Healthcare.com Would Have Worked Better

Is this any way to build a railroad?

By now you’ve heard that the “Obamacare exchanges” did not launch on October 1 so much as stumble out into public view, barely able to crawl.

Three weeks later, the federal version — “healthcare.gov,” which is actually the same exchange re-deployed 36 times in 36 states — is still barely able to crawl. By contrast, most of the 15 exchanges operated by individual states and the District of Columbia are working more or less fine, for varying reasons we will explore in a moment.

Why the epic fail for healthcare.gov, estimated to have generated a health insurance enrollment rate of less than one-half of one percent among nearly 10 million visitors? Information technologists have identified lunk-headed flaws in its overall design, while pointing to the way the Federal government rolled it out, all at once, all across the nation — as if it were a campaign commercial and not one of the most complex undertakings in the history of e-commerce.

Which would be for good reason: the federal exchange is a campaign commercial, one the Administration had no choice but to broadcast after its opponents went to war on every front against implementation of the Affordable Care Act.

The architects of the ACA expected that states would build their own exchanges. The federal exchange was supposed to be a failsafe — a fallback for a few straggler states unable to build their own in time for the October 1 launch. For the rest, healthcare.gov was supposed to do two things: point people to their state’s exchange; and handle the very complicated task of querying tax and other federal databases to verify people’s eligibility.

Instead, it found itself saddled with the entire e-commerce job for 36 refusenik states.

And then the really bad decisions began. Notwithstanding the existence of several private health insurance exchanges that have been working for years — and numerous turn-key insurance exchange software systems — healthcare.gov was hastily thrown together by CGI, a behemoth government systems integration contractor few had heard of until this week. CGI’s work was overseen by a federal bureaucracy under political siege from all directions, including most of the states it was attempting to help — while holding its breath as the very basis for the project moved its way through the bulk of the federal legal system. Obvious design problems were never addressed and worked out publicly, the administration’s energies consumed instead by existential defenses of the law and a scramble for implementation funding.

Design review? Implementation simulation? User testing? Yeah — we’re getting to that next Monday.

This is exactly how not to build a railroad. Ask anyone in the working information technology industry — or in biotech, nanotech, or alternative energy. Taking on grand projects with immense technical complexity and high risks of operational failure requires a culture obsessed with the task, rewarded for the risks, and shielded to every degree possible against uncertainty. Is that what it felt like for the people overseeing the creation of healthcare.gov the past three years? Of course not. Which is why it is important to remember that they never wanted much of that job in the first place.

The Devil is in the Politics

Back in 2010, when the health reform plan was moving from the drawing board to the floors of Congress, its architects had good reason to believe the states would build their own exchanges — and do so competently — because two very different states already had.

The actual Affordable Care Act — as opposed to the hydra-headed political animal known as “Obamacare” — deferred a great deal of the law’s day-to-day workings to local markets and state-based insurance regulation. What is the obvious way to implement the ambitious national goal of universal coverage, while deferring to the unique conditions of hundreds of local marketplaces? With exchanges operating as close to those marketplaces as possible.

Long before the ACA was drafted, several private exchanges were up and running to do just that. There are private exchanges for large employers operated by benefits management companies like AonHewitt, Mercer, and TowersWatson; others for smaller employers and consumers operated by Silicon Valley companies like GetInsured.com and eHealth (full disclosure – I am an advisor to GetInsured); and for years, individuals have been able to sign up for Medicare plans via ExtendHealth, another Silicon Valley company acquired last year by TowersWatson.

The architects of the ACA anticipated that most individual states would choose from among these many competing options for their own exchange — in some combination of buy, build, or lease – because they knew they were already up and working. They also took at face value the ferocious lobbying positions on various elements of the ACA, by champions of state rights, for more local control.

Deferring to individual states for the exchanges would also be consistent with the “Massachusetts model” at the heart of the ACA itself. But Massachusetts was neither the only inspiration for a state-based exchange, nor even the first. Utah was. In fact, Utah’s pioneering health exchange introduced the very idea to national health policy conversation — back during the George W. Bush Administration.

As a market-enabling mechanism for ending the dysfunctionality of local health insurance purchasing, exchanges were first championed by President Bush’s Secretary of Health and Human Services, Michael Leavitt, Utah’s former Governor. Not coincidentally, Utah is one of three states with a Republican governor operating its own exchange — an adapted version of the one it built years ago.

The real-world, red-state inspiration for the health insurance exchanges included in the ACA may seem bizarre in 2013 — but it is no more bizarre than the conservative origins of the individual insurance mandate — another odd feature of the law that inspires as much fury from the right as it does denial. But bad partisan politics can do ugly things to good policy ideas.

