Administration fears part of health care system so flawed it could bankrupt insurance companies

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ObamaCare issues putting health insurance industry at risk?

WH's worst fears revealed in new docs

While the administration publicly expresses full confidence in its health care law, privately it fears one part of the system is so flawed it could bankrupt insurance companies and cripple ObamaCare itself.

"Week after week, month after month," says John Goodman of the National Center for Policy Analysis, "the Obama administration kept telling us everything's working fine, there's no problem and then they turn on a dime and fire their contractor."

To justify a no-bid contract with Accenture after firing CGI as the lead contractor, the administration released documents from the Department of Health and Human Services and the Center for Medicare and Medicaid Services that offered a rare glimpse of its worst fears, saying the problems with the website puts "the entire health insurance industry at risk" ... "potentially leading to their default and disrupting continued services and coverage to consumers."

Then it went even further, saying if the problems were not fixed by mid-March, "they will result in financial harm to the government."

It even added that without the fixes "the entire health care reform program is jeopardized."

In spite of the "urgent" need officials cited to keep the system from collapsing, the White House spokesman said he knew nothing about it.

“I didn't see the article I'm not aware of those statements,” Jay Carney said.

The dangers were known in early December, but later, shortly before CGI was fired, Health and Human Services Secretary Kathleen Sebelius gave Fox News an upbeat account.

“I’m thrilled that we’re going to have millions of people for the first time that have health security,” she said.

Shortly after the website went live,one official told Congress a critical part of the system – what is known as the “back end” -- had not even been built yet.

Doug Holtz-Eakin, former head of the Congressional Budget Office, says "the back end -- that information is supposed to be transmitted to an insurance company, the insurance company knows who you are, they know what policy you've picked."

But the back end still hasn't been built, so insurers are dealing with massive confusion, missing information on who's signed up and what subsidies they get.

Sebelius insisted once again Wednesday it would all come together and insurance companies will get their money.

"I mean we will get them paid,” she said. “There is no question about that, so we are on track."

For now, though, officials concede they're relying on estimates from the insurers.

"Here's who we think we have, and here's the subsidy we think they're owed," explains Jim Capretta of the Ethics and Public Policy Center. "Please send us a check from the treasury," he says chuckling. "The honor system again."

"There's no way to effectively match policies and people," says Holtz-Eakin.

"And on top of that, you can't match policies, people, to the federal subsidies and that's a big problem in terms of just the mechanics of making payments."

The administration emphasizes that fixing the site by mid-March is urgent. Otherwise the system could descend into chaos and threaten the future of ObamaCare.

Meanwhile, a new Quinnipiac poll gives the president poor grades for his management of health care, with 59 percent disapproving while 36 percent approve.