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The Simple Solution for People Locked out of Obamacare

Rick Newman
The Exchange

Why be first?

In business, first-mover advantage can be crucially important because it gives you a head start against aggressive competitors. But in many personal choices, second or third movers might have the advantage, because first movers turn out to be guinea pigs who expose problems that quickly get fixed. And people aiming to be early enrollees in Obamacare, the troubled new health-insurance program, could learn a couple of key lessons from late adopters.

Obamacare is basically a start-up system consumers experience through a technology innovation — the website. It’s hardly surprising there have been some snafus in the effort to connect a government portal with the varying data systems of dozens of insurance companies. President Obama’s team clearly blew it by setting rosy expectations for the site and failing to road-test it properly before it went live. But the furor over the rocky launch obscures a simple solution for consumers eager to enroll in Obamacare: Just wait a while.

A long history of new product launches shows that late adopters often avoid the irritating snafus early adopters tend to get stuck with. If you bought a first-generation iPhone in 2007, for instance, you had to deal with a weak battery, a balky headphone jack and slow Internet service — problems addressed in subsequent versions of the phone. Microsoft’s Vista operating system was a buggy disaster, but it led to the much smoother Windows 7. Early versions of Ford’s Sync infotainment systems drove car buyers crazy with complexity, but their feedback led to refinements that made newer versions of Sync easier to use for later buyers.

You have time...really

Although the Obamacare website went live on October 1, insurance purchased through the program won’t go into effect until January 1, 2014. The deadline for choosing an insurance plan is December 15 of this year, and signing up early won’t help you get a better plan, a lower price, or any real advantages whatsoever. “I don’t see any downside in waiting until December 15,” says Paul Fronstin, director of the health research program at the Employee Benefits Research Institute. “Waiting doesn’t mean coverage starts any later.”

The White House isn’t providing an ongoing tally of Obamacare enrollees, but during the first three weeks Healthcare.gov was live, about 500,000 people visited the site looking for information. Many others tried and got locked out. Those early visitors may have simply been people without insurance who were excited to apply for coverage. Or they may have been trying to get an early start on assessing various plans and costs and figuring out how much they can afford to pay for insurance. In that regard, locking down insurance for 2014 as early as possible clearly provides peace of mind and practical planning benefits for some people.

Another group that needs to plan ahead are those with individual policies that are being canceled because they don’t offer the minimum coverage levels required under the new law — which could number as many as 10 million Americans. That includes independent contractors, small-business owners and plenty of others who need to budget for 2014 now and can’t afford to risk a December surprise.

But for many others, the whole process of applying for coverage under Obamacare will probably be easier, less aggravating, and less prone to error once the site and the links to insurers are in better working order. The White House now says all the bugs should be worked out by November 30, which would still allow two weeks for people to enroll before the deadline if they want coverage to begin January 1. There might even be a lull by mid-November, when many problems are fixed but millions of consumers are still waiting for an all-clear from the White House. And if problems persist beyond November 30, it would probably force the government to extend all the deadlines.

For people whose incomes are low enough to qualify for subsidies, an Obamacare policy is likely to be the best bet and well worth waiting for. People unlikely to get subsidies can just as easily comparison-shop for coverage by contacting insurance companies directly or calling an insurance agent or broker (but beware of those charging upfront fees, who could be scam artists).

If your main concern is avoiding the penalty fee imposed on people without insurance (which in 2014 will be $95 or 1% of your income, whichever is greater) you have until March 31 to enroll in an insurance plan. You’d have no coverage until you sign up, so waiting that long might not be prudent. But if you want to, you can, which is why the Obamacare deadlines might be the rare ones you really shouldn’t worry about until they’re almost upon you.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.