The stumble-filled debut of the health law is drawing new attention to the other risks. | REUTERS ACA: What can go wrong now?

Busted website, canceled policies, lousy early enrollment numbers. And that could be just the warmup.

Because the lesson of the last six weeks is that when it comes to the Obamacare rollout, if it can go wrong, it probably will.


The stumble-filled debut of President Barack Obama’s health care law is drawing new attention to the other risks that have been on the radar screen of health care wonks for months. Think health insurance plans sinking under the weight of sick customers, newly insured people being stunned that they still have to spend on health care, and possibly another wave of canceled policies — right before the 2014 elections.

They’re mostly worst-case scenarios, and an Obamacare recovery in the next few months could still prevent some of the biggest ones from ever happening. But health care experts are taking all of them a lot more seriously now — because at this point, why wouldn’t they?

A complete list of possibilities could be overwhelming, but here are the main ones to watch:

( Understanding Obamacare: POLITICO’s guide to the ACA)

‘Death spiral’

This was always the worst of the worst-case scenarios: Only sick people enroll in the Obamacare health insurance plans, healthy people stay away, and everyone’s premiums rise out of control because there are no healthy people to cover the sick people’s costs.

That’s the dreaded “death spiral,” and it has been a possibility all along. But it was only a remote one — because health care experts have counted on the attraction of Obamacare’s subsidies, along with the threat of fines from the individual mandate, to lure enough healthy customers to prevent a meltdown.

But they were also counting on a functioning website. Now that HealthCare.gov has tripped up all but the most committed customers, health care analysts are taking another look at the “death spiral” scenario — and some are worried that it’s already playing out before their eyes.

( PHOTOS: 10 Sebelius quotes about Obamacare website)

“This is not a political attack — I think we’re already there. I really do,” said Robert Laszewski, a consultant who works with health insurance companies. “If everyone is hearing that there are all these problems with the website and you have to do all these workarounds, who’s going to do the workarounds? Sick people.”

The Obama administration says roughly 106,000 people selected health insurance plans in October — and only a quarter if those used the federal website, which serves 36 states. There are a lot more potential customers, since nearly 1.1 million were found to be eligible for Obamacare plans. But they have to get through the website first.

The buggy website would have to be working well by the beginning of December, as the Obama administration has promised, to avoid discouraging healthy people from signing up, Laszewski said — and the chances of a successful fix by then are growing more remote every day.

( PHOTOS: House hearing on Obamacare website)

Others, however, say it’s too early to tell if a death spiral is a real danger. The open enrollment period lasts through March, they point out, and healthy people would probably be the last customers to sign up anyway.

“It’s too early to know for sure,” said Mark McClellan, who ran the Centers for Medicare and Medicaid Services under President George W. Bush and presided over the launch of the Medicare prescription drug program. “What’s going to matter is not the enrollment numbers over the next few weeks, but what the enrollment looks like come February or March.”

The cost of the cancellations fix

There’s another problem, and it has nothing to do with the website. Insurers and actuaries say the Obama administration’s solution to the canceled policies mess could backfire — because by telling insurers they can extend people’s individual coverage, they might cause the insurance prices to rise anyway.

That’s because the mix of healthy and sick people in the new Obamacare plans would be disrupted. In the worst-case scenario, it would be the healthy people that renew their old, pre-Obamacare insurance, and only the sick people would switch to the new plans — because they’d want the new coverage that accepts anyone with pre-existing conditions.

( PHOTOS: Senate’s Obamacare hearing)

Obama administration officials say they can take care of that problem by using a built-in mechanism in Obamacare that’s supposed to help insurers with high-cost patients. The “risk corridors” provision gives extra payments to health plans that draw a lot of sick people, and administration officials think they can adjust that mechanism to help insurers that lose too many customers they were expecting.

But even if that works, that could increase the cost of Obamacare — because the federal government would be on the hook for most of those extra expenses. In a letter to lawmakers, the American Academy of Actuaries warned that “costs to the federal government could increase as higher-than-expected average medical claims are more likely to trigger risk corridor payments.”

That’s the issue Sen. Marco Rubio (R-Fla.) is targeting with his proposal to repeal the risk corridors provision to prevent a “bailout” of insurance companies. A Rubio aide says there’s no exact estimate of how much federal spending would increase, but they’re going to ask the Congressional Budget Office to look into it.

Price hikes during election season

If the Obamacare health plans don’t get a good mix of healthy and sick people, the rate hikes wouldn’t happen right away. The prices are already locked in for 2014. The bigger political headache for Democrats is that insurance companies would raise their prices for 2015, and those new rates would be announced in the spring — bringing another round of bad news during election season.

Most likely, the insurance companies would submit their bids in April, and that would be based on only the most preliminary information about final enrollment figures for Obamacare’s first year.

“That should be in the category of things the administration should be thinking about,” said McClellan.

Coverage gap

The big danger of the canceled policies isn’t totally off the table. For any individual health plans that don’t get extended, customers will have to find new health insurance, either through the Obamacare websites or through workarounds, like the call center or even contacting health insurers directly. If they can’t do it by Dec. 15, they might not have a replacement health insurance plan by Jan. 1.

If health insurers — and state insurance commissioners — go along with the White House plan and extend people’s policies, that won’t be a problem. But not all of them will. Insurance commissioners in Washington state, Mississippi, Georgia and Rhode Island have already said no, and others have said they’re skeptical about it.

“It definitely allows insurers to continue policies and avoid any cancellations until 2015, but it’s still up to state regulators and the insurers themselves whether to take the option. So, it’ll probably vary from state to state and plan to plan,” said Larry Levitt of the Kaiser Family Foundation.

