It's been a little over two months since the Affordable Care Act's healthcare exchanges opened for business, or were supposed to open for business. Software problems crippled the Healthcare.gov system for weeks after its launch on Oct. 1.
Many small insurers expected to do a lot of business in the new health insurance landscape. In September, the non-profit HMO L.A. Care had only public insurance plans like Medi-Cal to offer. But on Oct.1, when the healthcare exchanges opened, L.A. Care was one of many small insurers getting into the private insurance business.
"We're anticipating hiring about 100 extra people just to handle the phones, the medical management, the kinds of questions that come up, etc." Howard Kahn, the head of L.A. Care, said then.
L.A. Care acquired an additional 50,000 square feet of office space for its new hires. Kahn expected the call center would be bustling when the exchange opened. "During the first month we could possibly see as many as 20,000 members or more signing up," he predicted. "It could be higher. It could be lower, depending on how the systems are working."
The systems, of course, did not work. Kahn used a single word to describe what it was like in the call center when the health exchange opened: Quiet.
The 20,000 new customers Kahn was hoping for in the first month did not materialize. L.A. Care has signed up just over 1,000 members. "I would say it has been bumpier then many of us expected," he said.
But business has improved steadily. On a recent afternoon, call center employees were busy answering phones in the new offices. In California, people can log onto the state's health exchange website, Covered California, and compare plans. But because the site’s sign-up section didn't work for L.A. Care, its customers have to fill out a 23-page paper application.*
"What we could do is take them through an application by phone and then mail it to them," said L.A. Care supervisor Regina Lightner. "It's a little convoluted, they would then sign it and they would then mail it into Covered California." This process can take anywhere from 30 to 45 days.
Despite all the missteps, Khan believes the state will solve these problems soon. "We've made adjustments to our expectations in the short term,"he said. "In the long term we haven't made long-term adjustments to our projections."
On the other side of the country, in Baltimore, Peter Beilenson is having similar problems. He was the health commissioner of Baltimore for 13 years, then health commissioner in Howard County for seven. A year ago, he started the Evergreen Coop, a small nonprofit insurer that came into existence because of the Affordable Care Act. Evergreen set up shop in an 1870's cotton mill overlooking a stream about three miles north of downtown Baltimore.
Maryland has had many of the same website failures that plague California. The previouis day, only four people had been able to enroll with Evergreen online. "That's just from the individual exchange, mind you," Beilenson said.
When it became clear the state's website wasn't working, Evergreen changed its strategy. Rather than focusing on individuals, it went after small businesses. "In the two weeks we've been approved for selling small group market here in Maryland, we have over 100 actively involved small businesses in the process of enrolling with us," Beilenson said. "It may be a silver lining of the exchange not working terribly well."
Even with the unexpected small business customers, Evergreen can't succeed without a drastic increase in the number of individuals it enrolls on a daily basis. To break even, Evergreen needs to enroll between 12,000 and 15,000 individuals.
"We are confident we will make that," Beilenson said.
Like Howard Kahn in California, Beilenson believes the problems with the new systems will be solved in the not too distant future and small insurers will be profitable alongside the larger companies that have dominated the market for decades.
*CORRECTION: An earlier version of this story misstated the extent of problems with California’s health exchange. It has worked well overall, but the insurance company we talked to, L.A. Care, had a problem that prevented it from signing up customers through the California website. That problem was fixed last week. The text has been corrected.