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Should the Obamacare Exchanges Be Shut Down?

My sense is that the biggest reason Obamacare is now in trouble is because of the top-secret way in which the administration has handled the rollout. If they had developed the computer system in a transparent way, the marketplace would have told them long ago this would not work.

No one outside the inner circle at the Department of Health and Human Services has any idea what’s really going on behind the Wizard’s curtain. Hasn’t for months. Doesn’t now.

So any technical advice any of us could give would be, to say the least, uninformed.

If I were on the inside, and it were up to me, the first thing I would do is bring in a group of heavyweight information technology experts to tell me just what was really going on. The administration cannot trust the people who have been working on this because they told them to launch this mess on October 1 and almost three weeks in there has been no improvement on the website or in the backroom––they no longer have credibility.

I would ask those experts to very quickly answer three questions:

  1. Can this thing be fixed on the fly––as the administration appears to be trying to do?
  2. If it can’t be fixed on the fly––and three weeks into this that sure looks doubtful––then can it be taken down for one or two months with a high degree of confidence it can be brought back up in time to enroll people sooner rather than later?
  3. If the first two options are not possible, just how long will the computer system have to be shutdown before Obamacare can be launched in a way that there can be confidence it will work smoothly?

Then I would take their advice.

Right now the Obama administration appears to only be looking at this through a political lens: How do they minimize the political fallout?

There are two things wrong with that perspective.

First, the politics of this can’t get any worse. This is now a political joke. Republicans can make lots of snarky comments about Obamacare and they won’t be able to do more damage to Obamacare than the administration is doing to itself. Any Republican reaction to taking the system down won’t last more than a couple of news cycles. More, the President would never lose politically by making a decision about every American already knows he has to make.

Second, the Obama administration, by keeping this computer system up and so far not being able to fix it, is not only wasting people’s time they are on their way to destroying Obamacare.

As I have repeatedly said on this blog, the real longer-term threat Obamacare faces is that not nearly enough healthy people will sign-up for coverage in order for the program to be able to pay the medical costs for the sick people who enroll.

Left as is, I have to believe that the only people willing to put up with the repeated attempts and frustration with the Obamacare website and call centers are people so sick and in need of health insurance they have no alternative.

The greatest threat to Obamacare right now is a computer system the Obama administration continues to defend. And maybe their inability to understand how much damage they are themselves doing to the President’s signature domestic accomplishment.

When these computer problems are finally fixed, then we can move onto the main event: Can Obamacare work?

Robert Laszewski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog, where this post first appeared.

36 replies »

  1. – Single Payer by 2020 – Medicare, by in large, “works” – Or at least there is the framework for it to work.

    More likely to be Medicaid for all not on Medicare. Then the administration can cost shift from Medicaid to Medicare since there will be no private insurance sector for the providers to overcharge.

  2. Actually, we pay specialists very well due to the RUC. We begger primary care.

  3. To get an idea of the panic, posters on leftie blogs were actually speculating that Republican moles were inside the contractors and purposely sabotages the coding.

  4. So far it has broken every promise, costs far more than project, is currently causing more people to lose coverage than to gain it, and is turning into a mass of unintended consequences and incompetence.

    If this is a GOOD THING!!!!!, then I would sure hate to see a BAD THING!!!!!

  5. If health care is a “right”, then what happens if one is alone in a place without a doctor or a hospital (like a deserted island or the Alaskan wilds)? Does this mean one’s rights are being violated?

    I can exercise all of my other rights without requiring anyone else to do something (or the power of government being invoked). Free exercise of religion or free speech don’t require the government to build me a church or a newspaper printer.

    Nobody has to have their rights diminished for me to exercise my natural rights. That isn’t true under a “right” to health care.

    If you want to call it a societal benefit, fine. One can then discuss how far the benefit should be expended, at what cost, and under what limitations.

    But it isn’t a right.

  6. We already have concierge medicine. It’s called Medicare. The govt takes our money and uses it to pay bureaucrats in Washington and NY and contractors in the Midwest. We go to specialists who can’t live on the fee schedule Medicare offers which is less than taxicab drivers earn. We pay them direct and get nothing from Medicare. Small wonder Medicare’s costs are going down. If you get rid of the doctors, there are no costs for it.

