Because the exchange makes it easy for consumers to compare premiums, by next autumn they will be able to see premium increases, state by state and congressional district by district. The insurance shopping season is scheduled to open on Oct. 15, 2014 — 20 days before the midterm elections.
Why is this an immediate challenge? Because the hundreds of insurers offering plans on the federal exchange will begin pricing for 2015 in just a few months.
Fortunately, October was an early shopping month, mainly for browsing and for those who are sick and highly motivated to get coverage.
It wasn't an important month for enrolling the "young invincibles"— uninsured young people who don't think they need health care — who will subsidize older, sicker enrollees. But the longer HealthCare.gov remains clogged, the more young invincibles will be discouraged from joining.
Insurers must set rates for 2015 in some states by the end of February, and in most states before June.
They can't raise their rates on plans in the federal exchange now; their prices are locked in for next year. Nor can most carriers recoup any 2014 losses by raising premiums for 2015:
Unless most competitors do the same, hiking premiums will chase away any healthy customers they have. But that is the imminent danger — a general rise in rates among health plans on the federal exchange.
The administration can try to head off the problem, or it can blame insurers after the fact. To convince skeptical CFOs that October 2014 will be very different from today, first the website and the information systems behind it must work.
Additionally, the administration has to prove that it can effectively manage the world's largest commercial health insurance store. And the president has only a few months to do so.
A health insurance exchange is more than a website. It is an insurance store, and to manage it well requires insurance experience, technical know-how, and savvy marketing and sales tactics.
The administration has a few months to put together a management team with these skills, dedicated exclusively to running the world's largest store for private insurance.
The Centers for Medicare and Medicaid Services have talented staff, and Jeffrey Zients, a former budget official who's been called up to help fix the federal exchange's online enrollment, may be just the guy to corral wayward technology vendors.
But selling insurance is not what policy analysts and turnaround specialists do. I had 45 employees dedicated to operating the Massachusetts Health Connector; California has budgeted more than 300. Who's minding the federal store?
If the administration fails to convince hundreds of insurers that the federal exchange will do a superb job marketing their products next fall, what then?
Premiums will jump, Democrats will blame "greedy" insurers, regulators will review rates and push for price controls. And Republicans can credibly crow: "We told you so."
Kingsdale, who oversaw the Massachusetts health insurance exchange from 2006 to 2010, has provided actuarial and other technical assistance for the Obama administration's Affordable Care Act.