Obamacare Gets Easier to Implement All the Time . . . As Long as You Don’t Care About Losing Major Functions

So the administration has given up on trying to implement the exchanges as they were envisioned in the law.  I can’t say I am surprised.  But I am disappointed.

I suggested that this was likely to happen in December of 2012, when I tweeted that “Like Michael Cannon, I think that there is roughly a 0% chance that Feds will have state exchanges running by deadline.”  I linked a story by Dave Hogberg about the decision, by the Department of Health and Human Services, to extend the deadline for states to declare whether they’d be running an exchange, or letting the federal government do it for them.  HHS extended the deadline several times, ultimately giving the states until March of 2013 to decide.  Since the exchanges are supposed to go live in October, I didn’t see how the administration could possibly be ready in time.

I was challenged on this by supporters of Obamacare.  The administration was saying that things would be ready on time; what reporting had I done to say differently?

The answer was no reporting; mostly, I was drawing on my experience doing IT implementations.  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.

As the law (and all the wonks) had described them, the exchanges needed real-time data from the IRS, in order to calculate whether purchasers were eligible for subsidies, and how big those subsidies should be.  In order to determine subsidy eligibility, they also needed to know whether your employer had offered you health coverage costing no more than about 10% of your family income, as they were required to by law (and subject to a fine if they didn’t).  Only those who couldn’t get affordable employer coverage were eligible to purchase subsidized insurance on the exchange.

That’s two sets of big, secure databases that needed to be hooked into just for the subsidy part.  One of them had to be created from scratch, and it wasn’t clear to me that the IRS was ready to deliver real-time payroll data, either.

Then there was supposed to be some sort of hook into the state Medicaid systems, for those below 133% of the poverty line.  There was also, of course, the part where insurers sell you insurance.  That seems like an enormous project all by itself.

As if that wasn’t hard enough, most of the exchanges were being set up under federal procurement rules, which make it slow and ponderous to commission software and buy equipment.  When I was working for banks and other financial firms, if the developers needed a bank of new servers for an important project, I could get that signed off and shipped within a week, two at the outside, as long as the powers-that-be really wanted it to happen.  That just doesn’t fly in the government.

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?

Indeed.

It turns out we were all missing something.  I was right that the administration could not possibly implement the exchanges that had been described when selling the law, described in the law itself, and described by all the wonks who supported the law after we passed it and found out what was in it.  But I was wrong that the administration viewed this as an essential part of “getting the exchanges up and running on time”.  Instead, they were going to start jettisoning large chunks of what they’d promised.

Last Tuesday, while my husband and I were driving around the Great State of Virginia, the administration announced that the employer mandate was being delayed by a year. We were on holiday, so we refrained from blogging . . . but not, I’m afraid, from chewing over our puzzlement.  Why delay the employer mandate?  As provisions of the law go, it’s relatively easy to implement, and it’s a significant component of both cost control, and coverage expansion.  The administration’s explanation–that this was complicated and they wanted to be sensitive to business–made no sense.  Nor did the follow-up explanations that were offered in the media, most notably that the administration didn’t want to see job losses in advance of the 2014 midterms.  It’s been clear for a while that the law is causing lower-wage employers to rein in their full time employment, but delaying the mandate for a year doesn’t change that.  No one wants to hire a full time worker you have to lay off in January 2015.

Besides, the employer mandate was a major part of subsidy verification; how could you rip it out of the system at this late date without compromising the whole verification process?

Question answered.  On Friday, they announced that they were also not going to have the real-time IRS data, at least not for the state exchanges.  Subsidy calculations in many of the exchanges will now be conducted on . . . the honor system.  The most likely explanation for all of this is that the administration simply couldn’t get the system working in time, so they gave up.

So those of us who suspected that the exchanges were not going live as we (and the law) had conceived them, were correct.  That’s why all the complicated functionality is getting ripped out of them.

(Though “ripped out” may not be the right word.  The architecture needed to interface with all those disparate systems is pretty complicated; I’d be surprised to find out that they’re actually planning to rewrite all that code now, when they should be moving into the testing phase.  Rather, I’d expect that they’ve known they were going to do this for months and months, and never put the functionality in there in the first place.)

And yet, my critics were not necessarily wrong either, because they didn’t see this as losing core functionality.  Ezra Klein basically sums up what I take to be their point of view, saying that “Obamacare just got easier to implement“.  Which is absolutely true–as long as you define large parts of the promised functionality as being inessential to Obamacare.

In one view, Obamacare really has only one feature: putting as many people as possible onto the insurance rolls.  As long as you’re doing that, nothing else matters–not cost control, not fraud prevention, not the words in the Patient Protection and Affordable Care Act.  Take them away and Obamacare still exists, as long as there are exchanges with subsidies.  I understand why people see it that way, but as you might suspect, I see some problems with this view of last week’s news.

