Review: HealthCare.gov a winner despite glitches

Tim Mullaney | USA TODAY

Any e-commerce veteran can tell you: If a start-up's business proposition is sound and it delivers what it promises, it survives early days when websites crash and chaos reigns. Then it thrives. We've seen it over and over, from America Online's mid-1990s outages to any of several crashes in Netflix shares when the company made pricing mistakes or Blockbuster made a run at its markets.

This brings us to Tuesday's launch of HealthCare.gov, the government-run insurance marketplace and centerpiece of the Affordable Care Act. The headlines are dominated by technical glitches likely to be gone by Thanksgiving. (More on that later.) Two main questions will matter once they're fixed.

The most important is whether HealthCare.gov meets its fundamental task — creating a marketplace with an array of choices and competitive prices. The other is whether it explains insurance so people understand it — how to buy it, why they should, how the law's subsidies work, and helps them start grasping which policy works for them.

On those counts, HealthCare.gov is an out-of-the-box success.

To look at HealthCare.gov, especially knowing some Internet history and health insurance, is to understand it will sell tons of insurance.

To start with, 2.8 million people crashing a site on Day One is considered a high-class problem. "It shows they've hit the target,'' says venture capitalist David Jones, ex-chairman of health insurer Humana. "It's obvious.''

Let's say up front that HealthCare.gov's problems have kept me from doing all the comparison shopping I'd planned, getting detailed lists of plans available to everyone from 27-year-old single Floridians to a New Jersey family headed by a 52-year-old (like me).

Nonetheless, we know HealthCare.gov already offers about as much choice as auto-insurance exchanges like eSurance.com. ESurance was fine: In five minutes, I got quotes from three companies, and the site was ready to process my credit card. HealthCare.gov offers the average consumer 53 plans, according to the government, with the "vast majority" having more than one carrier to choose from.

What most people don't know is how cheap the insurance is. According to a calculator provided by the Kaiser Family Foundation — a link to which is on HealthCare.gov — the site's benchmark policy for a single 40-year-old non-smoker will cost $3,240 a year before subsidies based on income.

This is $2,700 less than the average for employer-provided health care coverage for individuals this year, as reported by Kaiser on Aug. 20.

In a case like mine — 52-year-old Dad, Mom and 12-year-old — a benchmark "silver" plan paying 70% of my family's health expenses is quoted at $13,040 by Kaiser. According to Kaiser's August survey, average employer-based family coverage costs $16,351, with workers picking up $4,565. If my family made the national median income of $51,017, tax subsidies would cover $8,770 of our ACA plan. We'd pay $4,270.

Finally, I asked for a basic rundown of the ACA's toughest test case — a 27-year-old single person making $20,000 a year. More than a quarter of young adults are uninsured, and $20,000 in annual income is too much to qualify for Medicaid, but not enough to buy private insurance easily. I assumed this client smokes and lives in Jacksonville, Fla.

That silver policy costs $3,051, and the customer's share is $1,021, after the subsidies, Kaiser estimates. The average single worker contributes $999 for employer-provided coverage. A bronze plan with higher deductibles costs the worker $627, or $52 a month after subsidies. Not even cigarette money.

How is that possible? HealthCare.gov's logic is that selling every company's policies in the same place together forces insurers to offer their best prices. That undoubtedly helps. Some group plans may cover more, too, though group plans have plenty of gaps as employers pass more health care costs to workers. Kaiser says the average group-plan deductible for single workers is $1,135.

The other important question is how well HealthCare.gov walks people through the purchase, coaxing uninsured consumers who know little about insurance to buy it. HealthCare.gov excels at much of this already.

You immediately notice how many pages include questions on the right-hand side, linked to information intuitively related to what you're reading. And you notice the simplicity of the writing.

Take one critical question — the explanation of what the ACA's "gold," silver," and "bronze" policies are. The site gives a basic breakdown, suggesting plans best for young or old clients, with high medical expenses or very few. It takes 433 words — less than half the length of this story — written at a 12th-grade level.

Site-performance issues matter, but they don't ruffle e-commerce veterans much. I talked to a half-dozen, including two Bush administration officials who launched the marketplace for Medicare prescription-drug plans.

They said the problems may take a few weeks to two months to fix — and won't matter in the long run. Medicare Part D had smaller launch problems, now forgotten. "Every Internet company on the planet has had trouble scaling,'' says Ed Park, chief operating officer of Athenahealth, a Web-based processor of health-insurance reimbursements, whose brother Todd is the Obama administration's chief technology officer. "It happens to Twitter, to Amazon, Apple and Facebook.''

People thought Amazon and Priceline would collapse during the dot-com bust, too, and Netflix's obituaries have had more episodes than House of Cards. They won because they have delivered fundamental value. For HealthCare.gov, the fundamentals are well-priced insurance, clearly explained. And they're in place.