Obamacare's Mismanagement Problem

The health care law's implementation has been marked by missed deadlines and general bureaucratic ineptitude.



On Monday, the Department of Health and Human Services released a video touting its latest big promise on Obamacare: The health law's exchanges will be ready on time—at least, that is, the parts that haven't already been delayed. 

That's really all it had to say. The video, which has the forced-fun feel of an intro to a low-budget corporate training video, highlighted a handful of health law deadlines that had already been met, and insisted, yet again, that its insurance exchanges would open for enrollment in October as planned.

The intended message: We're on schedule. We can make this work.

Talk about lowering the bar for success. As anyone who's ever worked on a project with an important deadline knows, when someone starts insisting that everything will come in on time, really, trust me, it's usually because the work isn't going as planned—especially on project that's been rife with shoddy management and missed deadlines.

The real message of the HHS video is that the agency desperately wants people to think it is on schedule and can make the law work. And it understands that as it stands, its work, and the weight of the available evidence, suggests otherwise.

But despite the administration's messaging efforts, news in the days that followed did little to dispel the perception that the Obama administration may not be up to the task of implementing the law. That's not an unusual turn of events. So far, the law's implementation has been marked by missed deadlines, mismanagement, and general bureaucratic ineptitude.

The likely proximate cause for the video is clear enough. At the beginning of the month, the Obama administration announced two major delays in the health law. The law's employer mandate and related reporting requirements, scheduled to begin in 2014, were postponed by at least a year. Income and insurance status verification in state-run exchanges were also put off until 2015. The reason, it seems, is because it's too overwhelming a technical and administrative task to pull off in time. 

Those are merely the most prominent examples of the law's implementation troubles. But more bad news arrived even as HHS was insisting that everything was going according to plan.

On the same day that the agency released the video, news broke that the contractor hired to manage applications for health insurance subsidies through the exchanges was under investigation for overbilling government clients. Serco, a British company awarded a health care contracting gig with the federal government potentially worth $1.2 billion, was revealed to be under investigation by the British government for fraudulent overbilling estimated to be in the "low tens of millions of pounds."

It's not clear why Serco got the job in the first place. According to The New York Times, the company's American contracts are primarily defense oriented. But it has "little experience with the Department of Health and Human Services or the insurance marketplaces."

Serco is not the only organization tasked with implementing the health law despite little direct experience. The data hub designed to coordinate personal information within the exchanges from multiple government sources, including the IRS, is also an unprecedented project. And this week brought more worrying signs for its rollout as well.

At a congressional hearing on Wednesday, the Inspector General for the Internal Revenue Service said that testing of the system "will be difficult to complete" before its scheduled opening in October. "The lack of adequate testing could result in significant delays and errors in accepting and processing…applications for health insurance coverage," he said, according to Reuters.

At the same hearing, a representative from the Government Accountability Office told Congress that the government watchdog couldn't even determine at this point the amount of work that the federal government still had to complete in each state.

Nor was this the first time the GAO had expressed uncertainty about HHS's management and the law's implementation. In June, the agency reported that HHS had missed multiple implementation deadlines so far—and warned that future missed deadlines could make it impossible to open on time.

GAO has provided other reasons to be skeptical about the health department's competence as well. In a separate report in November, the office also found that HHS was among several government agencies failing to properly assess the cost and effectiveness of internal IT systems. Another GAO report warned that the health department was not exercising sufficient oversight of contractors in its Medicaid audit program. An audit of HHS finances last year by an independent contractor, meanwhile, found that the agency had ongoing material weaknesses in its financial management, owing in part to the department's size and complexity. HHS has known about some of these weaknesses for years. 

This is the wing of the federal government primarily tasked with implementing the largest, most complicated, most expensive social insurance scheme in decades: an agency that has demonstrated repeated failures to manage its own technology infrastructure, its fleet of contractors, or its sprawling financial controls.

Is it any surprise that implementation is not going entirely as planned? If anything, it's almost more of a surprise when anything does.

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  1. God, Sibelius looks like a cross between David Bowie and Herman Munster.

    Maybe put on some blush? Something?!?!!

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      1. …But does she get insurance?

        1. Not until 2015, according to a recent royal decree.

    2. Remember the lead singer for The Cars?

  2. Whether the exchanges are ready on time is a trivial, almost irrelevant question.

    The real problem is that the basic central pillars of the law – community rating and guarenteed issue – are going to drive inflation in the health care market and drive up premiums. It’s basic economics. People will spend more money if they think that someone else is going to pay for it. The sick and the healthy alike are going to do their best to “get their money’s worth” out of the premiums they pay. And since premiums are disconnected from risk, your personal record of how often you go to the doctor will have no affect on your premiums. As a result health insurance premiums are going to get dramatically higher. We either let the subsidies bust the budget, or we end up with a death spiral in the insurance market. Either way, it’s not going to be pretty.