    Insurance does not equal health care. Take away the anti-trust exemption and reform tort laws and that will get cheaper. Also take away the incentives for people to not become doctors.

  7. Here is where we have to go- “change or die”

    Here is my grossly overly simplified US “Healthcare Plan”

    – Close 1/3rd of US Hospitals within 5 years. There are too many and too geographically concentrated. Reward efficient ones who don’t horribly gouge/rape the system- Have you checked your hospital bills lately?

    – Every US citizen DESERVES as painfree and as dignified a death as modern medicine has to offer- Have you checked the medical expenditures in the last 6 months of “life”?

    – Strong emphasis on both individual (behavioral change) and institutional (public health) prevention. We need both.

    – Single Payer by 2020 – Medicare, by in large, “works” – Or at least there is the framework for it to work.

  8. Why is it that a FRIEND and a donator to the Obama Administration get a NO BID CONTRACT for this web-site that cost over $500,000,000+? And the cost is rising. Why is it that when and if Bush or Regan or any Republican would do this it would NEVER HAPPEN or we would hear about it 24/7 on EVERY news station? Well I guess that is what you get when you payoff the most of the News media and keep everyone else QUIET OR ELSE. Thank God only DEMS signed the Obama Care into law. Now with 2014 coming they, the DEMS, will have to answer for it and the fact that we are turning into another USSR. Just think DEMS you are getting your wish, we will have a Signal payer plan. Plus over 42,000,000 on EBT (Food Stamps) and now more people signing up for Medicaid since they can not afford this “great insurance” that the man the DEMS put back into office again. God save us and let’s up we can make it until 2016 so we can get a Republican in office to get are Country back on track.

  9. Just like Newton’s laws, every action has an equal and opposite reaction, the same is true in business. Let’s not kid ourselves; the government and healthcare are business industries. Insurance companies operate in the healthcare industry to earn a profit. The government should be run like a business, even though the CEO would be fired in the private sector, if finances were run the way the federal government does it.

    To the application of Newton’s law in the healthcare industry or any business industry, the government wants to make healthcare insurance affordable to those who cannot afford it. They want to do this by offering government subsidized insurance. Furthermore, the government wants insurance companies to take people with preexisting conditions. First and foremost, subsidizes have to be supported by funds. The funds have to be garnered by some kind of revenue; call it taxes, fines, or fees, it is still coming from somewhere. Since the people that sign up for the government subsidized insurance cannot afford it, then it will come from those that can afford insurance. These people will pay more money to the government to help provide for those that cannot pay for their own insurance. Secondly, insurance companies that have to take on those with preexisting conditions have to garner more revenue to cover the cost of paying for these people’s healthcare expenses. The company is in the business to make money for their shareholders or other key stakeholders, i.e. employees. Therefore, the company will have to raise premiums on others who purchase healthcare and do not have preexisting conditions; meaning people with less costs to the company. This is another means to get people who are health and can afford insurance to pay for those with health issues and cannot afford health insurance. Some people can afford insurance, but still barely make “ends meet” each month. If these individuals are forced to pay more, then they will become the ones that cannot afford insurance either. Therefore the system created under the Affordable Care Act, will force the population pool of individuals that cannot afford insurance without subsides to increase. Government regulations and additional laws always have consequences, like Newton’s laws, every action has an equal and opposite reaction. So I ask, is this really good for the country?

  10. This affordable health care is a joke. Not only have insurance costs doubled in the last two years for most people they are doubling again if the on-line rates are correct. A bigger charade is the cost for uninsured, if you are young or uninsured the cost you will pay on-line today under obamacrae is the same cost you paid three years ago before obamacare. SO WHERE IS THE VALUE ADDED. THIS IS A TOTAL WAIST OF TAXPAYERS MONEY. SOMEONE MUST BE HELD ACCOUNTABLE FOR THIS SCAM.