Those first health exchanges were operational long before there was a Tea Party movement — before the politics of health reform soured, the ACA turned into “Obamacare,” and educated people with real political aspirations started equating the law with slavery. So much for state exchanges and all the other rational, market-oriented ideas in the ACA. Suddenly, it was Civil War.

That war erupted in 2012, when the Supreme Court upheld almost all of Obamacare — except the provision that had, in effect, required states to expand their Medicaid programs. Most states responded in predictably red or blue fashion. At the same time, they also made their go/no-go decision about an exchange.

As a result, only 14 states (and DC) committed to setting up their own exchange, most of them solidly blue, though with a few odd exceptions: Kentucky went forward with its own; New Jersey did not.

Because we do not have reliable numbers yet, we cannot correlate which technology approaches by those states — buy, build or lease — are working best. But we do know from reporting around the country that they are working better than the federal exchange — because most of them appear to be working and people are managing to sign up for health insurance.

Which brings us back to the well-publicized traffic problems and miserable enrollment rate of healthcare.gov. It turns out that users of the federal exchange have to run through the entire enrollment process before they can see any of their insurance buying options. It is a simple design flaw, but a potentially fatal one. Imagine a first-time visitor with Amazon.com having to create an entire secure e-commerce account before ever seeing a product, or with Match.com before ever seeing a profile of anyone, or with Expedia before seeing if it had any actual flights. If there is one product design principle known to anyone who has ever worked for an e-commerce company, people browse before they buy — and many if not most of them are just browsing. The electronic traffic jams created by this terrible little design flaw multiply logarithmically.

This would not have happened if healthcare.gov had been undertaken by an organization with the wherewithal to treat the job like healthcare.com.

Some of the most mission-critical components of government programs are developed, built, tested and launched not by government employees or general systems contractors, but by highly specialized commercial enterprises. The federal government was not up for the task of building and overseeing a complicated e-commerce business with a significant data management back-end – any more than it has ever been up for building the military’s fighter jets, running commercial airports, or administering the actual Medicare program. (Sorry, fans of “Medicare-for-All,” but the program has always been administered by commercial insurers.)

As with national defense and Medicare, these critical programs should be mandated, funded and regulated by the government. But their execution is best left to private enterprises who compete for contracts, talent and capital, strive to foster innovation and efficiency, and maintain cultures of real accountability. If healthcare.gov had been designed, built and launched by that kind of culture — rather than a behemoth government contractor supervised by a besieged bureaucracy — we can be certain it would be running a whole better right now.

Yes, those who built healthcare.gov did so against a backdrop of enormous political conflict, and the failure of many states to step up and help is tantamount to sabotage. But that sabotage was aided and abetted by an administration that confused political and legal survival of Obamacare with implementation success. The administration apparently felt little need to push and pull on the product as it was being built; nor heed the very pointed advice of Bill Clinton back in February to “make it work;” nor rally the thousands of people working 24/7 on the project.

That is exactly not how things get done in Silicon Valley.

Healthcare.com would have worked better.

J.D. Kleinke is a pioneering health care information entrepreneur, medical economist, author, policy expert, and business strategist.

21 replies »

  1. The mess is because the people in charge don’t know what they are doing. They have had 3 years, over 3 years, and they spent millions of dollars. They Demand you sign up, then make it impossible to sign up. That is a pretty good scam they have going for themselves. Al Capone would be proud.

  2. Well worth review, the House Hearing on @HealthCareGOV epic fail: http://www.c-span.org/Events/Lawmakers-Updated-on-Health-Law-Implementation/10737442257-1/

    In between ideological grandstanding from the usual suspects, the contractor testimony and Q&A are insightful. CGI SVP testimony here: http://online.wsj.com/public/resources/documents/CambellC-20131024.pdf

    Also worthy is:


  3. Well done JD! Insightful and substantively on point.

    Some of the comments above are actually useful net of the the brain dead, talking point echolalia of some.

    I hear you loud and clear and been there as a sub to CGI on one recent project. One wonders what they actually do to earn their fee for the defscto ‘master lessor’ [ah hem, general contractor] role that they apparently play.

    They seem to be primarily a conduit or intermediary between the Feds and the contractor procurement food chain, managing at best the skill mix of general v sub task allocations. Hard to imagine uber accountability inside that ‘faith based deliverable’ construct.

    Beyond sad that HHS would seemingly rely on this arguably passive and less than ‘hands on’ relationship on such an historical launch.


    Hey, can we go live with this chat tomorrow at 12 noon pacific on ‘this week in accountable care’ http://blogtalkradio.com/acowatch? Pinged you via email.

