talking about one-sixth of the U.S. economy, and this is the system that they’ve now settled on.” (Note: It’s really a mechanism for coping with having no system. — Ed.)

Roy: “(This) is not a bailout of the insurers. It’s a bailout of the President.”

Kelly: “Reports today are everywhere that up to 30% of the people who have enrolled on only think they have enrolled, and that in fact, the enrollment has failed, and when they go to their doctors on January 1 trying to get coverage, they’re going to find out the hard way that their attempted enrollment failed, and they don’t actually have coverage.”

Roy: “We have more reason to trust the insurers than the Obama administration.”

Roy: “The IRS doesn’t have a system to check to see what your income is, to see what subsidies you’re eligible for. And that’s going to incentivize a lot of Americans to game the system and say, ‘You know what? I actually didn’t make that much money this year. Therefore give me a bigger subsidy, give me a bigger check.’” (Many people will also make inadvertent errors, because many will not understand the relatively obscure definition of “income” for ACA purposes ["Modified Adjusted Gross Income].”)

Kelly: “(President Obama says) ‘The law works.’ Really?”

This administration move exposes the insurance companies, whether they appreciate it or not, to bully-pulpit charges of overbilling by opportunistic administration officials and leftist politicians and to deliberate withholding of payments by the government based on imaginary suspicions of unaccountable bureaucrats.

Though the story is several days old, I was unable to find any other other establishment press reporting. As of 8:30 this morning, based on a search on “estimate” at its national site, it was not news at the Associated Press. It would appear that whether or not billions of dollar in payments are properly made is just too boring to merit attention.

Cross-posted at



  1. Actually, the settling up method is a euphemism for the government itself paying the medical bills, making the insurance companies merely the transfer agent in handling medical claims as the CMS now is. CMS as we know is NOT an insurance company. This is de facto single payer. Why? Because under ObamaCare the insurance companies are not basing premiums on the “future” risk of injury or sickness but on the actual amount of billing that has “already” occurred. There is no “insurance” happening when you guarantee a company a profit margin for handling your billing. There is a name for when one company handles collecting bills for another, Accounts Receivables and Collections. If the insurance companies are merely the AR for the government, then we have single payer via a privatized AR process.

    So now we understand why Kaiser and others went for this government take over, since profit margins for health insurance are thin, one sure way to increase your margin is to change the paradigm of the industry. There is no risk in being an AR department for the government, whereas being an “insurance” company there is risk that can only be foreseen by the actuarial tables and the known laws you must comply with at the time you write the insurance policy. So the only unknown now is whether the government is going to keep it’s promise to the insurance companies to settle up like Obama kept his promise to the American people that they would keep their health insurance plan and save $2500 a year and keep your doctor… good luck with that.

    With this understanding we know that there was NO NEED to build a payment process because the government is just going to pay the medical care providers via their outsourced AP and AR departments called the insurance companies.

    Comment by dscott — December 4, 2013 @ 3:55 pm

  2. CONFIRMED: Obama WH Turned Down Offer to Build O-Care Website for Free – Blew a $1 Billion Instead (Video)

    This strengthens my claim that the website was designed to fail deliberately to dilute the focus from the sticker shock. Having people talk about the failure of the website reduces the time people talk about the over priced under performing health insurance policy. Not even an idiot spends $634 billion on 60 to 70% of a project. It was all just one big head fake to distract and dilute the focus on the real issue of wealth redistribution.

    Comment by dscott — December 4, 2013 @ 4:15 pm

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