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.