    1. Look at what Medicare/Medicaid has already done for the health industry. The feds create a sea of public money ear-marked for medical handouts and naturally market prices rise to meet that extra supply of money. Effectively pricing large numbers of people out of the market. People, myself included, have no choice to to participate in the a 3rd party-payor dependency, which further warps cost incentives. I doubt my health insurance would be so expensive if an ambulance ride wouldn’t cost me $5,000.

      And don’t get me started on the central planning powers of the American Medical Association…

      1. In San Francisco ambulance rides are about $7,000. Much of that is due to the homeless who use them as free rides to emergency rooms.

    2. What it will all come down to is how often insurance companies are allowed to say, “No” (also known as “rationing”).

      I welcome any insight (or just speculation), because I don’t have the damnedest clue…

    3. Today my dog vomited on my kitchen floor. His barf was less of a steaming pile than the ACA.

  3. Every once in a while I’m overcome with a wave of conspiracy theorizing, wherein I think that the Administration wants Obamacare to fail, so it can switch to the system it really wants, single payer (Uncle Sam) health care. Then I recover and think, “Nah, couldn’t happen here.”

    1. wir muessen die juden ausrotten!

      1. Bunch of German words with “Juden” in ti means something about Jews.

        1. Maybe that’a that Austrian language we learned about.

          That’s what those guys who ran the Polish Death camps spoke. Austrian

  4. We’re in the “defining success downward” stage. By the time October rolls around, a web site consisting entirely of a pixelated DHS logo and an animated GIF of a guy with a shovel will qualify as the very pinnacle of health information management.

    1. Oh man, someone needs to create that meme. “A preview of the Obamacare exchanges, coming in October 2013.”

  5. …”In June, the agency reported that HHS had missed multiple implementation deadlines so far?and warned that future missed deadlines could make it impossible to open on time.”…

    ‘But in the meeting this morning, management assured us that if we all just put in a little more effort, we can make up that lost time and hit the deadline!’

    And anyone who has been through one of those cheerleader sessions knows full well it’s time to start looking for cover; when reality over-rules the fantasies, the blame is going to start flying off the fan blades in all directions.

  6. Obama made the claim in a speech today that costs are going down already as places like California, Oregon and NY have shown.

    What’s that about and what figures support this claim?

    1. As a CA resident, all I’ve read about (and experienced) are rising costs.
      There was a thread yesterday which carried predictions of reduced costs for some 17,000 NY residents, as a result of Obozoscare being slightly better than the current NY regs. And assuming everything works as planned. To put that in perspective, the NY population is 19.5M; natch the NYT headline said “50% lower costs for NY residents!”
      Dunno about OR, but let’s be honest; the only way this will lower costs is if (as in NY) it removes even more ridiculous regs.

      1. NY has some of the worst individual health care insurance regulations, but they can’t force people to buy health care insurance. So, the result is a very expensive market that doesn’t cover many people.

        However, since Obamacare forces people to buy insurance through the mandate then if you assume those people actually do buy insurance vs just paying the penalty (or setting their withholding rate to a $0 refund) then it will indeed result in drastically lower prices.

        It’s effectively a massive tax hike on the healthy to support the sick, but it will lower premiums for the sick.

        1. “However, since Obamacare forces people to buy insurance through the mandate then if you assume those people actually do buy insurance vs just paying the penalty”

          Given the fine (let’s be honest) is ~$300/annum, while the insurance for the young and healthy (what’s needed to offset the old and sick) is something like $300/mo, I have a feeling even gov’t-school math is sufficient to make the choice clear.

  7. It’s not clear why Serco got the job in the first place. According to The New York Times, the company’s American contracts are primarily defense oriented. But it has “little experience with the Department of Health and Human Services or the insurance marketplaces.”

    My guess is that their little experience is exactly why they got the job. Their competitors had experience working for the Department of Health and Human Services and priced their bids accordingly. The fact that Serco was the lowest bidder and they had no experience with the DHHS is a bad sign. They underestimated the complexity of dealing with that portion of the Federal government.

    1. So you’re guessing the due-diligence was ‘Hey! We got a cheap bid!’?

      1. No, they couldn’t care less about costs. Serco likely got the deal because someone played golf with Big O and let him win.

        This probably involved them self-performing an amputation of their right arm.

  8. The Oministration has a notable shortable of people with serious private sector experience in…just about everything from leadership down to whatever Michelle has her cabal do.

  9. As a result, it’s pretty likely they’ll screw the pooch on most grand projects.

    On something this big, Armageddon is all but certain.

  10. what Julie explained I am stunned that someone can get paid $7325 in four weeks on the internet. did you look at this website http://www.Work25.co?

  11. If this stuff isn’t code- and feature-complete and in some kind of UAT, it either ain’t going live in October or it will be a clusterfuck of galactic proportion.

    1. To paraphrase:

      The US is our beta site.

    2. It government work.

      It will be both.

  12. Will I be lucky to be old enough to get on MidiCare by Oct? Perhaps my timing is better than the POTUS’s !!

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  14. Obamacare can never be managed. Health care is a customer driven choice not a government driven choice so the cart is placed in the wrong location for forward movement. http://coldwarwarrior.com/

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