More cancellations close to the election

There’s another, separate issue with the cancellations. Some have actually been pushed into next year, because some insurers have offered early renewals — in which individuals or small businesses who renew their policies before the end of the year can keep them into 2014.

For example, Elaine Buccieri of Arlington, Texas, was able to get that kind of deal from Blue Cross Blue Shield of Texas. The carrier just moved everyone’s anniversary date to December, giving them more time in their old plans.

But that kind of renewal only carries people into 2014, raising the possibility that those people, and small businesses, could just get another wave of cancellation letters next year. And those letters would have to go out early enough to give them time to sign up for new policies — meaning they could go out in the fall, right before the mid-term elections.

“This is really getting backloaded into December 2014,” said Laszewski, who got an early renewal option with his own cancellation notice from CareFirst.

It’s not clear how widespread the practice is. A Commonwealth Fund blog post said it has been allowed in states like Arkansas, Colorado, Montana, Idaho and Kentucky, usually with some strings attached. And Sabrina Corlette of Georgetown University, one of the researchers who wrote the blog post, says more than 80 percent of small businesses in Wisconsin have taken the early renewal option — and of the individual insurance cancellation notices she was able to review, three out of four offered early renewals.

The Obama administration fix could take care of some of the problem, because it allows existing health plans to be renewed any time before Oct. 1, 2014. But again, not all states will allow it, and not all insurers will do it — so it’s not clear that the fix would take pre-election cancellations completely off the table.

Sticker shock

Obamacare supporters are convinced that once people with canceled policies can actually use the federal website, they’ll be able to find replacement health plans that are better and cheaper than what they have now, not just the expensive replacements their own insurers are offering up.

But Paul Ginsburg, president of the Center for Studying Health System Change, says that’s not going to be true of everyone. He says some people will go to the website and be dismayed by the prices — because they now have to include coverage of everyone with pre-existing conditions, new benefits that weren’t covered by all individual plans before, and a ban on charging older customers more than three times as much as younger people.

That doesn’t mean everyone will actually pay the sticker price. Many people will qualify for subsidies, which could mask any increases. But not everyone will get subsidies — a lot of people who will need coverage will find that their incomes are too high.

Ginsburg says the Obama administration will have to do something about “sticker shock,” but they won’t be able to backtrack on covering pre-existing conditions — that’s too central to the law’s goals. The limits on age-related pricing, however, are less crucial and could probably be rolled back to reduce the prices, he said.

There could also be another level of sticker shock not just over the premiums, but over the other out-of-pocket expenses people will have to pay.

A good example is the deductible — the amount of medical expenses someone has to pay before coverage even begins. All private health insurance has deductibles — that’s not unique to Obamacare. But a survey of 22 health insurers in six states by Avalere Health, a consulting firm, found that the average deductible is $2,550 in “silver” Obamacare plans (the second-cheapest kind). That’s compared to the $1,135 average that nearly eight out of 10 people in employer-sponsored health plans had to pay.

The deductibles are even higher in “bronze” plans, the cheapest kind. The average bronze deductible was $5,150 — and some were as high as $6,350.

“We all knew this was going to happen, but there could be another round of shock” when people actually try to use their Obamacare coverage and realize it doesn’t pay for everything, said one health insurance industry official.

People who can’t prove they’re covered

When Medicare Part D began in 2006, many seniors had rude surprises when they went to their pharmacies, expecting to fill their drug prescriptions, and the pharmacists had no record that they were covered.

Given all the problems with the Obamacare website — especially since insurers are so uncertain that they’re getting accurate information on who’s signing up — there’s a chance that the same kind of thing could happen in January, as people who believe they’ve signed up for health insurance can’t prove it when they go to the doctor.

“There are going to be some issues around that, and it’s important to be looking at the information coming out of the website,” said McClellan.

It’s not likely to be as serious, given that doctors are used to dealing with patients who don’t have proof of insurance and “you can usually work something out” as long as the patients can prove it later, according to Jon Kingsdale, the former head of the Massachusetts health insurance exchange that pre-dated Obamacare.

But the reporting of customer information to the insurers has already been a well-established problem, and it’s one of the highest-priority fixes the administration is trying to make to the federal website. So far, health insurers have been double-checking all of the information they’re getting, but that won’t be possible if the volume of customers shoots up in December — as it needs to, for people to get coverage in January.

“That’s OK with low volume. If you kind of open the floodgates and tens of thousands of people are going through, manual verification is not an option,” said the insurance official.

People who get wrong subsidies

This one is more of a question mark, because it’s too early to know how accurate the website calculations will be. But the reality is that any errors would backfire on the newly insured people — and so could any nasty surprises, like changes in their incomes.

If people get bigger tax credits than they’re supposed to get, Obamacare requires them to pay back the overpayments — with some limits — when they file their taxes the next year. But the calculations are so complicated that it would be hard, if not impossible, for most consumers to know if they’re getting too much.

And people may not realize that if their incomes go up in the middle of the year, they may not qualify for as much of a subsidy as they did before.

“Think of the family that gets a big subsidy, and then Mom goes to work halfway through the year,” said Laszewski.

Health care experts don’t put this one at the top of the list yet, but they’re watching it.

“It’s hard to judge how big a risk it is, but it would be a very consequential problem if it turned out to be true,” said Levitt of the Kaiser Family Foundation.

CORRECTION: An earlier version of this story contained an inaccurate description of the “silver” Obamacare plans.

CORRECTION: Corrected by: Jessica Huff @ 11/18/2013 10:02 AM CORRECTION: An earlier version of this story contained an inaccurate description of the “silver” Obamacare plans.