Thursday, December 6, 2012

Obamacare Burying America in Paperwork

The Administration’s latest “reg dump” of proposed rules, released last Friday, includes some interesting new requirements on health insurers.  According to pages 259-260 of the proposed rule, the Department of Health and Human Services will impose a mandate of more than half a billion dollars on insurers, to track “9 billion claims and enrollment files:”

Issuers will be directed to make risk adjustment and reinsurance data accessible to HHS in a way that conforms to HHS-established guidelines and applicable standards for electronic data collection and submission, storage, privacy and security, and processing.  In addition, in §153.720(a), we propose requiring these issuers to establish a unique masked enrollee identification number for each enrollee, in accordance with HHS-defined requirements and maintain the same masked enrollee identification number for enrollees that enroll in different plans within the issuer, within the State, during a benefit year….

We estimate that this data submission requirement will affect 1,800 issuers, and will cost each issuer approximately $327,600 in total labor and capital costs (including the average cost of $15,000 for a data processing server) during the start-up year.  This cost will be lower in future years when fixed costs decrease.  This cost reflects an estimate of 3 full-time equivalent employees (5,460 hours per year) at an average hourly rate of $59.39 per hour.  We anticipate that approximately 400 data processing servers will be established across the market in 2014, and these servers will process approximately 9 billion claims and enrollment files.  Therefore, we estimate an aggregate burden, including labor and capital costs, of $589,680,000 for all issuers as a result of these requirements.

Over and above the obvious privacy implications these new Washington-inspired requirements present, there’s one obvious question: How does imposing more than half a billion dollars in costly new mandates help lower health costs?  Candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family – but creating new paperwork requirements seems like a great way to RAISE costs, not lower them.