  11. Obamacare Genocide in Action: What is Already Underway
    October 21, 2013 • 9:08AM
    On June 24, 2009, Lyndon LaRouche’s Executive Intelligence Review submitted testimony to the House Ways and Means Committee of the U.S. Congress, which argued, in detail, that “ObamaCare is Genocide,” and presented an alternative of what must be done.

    In its upcoming issue, dated Oct. 25, 2013, EIR will present a Fact Sheet that will include its preliminary findings on how this genocide has been carried out over the three and a half years since the implementation of the Affordable Care Act (ACA) in the spring of 2010, and its further projections of how this fascist program is set to be implemented over the immediate future.

    We present part of these findings below:

    SHUT DOWN HOSPITALS

    The U.S. hospital-centered health care system, already contracting, is now under assault from multiple Obamacare measures.

    Overall, Obamacare specifies cuts of $716 billion through 2020 in Federal health care programs (Medicare, Medicaid and “new”), much of which are cuts to hospitals, directly and indirectly.

    * Penalize readmissions. Financial penalties against hospitals are in effect for their “too-frequent” re-admission of sick patients. Since October, 2012, hospital rates of re-admission are reported quarterly and evaluated. A rate considered too high results in docking Medicare payments to the hospital. The cut is up to 1 percent in FY 2013; up to 2% the next year; and 3% thereafter.

    As of early 2013, of the 3,282 hospitals in the HRRP (Hospital Readmissions Reduction Program), fully 66.7%, or 2,189 facilities suffered a cut in Medicare payments. Teaching hospitals, which tend to have complex cases of elderly patients, and safety-net hospitals serving the poor, predictably have the most need for re-admissions, and they are reeling from the cuts. HRRP will cut Medicare spending by $8.2 billion from 2013 to 2019, say Obamacare statisticians.

    * Cut charity care reimbursement. Obamacare specifies cuts in Federal aid to hospitals, which has defrayed costs of treating the uninsured. Starting in 2014, Obamacare will cut what is called DSP—Disproportionate Share Payments. The hospitals are to get $22 billion less over the current 10 year period, according to the American Association of Medical Colleges and the Commonwealth Fund.

    * Sequester cuts. Some $95 billion in other cuts in Medicare programs are underway, including the impact of the sequester, all of which are slamming hospitals, according to Caroline Steinberg, vice president for analysis at the American Hospital Association. In fact, a specific sequestration automatic cut has taken away $45 billion from hospitals—more than double what the Obamacare DSP charity cut was.

    * Mass threat to rural hospitals. In August, the Obama Administration proposed a rule change to what is called the Critical Access Hospital (CAH) program, which would shut down hospitals in rural areas en masse. There are currently 1,332 CAH hospitals nationwide, with potentially two-thirds in line for shut down. The CAH system was set up in 199x, to act to curb closures of rural hospitals.

    The way it has worked prior to the Obama proposed change, is that, under the CAH system, since 2006, state health officials designate which of their community hospitals—often in low population density areas—are critical to remain open and viable in their localities, in order to provide Medicare residents the physical means to receive care. The criteria include that the facility not have more than 25 beds, it be at least 35 miles distant from other hospitals, and other factors. These CAH facilities then get reimbursed by the Federal CMS (Center for Medicare and Medicaid Services) at 101 percent for their Medicare-related expenses, not at the usual lower Medicare reimbursement rates.

    But in August, Inspector General Daniel Levinson, for the Health and Human Services (DHS) Department, said that hundreds of these CAH hospitals no longer meet the criteria. So states should no longer have the right to designate CAH facilities; the HHS/CMS should do so, and they will disqualify many such hospitals from adequate reimbursement. This will financially ruin the hospitals. Particularly vulnerable are Iowa, with 82, and Kansas with 83, CAH hospitals.

    DRIVE OUT DOCTORS

    Under various Obamacare measures, physicians are under financial and subjective pressure to acquiesce to the intent of the ACA to cut care and lives. Already, two-thirds of the doctors in the United States no longer practice medicine independently, but they are now in the employ of other entities—groups and hospital systems, to the point where the American Medical Association, in November 2012, issued guidelines on how to cope with the “conflict of interest” involved—namely, where the physician wants to treat his patient according to the Hippocratic Oath, and the Obamacare system does not.

