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ObamaCare Clusterfuck: How bad is it? Megan McArdle gets it right on the exchanges

From her site:

Six months is an extraordinarily aggressive timetable to start doing an IT project, even one that’s what one of my colleagues used to call “shake and bake”: take it out of the box, add a few of your own ingredients, and serve it up.

Yes, the administration had been working on Obamacare since it passed in spring of 2010. But it seemed to me that just the build phase would take longer than they were allowing, because Obamacare had a lot of complicated parts; it’s basically a giant Rube Goldberg machine that breaks if any of its major pieces goes even slightly awry. ...

On the other hand, it’s now been ten years since I worked on an IT installation, and longer since I worked on a large-scale multi-site project. For all I knew, the process had gotten a lot faster since the long-ago days when I was in the business. And of course, I did oppose the law, so I’m probably naturally predisposed to assume the worst. It wasn’t unfair for my critics to be skeptical of my judgement; I was a bit skeptical myself. Why would the administration lie about being prepared to move on time? Wasn’t it more likely that I was missing something?

I had exactly the same "This can't be happening!" feeling, based on my own IT experience, more like 7 or 8 years ago.

One of two things must be true: the administration knew this was necessary long ago, but concealed it from the public and the congress in order to limit the time they had to react; or the administration is so incredibly inept that it has only just now realized that it wasn’t going to be able to handle any of the complicated bits. Either way, why would we assume that anything else they say about the systems–like, “It’ll be ready next year”–is true? Indeed, why should we assume that this is the last such revelation?


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katiebird's picture
Submitted by katiebird on

If the Exchanges work when they go live on Oct. 1st, then Obama hid essential information about ObamaCare and the Exchanges from us for months and more likely years.

If the Exchanges do NOT work on Oct. 1st - they're idiots.

There isn't any other possibility.

katiebird's picture
Submitted by katiebird on

This is the sort of analysis I've been wanting to read:

July 10, 2013 @ 8:55 pm
One point about the real time reporting of payroll information: I don’t see how this can be done through the IRS. The IRS doesn’t have real time payroll information in the first place. There is no proposal or legislation in place for companies to report real time payroll information to the IRS. HHS has admitted as much in their response to comments: “no comprehensive data source will be available by October 1, 2013. Current legislative and operational barriers prohibit HHS from requiring employers to report information directly to Exchanges or requiring Exchanges to obtain employer data from the Internal Revenue Service.” (CMS-2334-F p. 349)

To do the verification, the exchanges must contact employers directly, because not only do they need to confirm income, they need to confirm whether or not the employer offers any insurance plans, whether or not those insurance plans meet the minimum requirements of the law, and whether or not the individual applicant is eligible for coverage under the employer’s plan(s). (The last part is important, since it eliminates any efficiency you might get from knowing you’ve already contacted employer ABC for a previous applicant A and know they have the XYZ plan–you don’t know whether new applicant B is also eligible for the same XYZ plan.) This is information that only the employer can provide. The law reads “the exchange must verify”. How do they do that? Phone, fax, email, snail mail.

For all of the talk about how automated the process will be with all the information from separate databases tied together, apparently no one ever thought about how this little bit would be accomplished. Beyond “the exchange must verify” there is nothing in the bill AFAIK that specifies how the exchanges are supposed to do that.

With that perspective, there really is no code to rip out of the exchanges for that part of the subsidy verification process, because it could never be written in the first place.

katiebird's picture
Submitted by katiebird on

This is talking about a situation VERY close to my fake family example:

July 10, 2013 @ 10:18 pm
Doesn’t work that way. Each employer has different rules for which spouses, children, domestic partners, etc are covered, at what copays, all of which often vary considerably across multiple possible plans. Do you have affordable coverage if you’re eligible for domestic partner benefits that would be 9.5% of your joint income but 11.5% of your personal income? Copays were higher for my husband than for me before we were married . . . do you allocate half the copay to him and half to me, or all to him? Is the employer coverage a qualified plan for the purposes of subsidy calculation? Are you legally separated from someone who was on your return last year?

There is no way for the employer to know whether they are offering you qualified coverage or not; for that, they need family income data. And there’s no way for the IRS to know, because how the hell do they know what your particular employer’s benefit rules are? For that matter, the employee may not know.

The reason people are saying this is complicated, and the reason that the Feds have at least temporarily abandoned this, is not that we’re all idiots who would never think of building a really big spreadsheet and FTPing it to the compliance office once a month.

Cujo359's picture
Submitted by Cujo359 on

Based on my own experience with IT development, I'd say McArdle's right about this. Plus, this definitely is not a "shake and bake" project. It never is where huge amounts of money and large numbers of customers/users are involved, let alone a major change to the law. Add in the likelihood that many of these customers/users will be first time users of such a system, and not all that familiar with the law and other requirements as well, and you have all the makings of an ADP clusterfuck.

The best you could hope for, assuming sufficient time and resources had been devoted to this, is that it wouldn't work very well for a while, until the bugs in the software and the procedures were shaken out. We clearly don't have that here.

This was a disaster waiting to happen. The only reason I didn't realize it earlier is that I wasn't paying attention.

beowulf's picture
Submitted by beowulf on

Interesting comment there:

Why is this failing so spectacularly? Most people don’t realize that the federal government has never processed and paid a single health claim for anyone anywhere. Take Medicare as an example. A third party, typically a private insurer, in each state is contracted to maintain membership, provider data and plan information, process claims from doctors/hospitals, write checks to those doctors/hospitals, and perform fraud prevention and detection. All the federal government does is tell the insurer through a scheduled file transfer that the specified people are eligible for Medicare, and transfer money to a bank account to cover the claims expense plus administrative fees on a regular schedule. That’s it.