Industry expert on Healthcare.gov: It's time to shut this disaster down for awhile

It’s Bob Laszewski, the same industry consultant whose jawdropping blog post about the site’s technical problems (“Things are worse behind the curtain than in front of it”) made the rounds online last Friday night. Today he tells Ezra Klein that they’ve got only a few weeks to fix this thing before the crush of having to correct so many faulty enrollments before coverage takes effect in January becomes too much. The whole interview is worth your time (his advice on taking down the site for a month to fix it properly comes at the end) but I want to highlight the following bit. Here’s Laszewski puzzling through why the White House and HHS were so fantastically secretive about building the exchanges, even though greater transparency could have identified some of the glitches on the site before it went live:

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They were paranoid because Obamacare was under siege. I understand that. If they were open with their partners there would’ve been criticism, but it would’ve been constructive criticism. None of us had any idea that the government Web site would require security sign-ins before browsing. Why did that have to be a secret? No one will read a newspaper article about that. If it had been transparent I think most of this would’ve been caught upfront. That really hurt them.

One thing the Obama administration has been really paranoid about is rate shock. When someone like me says there’ll be rate shock they say you have to net out the subsidies. That is a fair point. But I think what happened was when they designed their system they were so paranoid about that that they wanted to make sure people browsing got the lowest price. That required signing in so you could see subsidies. And my theory is that’s why they went to the architecture they did even though the IT systems people wanted to go another way.

That’s the same theory that Avik Roy floated yesterday. One big reason why the site is so complicated to use is that, unlike most commercial websites, it makes you create an account simply to do a price check. And the reason it does that, notes Roy, is because the “price” of many of the plans is so surprisingly high that uninsured people might recoil and refuse to buy coverage upon seeing them unless they’re told right up front that they’re eligible for a certain amount of subsidies to reduce the cost. Result: Everyone is forced to create an account, which generates a huge load on the system, and all because the White House is afraid to let you see what these plans cost if you’re not among the relative few who qualify for subsidies. Rate shock, said Roy, is driving the technological disaster. And now here’s Laszewski essentially saying “yep.”

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As grimly amusing as it is to watch the Most Tech-Savvy President Ever, whose campaign famously ran rings among the GOP’s data-crunchers, preside over what may be a historic technological failure, it won’t be so funny if this jackass insists for reasons of pride on riding this rocket all the way into the ground. We need a pull-the-plug date for the ObamaCare exchanges, says Megan McArdle, or else the long-feared health-insurance industry death spiral might be unavoidable:

The administration estimates that it needs 2.7 million young healthy people on the exchange, out of the 7 million total expected to apply in the first year. If the pool is too skewed — if it’s mostly old and sick people on the exchanges — then insurers will lose money, and next year, they’ll sharply increase premiums. The healthiest people will drop out, because insurance is no longer such a good deal for them. Rinse and repeat and you have effectively destroyed the market for individual insurance policies. It’s called the “death spiral,” and the exchanges, like the mandate, were designed to keep it from happening…

Once the death spiral happens, it’s very difficult to recover from. That’s why if the exchanges don’t work soon, we need to hit the reset button and try again next year. This will be very, very difficult: Insurers are already selling policies under the new regulations, and those regulations have driven up costs for existing buyers. People who have been counting on being able to buy insurance through the exchanges will have to spend another year without. And of course, it will be politically embarrassing. But it will be even more politically embarrassing to get to December and find out that we have commanded millions of Americans to buy insurance on a system that doesn’t work. And it is not a good bargain to cover some people now, but in doing so, to make insurance unaffordable for millions more in a few years. If we can’t launch the system correctly, then we need to wait until we can.

In the private sector, this system would already have been rolled back, probably less than 48 hours after it was rolled out. The government has more time, but not that much more, because every day they wait adds to the chaos that will occur if they have to pull the plug in December. If the system cannot reliably process 50 percent of its users on Nov. 1 — and I mean from end to end, including sending a valid enrollment file to the insurer — then the administration should ask for a one-year delay of Obamacare’s various regulations, including the individual mandate.

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Anyone think all of the bugs are going to be worked out two weeks from now in a system where some features haven’t even been tested yet for fear of what may result? And before you say, “Obama wants it to fail so that he can push for single-payer!”, yes, that would be true if Democrats still controlled both houses of Congress. As it is, with the GOP likely to hold the House for the foreseeable future, that’s a nonstarter. His options here are essentially to (a) make this work now as is, which may be impossible, (b) work with Republicans on repairs/reforms, which … may also be impossible, or (c) pull the plug for awhile. All of which is to say, if you’re bummed about a looming Boehner cave to end the shutdown and raise the debt ceiling, your consolation prize is that that might, ironically, increase the pressure on O to suspend O-Care. House Republicans are promising hearings on the Healthcare.gov disaster soon; once the shutdown kabuki is done, those should get plenty of media coverage. It may also be that ending the shutdown will reveal the truth of Healthcare.gov’s failure to Democrats and centrists who mistakenly believe that the shutdown is responsible for the website’s problems. O would never agree to delay the law now, with Republicans using fiscal leverage to pressure him to do so, but once that’s over he can do so if necessary without losing that extra partisan bit of face. We may get our delay yet, thanks not to GOP tactics but The One’s own egregious incompetence.

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Duane Patterson 11:00 AM | December 26, 2024
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