Wall Street Journal - ObamaCare's Political Choices

January 29, 2014
In The News

The Affordable Care Act exchange rollout debacle is rooted in deliberate decisions about coverage and control.

It's been another lousy week for the Affordable Care Act, as hundreds of thousands of Americans learned they're losing their current coverage and new details emerged about the 36 federal insurance exchanges that are still as useful as a cement wall. But the truth is that these and other events aren't "glitches." They're the intentional or inevitable results of political control of the health economy.

In the most transparent account of ObamaCare's rollout so far, executives from the four largest technology contractors out of 55 hired to build the exchanges testified for almost five hours before a House panel on Thursday. The Health and Human Services Department didn't deign to attend and HHS's contracts gag the vendors from disclosing information without permission, but now and then they showed a little leg.

Remember when HHS Secretary Kathleen Sebelius first blamed the breakdown of the Healthcare.gov enrollment hub on a traffic overload? Well, all of "hundreds of users" crashed the site, revealed Cheryl Campbell, senior vice president of the major contractor CGI Federal.

Anna Eshoo (D., Silicon Valley) called that "a lame excuse" given that "this is the 21st century." So, despite millions of uninsured supposedly clamoring for benefits, the health planners weren't prepared to handle the matinee audience at a movie theater.

The new lame excuse is that HHS didn't do enough testing in its rush to beat the October 1 launch. Ms. Campbell said due diligence didn't begin until the last two weeks of September, while Andrew Slavitt of UnitedHealth's QSSI unit said it was maybe "a couple of days" before October. Yet if HHS knew it wasn't ready, why not ask Congress for more time, instead of launching a junk product?

In any case, the backlog itself was political. HHS first delayed writing its rules so as not to give Mitt Romney a political target. And CGI now says HHS told the company in August to disable an existing tool that allowed users to browse health plans without registering. The reason was to let users see only premiums net of subsidies so they didn't see the real cost of insurance, but the effect was to needlessly clog Healthcare.gov.

The contractors also say their own tech components work fine or at least adequately, and the problems owe to how they were integrated into the system, which is HHS's job. Perhaps they're trying to shift responsibility to HHS or each other or both, but HHS's role as Dr. Frankenstein stitching together all their disarticulated parts is highly unusual.

Federal agencies typically designate a general manager for such complex technology projects—a company with the expertise to make sure 55 teams work together. Mrs. Sebelius might have drafted a Google or eBay as quarterback, or one of the companies already running exchange platforms for the private economy.

But that would have meant that someone other than Mrs. Sebelius and the bureaucracy would decide what is valuable to the consumer experience. Decisions like banning the browsing tool are irrational except in the context of political incentives. It's telling that the man now leading the "tech surge" to repair the exchanges is Jeff Zients, a White House aide, and not someone like Jeff Bezos.

This command and control model is also behind the wave of insurance cancellations nationwide. Insurers are liquidating business in the individual and small-business markets to comply with Affordable Care Act rules.

The law included a grandfather clause that was supposed to honor President Obama's vow that if you like your health plan you can keep it. But in the name of political control and equity among plans, HHS wrote regulations that are so restrictive that few plans qualify for the safe harbor. Thus the mandates on required health benefits, cost-sharing and so on apply to most policies even if they aren't sold on an ObamaCare exchange.

Last year, a Health Affairs study found that 51% of the policies sold to the 19 million consumers who buy on the individual market are inadequate under the Sebelius-Obama vision. By the time this trauma recedes, more Americans may lose current coverage than gain it through the exchanges. That doesn't mean they'll become uninsured. But they'll have to accept some higher-cost replacement in lieu of what they voluntarily buy today.

ObamaCare was sold as a way to extend private insurance to people who lack it, but its real purpose has always been income redistribution and expanding government control over health care. Liberals are now trying to sell the exchanges as "marketplaces," but then they turn around and limit the choices that are legal. Their idea of "competition" is limited to public health utilities that obey their political masters. And price transparency is a high crime if it creates a political problem for Democrats.

To put it another way, ObamaCare's rollout woes aren't merely technical or a failure of management. They go to the heart of its political project.