    Only 36% of all U.S. practicing physicians own their own practice (in whole or in part), which is way down from 57% in 2000; and way below 85% or higher in the 1960s.

    Rural areas are desperate for physicians, and the threat to shut down Critical Access Hospitals is a threat to cut off all advanced care in these localities, in particular in the farm states, where counties have a high percent of elderly.

    In addition, new “ratings” for physicians, upon which their pay will be evaluated, are being devised under the title of the “Physician Value-Based Modifier.”

    CUT DIAGNOSTICS

    Screenings for diseases and conditions, and the staff and facilities to conduct them, are being denied and reduced under Obamacare. One of the methods, is the issuance of guidelines to cut back on preventive screening, by the U.S. Preventive Services Task Force (USPSTF), a pre-existing agency in the Department of Health and Human Services.

    * Breast cancer. Within three months of the enactment of Obamacare, new guidelines were issued that women should get less frequent mammograms. This decree was made, despite the national concern for the fact that mammography use was declining in the 2000s, mammography facilities were decreasing, and doctors feared a rise of breast cancer mortality rates. As of 2009, 27% of U.S. counties had no mammography facilities at all, associated with poor and rural areas.

    In May 2010, the U.S. Preventive Services Task Force stated that screening mammography for women aged 50 to 74 should be every two years, not yearly; and for younger and older women, such screening should be less often, and decided on an “individual” basis.

    This went directly against the modern standard, recommended by cancer specialists, for women aged 50 and above to have annual screenings; and every two years for those 40 to 49.

    Since the USPSTF decree, preventive mammography rates in women in their 40s have dropped nearly 6 percent, as of 2012 (Mayo Clinic study).

    * Upper limits on screenings? The Task Force is considering an upper age limit for screening mammography. In The Netherlands, women over 75 are not prohibited from mammograms, but they are no longer reminded to do it, despite the fact that breast cancer for elderly women is still a clinical concern, and treatment can extend their lives.

    * Prostate cancer. In May 2012, the Task Force recommended against prostate-specific antigen (PSA)-based screening for prostate cancer.

  12. Most of our doctors have opted out of Medicare because of horrendously low fee schedules making it only a transfer of money from us to it to provide free insurance to others. It would be better to just tax everyone to pay the bills for those who either can’t afford it or simply don’t feel like paying for them. Meanwhile our secondary carrier, CIGNA struggles with all its might to figure out how to properly process claims when the doctor has opted out of Medicare.

    There should be a national marketplace with a cafeteria of benefits and tort reform. We could redirect the hordes of lawyers involved in the many insurance commissions to encouraging people to buy insurance or making the tax code apply to everyone.

  13. I have done the obamacare website, it only took me two weeks. And found that most Insurance companies have RAISED their monthely premiums 77 to 100 dollars permonth across the board, And the comprable healthcoverage through obamacare is costing me 77 $ more per month FOR THE SAME EXACT PLAN. My current plan is being abolished the end of the year, so i cannot continue to use that plan. So , with obamacare i have to accept a cheaper plan with a HIGHER deductable, with LESS coverage and MORE out of pocket money if i get sick or need surgery. HOW IS THIS HELPING THE AMERICAN WORKING MAN ? LESS COVERAGE, MORE OUT OF POCKET MONEY, AND I HAVE TO GET INSURANCE OR BE PENALIZIED ON MY TAXES. THANK YOU PRESIDENT OBAMA AND CONGRESS, you have met my expectations on how you would handle healthcare. Just but more financial burden on the working man who you care NOTHING about….

  14. One other thing. Health care investors are salivating at the opportunities associated with concierge medicine. I predict that, within a couple of years, we’ll have vast concierge franchise operations. There will be $20,000 per year 5-star enterprises, featuring Stanford and Hopkins grads and other medical superstars, and less expensive options staffed by more modestly decorated docs. Cash only, thank you very much. Anyone who’s been to less developed countries understands these sorts of bifurcated medical systems. it’s coming here, thanks in part to the ACA. Again, good job Dems!

