So it’s been a month since the rollout of the health insurance exchanges created by the ACA, and it hasn’t exactly been a fantastic rollout. It also isn’t that unexpected, nor is it the worst rollout of all time. It certainly doesn’t mean that Obamacare is doomed to failure. But there are a lot of lessons to be learned from this.
There have been two major issues during the rollout. The first obviously is the condition of the website. The second has been the “cancellation notices” that many people have been sent about their non-compliant health care plans. For the latter, this is one of those times when you can truly say that it’s not a bug, it’s a feature. I’ve been a bit shocked about all the attention that this issue has received, because it was known all along that Obamacare would require policies to meet certain minimum guidelines, and a lot of existing policies would not. The policies that people are losing are being replaced by policies that cover more items, and often for lower cost. True, some people who had catastrophic plans will find that they can’t find a plan that’s as cheap, even without subsidies, and there are millions of people out there who will be in that situation. Again, though, this isn’t news to people who have been following the law.
Of course, this issue has come up because Obama repeatedly said that people who liked their insurance could keep it. He was largely referring to those with employer-provided health care, but he should have certainly had a clearer message for those who had catastrophic plans on the individual market. Something along the lines of “If you currently have a catastrophic plan, it will go away. But it will be replaced with a more comprehensive plan that will probably be cheaper.” That would have been totally accurate, and may have blunted the complaints today.
The “no major changes” philosophy of Obamacare was deliberate, and small-c conservative. I have never liked it, but given the realizations of the past month, it’s probably a good thing that the law was rolled out this way. If employer-based healthcare were dropped entirely and the exchange didn’t work, this truly would have been a catastrophe. So far, it is incredibly bad that people aren’t having success on the federal exchange (state exchanges are another matter), but it is the minority of the country that even has to deal with the exchanges. It’s good that the initial implementation was incremental, as much as I don’t like it.
Let’s talk about the federal exchange. First, because of the way it was designed, setting up this exchange is probably one of the biggest IT projects that the government has ever done. It’s not the website itself that’s the problem, it’s all the systems the website has to talk to. Project this big are not easy to pull off. Even the private sector has had a lot of failures in this realm. It happens.
Not that there weren’t ways to improve the odds of success. With such a huge project, you need a good PM who has seen these kinds of things to completion before. The Obama administration dropped the ball on that point. They have had a tendency to be wonks who think they can do things quite well on their own; that was not the case for the exchange project. Ideology or hubris? Probably the latter, although who knows.
One criticism that I don’t think is fair is that the government used outdated development techniques on this project. Yes, Agile is great for a lot of things. It would have been disastrous for Obamacare. Agile works when you can incrementally add features to a product, all the while providing at least some level of functionality. The exchange simply would not have worked if all the pieces hadn’t been in place, and so a Waterfall methodology made a lot more sense. There are plenty of places that the government could use Agile development, but I don’t see how this was one of them.
The biggest problem that the exchange faced is that it is needlessly complex due to the politics surrounding the law’s passage. The reason all those back-end systems need to talk to each other is because the law has a very complex system of subsidies, income requirements, and eligibility requirements. The sausage factory that produced this law made it so, but it didn’t have to be this way. I do hope that in the long term, all of this goes away, and in concert with the end of employer-based insurance, we have a system where there are no subsidies or eligibility requirements. Instead, everybody can sign up for a Silver plan with no out-of-pocket premium expense. If you don’t sign up, you are randomly assigned to one. Sign up for a Bronze plan, get money back. Sign up for Gold or Platinum, pay some additional premiums. That’s it. You pay for it through the tax code, and then subsidies to insurance companies themselves based on who signs up for their plans. Other countries do it in much this way, so can we.
In the meantime though, we have to deal with the system we have. I don’t think any of the technical issues of the exchanges are things that can’t be overcome, but they need to be fixed soon or the long-term changes that the program needs to become better are in jeopardy. Getting things working well enough to declare success is probably the biggest lesson that the Obama administration needs to learn before the end of this month.