  4. Heathcare.com probably would have worked better, since the federal govt’s existence doesn’t depend on the success of healthcare.gov. I’d like to believe that this isn’t a distraction tactic, or at the very least that the fatal flaws in the ACA can be ironed out and the whole thing made to work. Time will tell. In the meantime, I’ll be easing slowly down this road of good intentions.

  5. Are we seeing the tip of the iceberg? If there are design, implementation and operational problems with performance, could there also be other issues with the system? Hope they know how to securely handle all that PII.

  6. “the law does stipulate that subsidies for health insurance can only come through the healthcare.gov or approved state sites.”

    Turns out this is false. The Act contains very specifically language that the subsidies are only available through exchanges established by the states and will not be available through federally established exchanges.

    Per The Act, the subsidies were not available anywhere other than through state established exchanges as an incentive for states to establish their own exchanges.

    It is only through unconstitutional fiat that the IRS decided they will allow the subsidies and therefore employer penaltaxy through exchanges established by the federal government. This illegal IRS finding is in direct contradiction to the wording in The Act. This is in essence a $600 billion dollar tax the IRS levied. Again, please note the IRS does not have the constitutional authority to levy taxes.


  7. Good points Matthew – and yes, unfortunately, the law does stipulate that subsidies for health insurance can only come through the healthcare.gov or approved state sites. Direct purchases with health plans or brokers aren’t eligible subsidies. The next logical question is, “why not?”

    I’d also add a fifth point – the education of buyers about all the financial aspects: subsidy, premium, co-pay, deductible, and % covered. As you noted, the current enrollment disaster coupled with the atrocious shortage of navigators to assist buyers is very likely to lead to the next disaster – financial catastrophe for buyers that only paid attention to the premium and subsidy.

  8. Great point, though I’d add that it’s the usual technology implementation that ignores the end customer. Where was the focus on customer-centricity? The simple intent of the healthcare.gov site was to make it easy to SHOP and BUY insurance.

    Leveraging a customer-centric approach you build a site from the standpoint of easily supporting the customer accessing, navigating, shopping and buying. Our clients successfully do this everyday for their healthcare customers. Amazon and other retail sites do this everyday for their customers. The effort by the healthcare.gov team should NOT have been this poorly executed.

  9. Dear Mr. Kleinke, I appreciate the optimistic lens you are utilizing in portraying this docu-drama loosely based on a true story. However, your interpretation of many of the events strains credulity. Any depiction of the ACA drama should begin with an audience warning: None of the events that have taken place were ever meant to actually work. Rather, this entire episode is a giant distraction with the ultimate climax of socialized medicine (single payer, i.e. that payer being the federal government). Further, the architects of this sad tale have added a sub plot; the funneling large amounts of tax payer cash to their friends. So, with this in mind,
    “But bad partisan politics can do ugly things to good policy ideas.”
    Yes and bad partisan politics can do even uglier and more despicable things to bad policy ideas. This is why you do not disembark the train from the station on a transcontinental journey if you do not have the support of all the states and stations in between. Unless, of course, you never intend to get to the stated destination (remember insuring the uninsured and lowering health care costs, etc.).
    “It is a simple design flaw, but a potentially fatal one.”
    Again, while optimistic this is really just naïve. What makes you think this is a flaw in the minds of the architects?
    “Principle known to anyone who has ever worked for an e-commerce company, people browse before they buy”
    Why do you believe this principle holds in an environment where the architects are not interested in normal market forces like having to attract customers voluntarily or providing a product or service that they want, or offering perceived value or even that the customer is always right. If more than half of the customers did not want Wal-Mart to even build the store in their area, and in fact were doing everything they could to halt construction, but they decided to build it anyway, why would Wal-Mart bother to show the customer the prices before they get to the checkout line and have already swiped their EDT card?

  10. More choices should not make much difference since the ACA is supposed to specify standard plans with similar benefits.

    Exchanges were sold as offering more competition – I really don’t think that’s a reality though. The risk is the risk and insurance has been feeding us the line that they only make a small profit. Look for industry consolidation to blunt any need for real competition.

    The higher rates for MS shows at least in the first year competition should matter. I’m not sure what living in a rural area or a city has anything to do with it. Insurance is adding to its volume which should spread the load.

  11. Actually, fewer choices help, not hurt sign-ups. In Kentucky’s healthcare exchange (which is doing great) there are only 4 insurance companies competing for business, and in some regions of the state only 2. However, just across the Ohio River in Cincinnati, there are 72 different insurance plans to choose from, which is very confusing, time consuming, and frustrating.

  12. “As far as I know, none of the working exchanges mentioned by Mr Kreinke had to pay one second of attention to the buyer’s family income,”

    Wasn’t that part of the “deal” to open the government that Republicans “negotiated”?

    I’d also like to surmise that the site required sign-up/registration before shopping because they anticipated high volume and wanted to weed out the lookers from the potential buyers. It would also give them better numbers as to who was using the site.

