Vermont: The Next Failed Obamacare Exchange?

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Posted by Alexander Hendrie on Tuesday, February 2nd, 2016, 7:00 AM PERMALINK

Vermont’s Obamacare exchange still does not work, more than two years after launching.

Despite receiving over $200 million in federal funds and more in state funding, the system shows no sign of improvement and may be in a death spiral toward collapse.

As reported by Erin Mansfield of VTDigger news, the system is beset by basic functionality problems. The “change of circumstance” function no longer works, which has resulted in a backlog of more than 4,000 requests. Another technical problem with the exchange resulted in over 1,000 individuals being unable to reenroll in their insurance plans.

Obamacare exchanges exist to facilitate the purchase of taxpayer-subsidized insurance. For this to occur, the system must be able to accurately process personal information. If this isn’t happening – as Vermont’s exchange has failed to do to date – the entire system breaks down as the federal government cannot tell what level of subsidy an enroll should receive, if they are eligible at all, and if they have maintained coverage or need to pay the Obamacare individual mandate tax.

For taxpayers, this means billions more in wasted money through incorrectly paid subsidies. For the more than 30,000 on Vermont’s exchange – this problem has led to dropped coverage, incorrect billing, and a host of other confusing problems.

Over the past two years, the state has spent millions of dollars fixing the change of circumstance function – a basic tool to allow customers to update and change basic personal information. For almost two years, the exchange instead relied on a mind-bogglingly complex method of processing requests, with many having to be logged and entered manually into up to six different databases. This resulted in a backlog of more than 10,000 requests for most of 2015.

Unsurprisingly, stakeholders of Vermont Health Connect have described the state of the exchange as “depressing” amid fears it is going backwards. Officials are beginning to realize the system may be beyond saving and are looking at moving to the federal

Given these issues, it seems inevitable that Vermont will join the growing list of failed state exchanges in Oregon, Hawaii, Nevada, and New Mexico.

Of these, the most troubling is Oregon. Like Vermont, Oregon’s $305 million exchange failed to work by the November 2013 deadline – or months later. The system was soon shut down by then-Governor Kitzhaber, at an additional cost of $41 million in mostly federal funds.

Recently discovered emails suggest that the Cover Oregon debacle can trace its origins to the Governor’s partisan political advisors who closely managed the project and made the call to shut down the exchange in order to assist the Governor’s reelection campaign. It appears that Cover Oregon's infrastructure was close to 90 percent complete when this happened.

While Obamacare state exchanges continue to fail to provide Americans a pathway to accessible healthcare, things do not get better for Americans once they are enrolled on an exchange. A recent study by Freedom Partners found that Obamacare exchange premiums were skyrocketing in 2016. 34 states had top premium increases of 20 percent or more with Minnesota topping this list with a top premium increase of close to 50 percent.

Congressional leaders are expected to soon craft a replacement healthcare plan focused on patient centered, affordable health care. Given the disaster that is Obamacare this cannot come too soon. In the meantime, Congress needs to ensure to continued oversight over the state exchange debacle.

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