  15. Obamacare passed without a single Republican vote. It bears this president’s name. Nancy Pelosi wouldn’t let the public read it. Harry Reid used procedural tricks in conference to pass it. Yes, Dems, this is your baby. You own it.

    Enjoy!

  16. Where did you guys come from? Our job isn’t to make you feel good about stuff or to help you stay positive. This isn’t a spin control exercise (or wasn’t until you showed up). It’s to try and understand what’s happening.

    You are quite correct that the Part D roll out was a mess. It took almost six months to straighten it out. Software isn’t infinitely complex, but to paraphrase an old friend, “Architecture matters” as does collaboration with users. Healthcare.gov is fixable, but not by a “Fortress CMS”.

    You’ve accidentally blundered into a nest of IT geeks. Listen and learn.

  17. http://huff.to/16lD6cM

    I think the technical issues are pretty well described in article linked above. Further, according to another report recently, the company that designed the front end has taken its name off the site — a move which had to be approved, and was, by the HHS. The reason seems obvious — the site development was not done according to the original plan and the designers did not want to take the heat for a management failure.

    What I have read elsewhere is that HHS was warned last JUNE by the developers that the project was unlikely to meet the Oct 1 deadline. Repeated requests were made to change the roll-out and do it in stages. For POLITICAL reasons, these requests were denied.

    I don’t blame the President, nor the HHS Sec’y, so much as some lower level political hacks that did not know what was going on and were not competent to manage an IT project. Those people should be hunted down and fired. They false represented the state of the project to their superiors. They not only screwed the President, they screwed the people for whom the site was built.

  18. The Obamacare exchanges are a huge step forward and should be appreciated warts and all. They will be compatible with private insurance, public options, Medicare for All, and business benefits management regardless of the political winds. For the first time at the federal level, we have real on-line marketing and interactivity with real citizens.

    We need to be asking for more transparency and Blue Button Plus automation form both our state and federal agencies and the insurance exchanges, both federal and state, are a good place to start.

    More about this https://thehealthcareblog.com/blog/2013/08/15/the-federal-health-data-services-hub-hubbub/

  19. Obamacare is the biggest most deviously disguised piece of pro-corporate-welfare crap ever passed over on a misinformed and misled public. We need “Medicare for All” (starting with the president and members of congress on down)…or a real (not fake like the one Democrats offered but did not pass) public option at the very least.

  20. I thought after defending the ACA for the last couple of years that my fight was over! We need to stay positive. OBAMACARE IS A GOOD THING!!!!! thanks Jill.

  21. Thank you Cindy. I’m quitting this blog I’m so fed up with the negativity. What program has the gov’t ever rolled out that went seamless from the beginning ? Four years and it’s so old and tired….

  22. NO! Need to remember it is outside contractors that have been hired to do the job …… so corporate groups can always do the job right? Congress does not fund the government to keep IT current and up-to-date …. so problems when we try to address issues across agencies ….. you would think we would learn.

  23. What happens if people think they’ve enrolled and actually haven’t? I also read on one of the computer expert blogs where a guy said he didn’t enroll or even register for info and was sent an email stating he had enrolled. Would it be possible for hackers with SSN to enroll people… not that the gov’t would enroll anyone just to meet prerequisite numbers to make it work…

  24. Megan McCardle answered my question in an excellent column n 10-14 titled ‘ObamaCare needs a drop dead date.’
    She said that if enrollment was manual, those with chronic health problems would push through the delays, but healthy young people would not bother.

  25. My impression is that displaying insurance products on a website is not hard to do. Esurance and Term Quote companies do it every day of the week.

    The hard part is determining the subsidies, with all the confidential and complex data bases.

    So here is a suggestion:

    Ask people to come into their local Social Security office and enroll them manually. This will take at least $500 million in extra labor costs and it will be much slower. Also there are no Social Security offices in far flung rural areas.

    Another alternative would be to let health insurance agents enroll people manually. These agents do exist in every small town in America. There could be a problem with allowing so many people to have access to income data — but there are surely solutions.

