Reports are circulating tonight regarding a nearly-done budget and debt deal on Capitol Hill. This story is long-overdue and a hopeful sign.

Senators Closer to a Deal on Debt Ceiling and Shutdown
New York Times
October 14, 2013   5:05PM

WASHINGTON — A bitterly divided Congress edged closer to a budget and debt deal on Monday, while the rest of the world braced for the possibility of a legislative failure and an economic catastrophe that could ripple through financial markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors...

...Senate negotiators were still talking late into the afternoon, but both parties were coalescing around a plan that would lift the debt limit through Feb. 7, pass a resolution to finance the government through Jan. 15 and call for the two parties to conclude formal discussions on a long-term tax and spending plan no later than Dec. 13, according to one Senate aide briefed on the outlines of the plan.

Any provision to delay or repeal a tax on medical devices – a sticking point in the negotiations – will almost certainly be excluded from the final deal, Senate aides said. Republicans sought to have the tax eliminated or pushed back, but Democrats strongly resisted.

The deal would include a one-year delay of another tax associated with the Affordable Care Act known as the reinsurance tax, which employers pay.

Another Republican-backed measure would require tighter income verification standards for people who receive subsidies under the new health care law. Under the new guidelines, the Health and Human Services secretary would have to certify that the department can verify income eligibility...

(Bold type is diarist's emphasis.)

However, there’s a major, hidden problem in the framework of the reportedly agreed-upon Senate proposal, and it’s this: with regard to the Affordable Care Act (i.e.: "ACA," "Obamacare"), as many in the financial services technology business already know, above and beyond the creation of perfect consumer lending analytics, accurate, real-time, automated income verification is the current-day Holy Grail in the consumer financial services data processing technology industry. It has been and continues to be problematic; and it’s frequently cited as the number one reason for delays in responsiveness by lenders in the consumer credit space.

(By the way, between the automation of consumer credit data “pulls,” not to mention social security number, “current residence” and income verifications, I’m pretty certain—while the public hasn’t been made aware of the granular details regarding technical problems inherent with these efforts, which are all fraught with intensive technology security requirements, too—that the smooth implementation of these particular processes, have contributed significantly to delays in getting the various federal and state[s] governments’ ACA technology platforms up and running smoothly.)

Many tech firms are rushing “solutions” to market to resolve delivery issues relating to accurate, real-time, automated income verifications, as you read this; but there’s simply no panacea with regard to an acceptable resolution of this issue; and, that’s because there’s really nothing available in the marketplace as far as solving most of these problems are concerned on the horizon in the near future; or, even over the next few years, for that matter.  Very simply stated, most smaller employers (let’s state it as <500 employees, for discussion’s sake) simply don’t have the infrastructure/capability when it comes to providing anything close to real-time updates as far as the status of their employee rosters are concerned.

The current-day reality is that, unless you work for a fairly large company (500+ employees), there’s a very good chance that government automation will, at best, deliver up outdated, verified responses (responses that are at least 6-18 month’s old).

If access to databases owned by payroll processing firms such as ADP are included into the mix, they significantly ameliorate a substantial portion of this problem; but nothing close to what would be necessary to effectively fix it.


Additionally, the inconvenient fact is that, right now, when you query these commercial and government income verification databases, the “hit rate” (where the automated service returns complete information in real time) is usually somewhere in the 50%-75% range. In other words, 25%-50% of the automated responses from these sources are incomplete and/or not current enough to base a decision upon (the information provided), without going through the effort of physically contacting the employer by phone, snail mail or email, etc., to receive updated information.

This already creates many logjams in the commercial credit sector, today. And, if the government does adopt more stringent income verification requirements, as the initial press coverage of the current state of the negotiated proposal indicates is the case —which virtually always means real-time acknowledgement of an individual’s employment status from their employer with current pay period amounts included—for the ACA program, it will add massive amounts of time to the efforts relating to formal approval of applicants. Perhaps more importantly, and based upon this writer’s own experiences, the additional effort(s) involved in the employment verification process frequently/usually triples or quadruples the cost of processing documents from completion through to final decision. (Read that last sentence, again.)  

Furthermore, with upwards of 40 million “underbanked”/”unbanked” (i.e.: those with “thin,” publicly available documentation) people in the U.S. workforce, not to mention self-employed individuals, part-time employees, freelancers and contractors, this compounds the issues (and processing costs) discussed above as they relate to automated employment verification technologies as they exist, today.


While I’ve focused upon the known and potential income verification problems associated with processing data of this nature, there’s another “800-lb. gorilla” in the room, and it’s  this: just properly processing consumer credit data to facilitate automation of these programs is much more easily said than done. It’s common knowledge that many/most major financial services firms—the largest companies processing consumer credit data in the U.S.—are constantly struggling with problems relating to accuracy. (Many/most of these firms will deny this, so you’ll just have to take my word for it. Another inconvenient reality on this “side” of the data processing equation is that the credit repositories—Experian, Equifax and Trans Union—continually modify their data formats, requiring significant programming updates on the end user side of their data, as well. And, when you add analytics into the automation/automated “decisioning” mix, it becomes exponentially more problematic.)


It doesn’t take a rocket scientist to speculate that all of the issues, noted above, would add significant cost-overruns and schedule delays (or, if additional data processing tasks to meet G.O.P. demands are added to the mix, they could add exponentially greater cost overruns and schedule delays) to the rollout of the ACA programs both on a federal level and throughout the country.

Democrats need to move cautiously before accepting well-intentioned conditions from bipartisan negotiators when it comes to launching these types of technology- and data-dependent health insurance programs. As is often the case in the private sector, when it comes to making (political and legislative) commitments that rely upon well-thought-out data processing initiatives, agreeing to what might appear to be a modest, negotiated demand for a seemingly-benign issue such as more stringent income verification might very well deliver up a program with massive delays that inadvertently discriminates against those that the overall ACA effort was focused upon helping most—which is what the Tea Partiers have always wanted anyway--and exponential cost overruns, instead.

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One final, slightly off-topic note.

Stating the obvious: If tonight's reports are, indeed, accurate, the facts tell us that various other pieces of legislation, including the rollout of Obamacare, ended-up being inexorably joined at the proverbial hip with the reopening of our government.

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