Officials warn of Obamacare insurance exchange delays

By Patrick Temple-West and Kim Dixon

WASHINGTON (Reuters) - Two U.S. government officials warned on Wednesday that the launch of new state healthcare exchanges could potentially be delayed, raising further doubts about the implementation of President Barack Obama's signature legislation.

Alan Duncan, an auditor with the Treasury Inspector General for Tax Administration, an Internal Revenue Service agency that monitors performance, said testing the systems needed to implement the exchanges "will be difficult to complete" by the October 1 start date.

"The lack of adequate testing could result in significant delays and errors in accepting and processing ... applications for health insurance coverage," he told the House of Representatives Oversight and Government Reform committee.

At the same hearing, Government Accountability Office official John Dicken said the amount of work the federal government needs to do in each state has yet to be determined, raising the risk of missing deadlines. He added that the federal government and the states have already missed some deadlines.

The House on Wednesday approved a one year delay to the law.

However, Obama administration officials offered assurances that they were on track.

"We are on target to have our new systems ready for deployment when open enrollment in the marketplace begins on October 1," Acting Internal Revenue Service chief Danny Werfel told the committee.

At a separate hearing, Mark Iwry, a health policy senior adviser at the Treasury Department, told lawmakers the administration's healthcare work was on time.

HEALTHCARE'S PATH AHEAD

Beginning in October, individuals will be able to buy health insurance through the new exchanges to comply with the Patient Protection and Affordable Care Act, which is also sometimes called Obamacare.

The exchanges are essential to the healthcare law's "individual mandate," which requires people to have insurance or pay a fine. The exchanges will extend coverage to millions of uninsured Americans by offering subsidized insurance through online marketplaces in all 50 states.

Many states have refused to set up the exchanges, adding to the federal government's burden in implementing the law, which begins for individuals next year. The federal government has to set up exchanges for individuals in 34 states.

The U.S. Treasury and White House said earlier this month that businesses would not be required to offer health coverage, or pay a fee, for 2014 to give businesses more time to comply.

Businesses complained that IRS instructions on how to comply were not published and they would not have time to prepare. The new fee affects businesses with more than 50 full-time employees.

Congressional Republicans, who have taken more than three dozen votes to repeal the law since it was signed in 2010, are using the delay to argue that the entire law is flawed.

Also on Wednesday, the Republican-controlled House Appropriations Committee approved a 24 percent budget cut for the IRS in fiscal 2014. The bill prohibits the agency from spending funds to implement the healthcare law's individual mandate.

Republican efforts to repeal or defund the law have little chance of passing in the Democratic-controlled Senate.

(Reporting By Patrick Temple-West; Editing by Kim Dixon, Leslie Gevirtz and Andre Grenon)