    Maybe it’s going to be like SS disability, they don’y care about fraud.

  13. it is the usual technology implementation challenge with too many stakeholders, too little change management, the top pushing for execution of the project with a view that bugs and everyone’s inputs can be included in later phases of the project… but the later phases may never come…

  14. The application for Medicaid can run 40 pages, and is normally done manually with a case worker.

    The same is true for many VA benefits.

    Was there not an arrogance that ACA subsidies could be done on-line?

    As far as I know, none of the working exchanges mentioned by Mr Kreinke had to pay one second of attention to the buyer’s family income,

  15. Somewhere between $360M and $600M of our tax dollars were spent to develop the websites and servers to handle the administrative rollout of Obamacare, and it has proven to be a HUGE failure. Yet no one is held responsible, and no one has lost their jobs for that HUGE failure. What corporation in the U.S. would allow such a failure to go unpunished? None! This is just the tip of the iceberg as ObamaCare if forced upon America – like it or not. And our government is supposed to be representing the will of the people. Yeah, right! Shame on Congress and the White House for forcing this multi-million-dollar bureaucratic boondoggle down our throats!


  16. Signing up is only one problem. There is another more substantial one which will kill sign-ups pretty fast – little to no insurance competition in many/some states.

    My North Carolina is one with only two companies, BCBS being the dominate monopoly, and another example would be Mississippi.

    “Mississippi is one of the poorest and unhealthiest states in the nation, and its residents will face some of the highest premiums under a health insurance exchange, an online marketplace that will be run by the federal government.”

    “HHS said the only states with higher monthly premiums than Mississippi are Wyoming at $516 and Alaska at $474.

    I’m sitting out the first year to see how this mess unfolds.

  17. President Obama was just on the TeeVee doing damage control. He yet again cited that “health care is a right.”

    Odd logistical way to administer a “right.” His intractable incoherence on this issue continues to frustrate. We citizens have a right to the military defense that secures our constitutionally enumerated and inferred “inalienable” rights fundamental to “the pursuit of happiness.”

    No one has to go to “DefenseCare.gov” to voluntarily sign up for it.

    We just love to be mired in the wasteful Quadrant Three.

  18. Beginning to think that we need to decouple four things as people in teh individual and small group market sign up for 2014. These four are
    1) the regulation over what plans can do and can charge for it (the move towards standardized insurance packages)
    2) the bargaining done by the state bodies like CoveredCa with insurers in their states over premium and networks (lowering prices for #1)
    3) the enrollment process (the current disaster)
    4) the subsidy amount and certification of that amount.

    I think #4 can wait. And I am beginning to think that none of them need a separate exchange….which leads to the question, is there anything in the law that says these enrollments have to come via the exchange OR could they happen direct with plans & brokers, and have all the other stuff sorted out later? (My friend Dave Degraff sent me a question/suggestion about this and I dont have a good answer as to why he’s wrong).

  19. Yes indeed on the state exchanges II am very curious if the contractor, CGI went on the cheap and built a state exchange with open source software instead of buying it from first Oracle and second alternative Microsoft. Most of the technologies used are Oracle so that would make sense as well as “paying” for it to get it done right. Oracle announced their turn key solution, which was set up to integrate with insurers as Oracle has most of them as clients anyway, would solve the problem of the data getting to the insurance company systems..duh? When time is of the essence with all the connectivity it’s not the time to be writing a new platform.


    And then Microsoft had one too…and Oracle and Microsoft have integrated together for years on tons of projects, not to mention Windows operating system…duh?


    Again, did they go on the cheap? There are times when you need to pay for software and this was one of them if in fact CGI decided to built a state exchange with open source software to save money…

    What i said in 2009 that Health IT would eat Sebelius up as she’ contest for the math and algorithmic formulas used by insurers, duped and duped again. I read the United Healthcare company, QSSI having issues with the ID identification, well guess what there’s Oracle Access and ID, Kaiser uses it, works well. SEC and DOJ have same issued with non tech or partial tech running those agencies too, nothing personal but predicted in 2009.


  20. J.D. Kleinke’s blog post makes sense in the abstract, but not in reality. How many e-commerce firms would have accepted the contract to build the website until the Supreme Court ruling and 2012 election were over? Also, remember GOP Senator Mitch McConnell’s letter to the NFL and other sports leagues warning them not to endorse Obamacare, or else? How many firms would want to deal with that kind of blackmail? How many companies would want to lawyer up and face constant subpoenas to testify in front of GOP Rep. Darrell Issa’s congressional subcommittee, as did the non-profits that accepted funds to serve as Obamacare navigators? Could the website implementation have gone better? Maybe, but probably not given the political environment.