I saw this article in the Politico:
key player in the Obamacare website’s creation acknowledged Tuesday that up to 40 percent of IT systems supporting the exchange still need to be built.
“It’s not that it’s not working,” Chao told lawmakers at an Energy and Commerce Oversight and Investigations subcommittee hearing. “It’s still being developed and tested.”Financial management tools remain unfinished, he said, particularly the process that will deliver payments to insurers.
A Health and Human Services source said the health plans can receive the payments consumers make when they enroll. The system isn’t yet ready to deliver federal subsidies to insurers.
First, Politico undercuts its own lede. The financial segment is not live in the production environment but it never was scheduled to be live until December. The first subsidy was not scheduled to be sent to the insurance companies until late December if everything works correctly. More importantly, this is not a system failure point as most insurers could get by for a while without Federal subsidy flows.
One of the most important lessons in my career was from a grizzled old bureaucrat:
Not all dollars are equal, some are better than others
I learned this as I interned at a multi-agency, multi-level of government pilot project in college. We were funded through a combination of earned revenue, municipal contracts, state loans, private foundation grants and a federal program grant. Shifting resources from different funding streams was almost impossible. General operating dollars from the feds and earned revenue were the most valued as they could be used for anything. Municipal money could be used for rent, salaries and gas while the state loan was technology only. The foundation money was only allowed to be used for 3 FTEs and a small marketing campaign. We faced quarterly crisis as a particular type of dollar was running short or a funder was holding a check an extra week.
The Exchange revenue from an insurance company point of view are two different types of dollars. The first set of dollars is the individual dollar. These dollars are somewhat unpredictable at the individual subscriber level. The company knows that some people will pay the first month but not the second month, they know they’ll receive some catch-up payments on Jan. 22 when it should have arrived by Jan. 15th for February coverage, they know the income stream is a bit bumpy. There is a discount (probably a small one but a real one) on individual premium streams because there is uncertainty.
The other type of dollars are federal dollars. Insurance companies KNOW the Feds will pay. They are not sure exactly when the money will arrive, but they know it will arrive and it will be a continuous flow. Insurance companies have massive cash or near cash reserves that they can borrow against to smooth out any Federal cash flow bumps and their auditors and regulators will approve these measures because they know Federal dollars are very good and reliable dollars.
Small co-ops and other start-ups that mainly cater to the Exchange market may not have as much breathing room for an interrupted Federal subsidy flow as established insurers, but most insurers could go a while on the combination of individual payments and borrowing against Federal account receivables without it being system compromising.