    HHS designated the paltry sum of $67 million to pay for navigators. If that was multiplied by 10 we could get the exchanges off the ground.

    My suggestions are probably naïve, comments welcome.

  26. Please be sure to exclude the state-developed exchanges when discussing problems with the federal exchange. The state exchanges are generally working at this point, as well as could be expected given that we are in the first weeks of an incredibly complex project launch that had never been done before. To paraphrase the Matrix: nobody makes it on the first jump.

    Aside from that, John Irvine’s point nails it: this wouldn’t be like Google pulling the plug on its beta version of gmail, or even a service like GoogleHealth. It’s also not just about someone being embarrassed, but about myriad interdependencies nationwide across government and the private sector that would be affected. October 1 may not have been a real deadline, but January 1 is, and pretty much the only sensible course of action is to work on the federal exchange 24/7 with the goal of making sure people who want/need insurance effective on 1/1/14 get it. Perhaps you put up a sign saying “We’re fixing it. Leave your email and we’ll notify you when you can get through quickly.” but you don’t stop working and you don’t take the site down now.

  27. I wonder if any of these contractors had the requisite HIPAA Omnibus-compliant BAA’s in place?

    Wonder whether they had any software QA P&P’s in place?

    (Asked and Answered)

    I also can’t help but wonder whether there were any GOP supporter-paid “moles” hired by these contractors and artfully working to throw sand in the HIX gears?

    Yeah, it really is a CusterFluck. Obama just handed the Defunder Battalion, — on a Bronze/Silver/Gold/Platinum Platter, no less — a convoy load of depleted uranium hollow point projectiles for the January 2014 Shutdown/Default Festivities.

    Wonder whether Sebelius will get dragged before a number of congressional Circus Vargas committee hearings this coming week or next?

    (Asked and Answered.)

  28. Regardless of the worthy aims, the Obama administration badly mismanaged this roll-out. ObamaCare isn’t a political joke; the roll-out is. Robert L has it right. These weren’t glitches. This failure was the result of a deeply flawed software development process managed by frightened amateurs. They did it to themselves.

    The Secretary, almost certainly under White House orders, basically froze issuing not only regulations, but specifications for the Exchange’s data systems during the 2012 political campaign to avoid providing any easy targets for their political opponents.

    By the time they resumed working on system requirements, it was far too late.
    Coding began in earnest in February. PLUS, as Robert suggests, they compartmentalized the development process, cloaking the key federal data hub from all the contractors working on the vital interfaces to it from other departments, as well as from the health plans they would be feeding enrollment data to. It couldn’t have turned out differently than what we’re seeing now. Books will be written about this. . . .

  29. A political joke? Expanding health care to millions who do not have it, and it would be millions more were it not for the politics (and this is where the joke is albeit not funny) of certain red-state governors?

    Health care is a right, not something just for the few. No one asks to be poor, sick and uninsured.

    Study your history. The same things being said now were said about Medicare.

    So let’s not let the inevitable start-up glitches serve as a smokescreen for Tea Party silliness. I expect better on this blog.

  30. Realistically, I am guessing shutting down – either temporarily or longer term – is a practical impossibility. And Robert knows this.

    This is the problem with government IT programs and government innovation programs. Once you commit, you’re committed. Shutting down a $400 million project – or a $100 million project – or a $25 million project for that matter, is political suicide. You’re going to have to acknowledge that you made a mistake. And it doesn’t take a degree in political science to know that this isn’t how Washington works.

    Google can innovate because it can experiment. Have an idea? Cool. Throw it up against the wall. It sticks. We keep it. It doesn’t? No problem. We move on. And forget about it. This is the point that’s being lost here. The exchanges were an effort to borrow from the private sector approach to innovation that made it half way there and then stalled. I think the takeaway is that If we’re going to do this kind of thing, we have to do it in a way that acknowledges some of the limitations that governments operate under regarding contracts, political reality and transparency.

    The real tragedy is that people in government are going to become even more risk adverse than they already were and that will be a problem for people with good ideas for a long time to come ..