The honor system is a really expensive way to hand out subsidies.  In theory, if you lie about your income (or underestimate it), the IRS can make you give the money back.  But as I understand it, there’s an interesting wrinkle with Obamacare: the IRS cannot seize the money from your bank accounts, or take normal enforcement actions as they would with other sorts of overpayments.  The only way they can get the money back is to take it out of your tax refund.  If you don’t get a refund–if you owe a bit at the end of the year, or you don’t file a tax return because you’re too poor–then all they can do is keep a tab and hope you have a refund later.

In theory there is also a hefty fine for deliberately misrepresenting your eligibility.  But the section of the law which deals with the penalties says this:

(3) LIMITATIONS ON LIENS AND LEVIES.—The Secretary (or,
if applicable, the Attorney General of the United States) shall
not—
(A) file notice of lien with respect to any property
of a person by reason of any failure to pay the penalty
imposed by this subsection; or
(B) levy on any such property with respect to such
failure.

So it’s not clear to me that the penalties are actually any bigger threat than the remote possibility that the IRS will raid your bank account to recover subsidy overpayments. And in the case of the employer mandate, they’re not even collecting the data, so there will never be any way to know if you’re lying about the availability of insurance from your employer, or are just looking to see if you can get a bigger subsidy from the federal government.

Naturally, losing the ability to verify eligibility before you hand out subsidies is going to hike the cost of the program.  Remember when Obamacare was passed, and it was trumpeted as a giant deficit-reduction program?  Half of the deficit reduction has already gone away, as unworkable elements like the CLASS Act and tighter 1099 reporting requirements were trimmed away, and beacons of hope like Medicare pilot projects slowly flickered out.

Well, there’s a good chance that we just lost the rest of the deficit reduction.  Doing away with all the verification is likely to push Obamacare deep into the red.  At Time, Kate Picket lays out the cost:

Whatever political benefit the Administration accrues in the delay will come at taxpayer expense, as the move will increase the cost of Obamacare. The provision was expected to generate some $10 billion in revenue in the form of penalties that employers not offering coverage would have incurred in 2014. Adding to that cost is the fact that many workers whose employers decide not to offer coverage in 2014 will now be eligible to receive federal subsidies to buy individual insurance policies through state or federal exchanges.

When the law was passed, deficit reduction was supposed to be a hair under $120 billion, though that actually rose slightly after it passed.  But then we started lopping bits off the law, and the projected deficit reduction shrank to about $7 billion a year, or $70 billion over a decade.  A little arithmetic will tell you that the annual cost of losing the employer mandate will push this program into a net fiscal drain.

But it’s just a temporary delay, I hear you cry.  And maybe so.  But I’m not so sure.  The administration seems to be floating trial balloons about getting rid of the employer mandate entirely–and no wonder, given that a lot of employers were clearly cutting back on their full-time staffs in order to avoid it.

You can make the argument that getting rid of the employer mandate is much more economically efficient, helping to finally break the link between health insurance and employment.  But whether or not you agree with this argument, getting rid of the employer mandate is inarguably much more expensive.

Nor would I bank on the other income verification components going live next year.  Setting up a secure system to gather and share confidential income data without, say, accidentally exposing half the nation’s private data to hackers, is an enormous enterprise.  And the administration is not exactly inspiring confidence in either its competence or its candor.

After all, it’s really pretty stunning that the administration is suddenly announcing, at this very late date, that it plans to gut half the functionality from the exchanges, at least temporarily.  These systems are supposed to go live in under three months and we are just finding out that they’ve given up on controlling costs in favor of indiscriminately handing out subsidies to anyone who asks?  It’s hard to communicate how last minute this is, if you haven’t worked on a big project, but you can get some of the flavor if you imagine a newly minted MD arriving to take her medical boards and announcing that that she’s decided she’s going to be a Physician’s Assistant instead of a doctor, so please administer that exam, folks.  Don’t get me wrong–we frequently rolled back the scope of projects.  But we didn’t wait until a couple months before the drop-dead date when the whole thing absolutely, positively had to be live.

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?

In fact, we know it’s not; this morning we learn that the administration has somehow inadvertently made it impossible for insurers to charge older smokers more than non-smokers.  This is a small thing in itself.  But what else is going to break?

This is not just a rather unflattering reflection on the administration’s ability to implement its signature achievement–didn’t they, say, talk to any IT folks about this?  It’s also a violation of the promises that they made when this thing passed.  They swore up and down that cost control was central to Obamacare; the bill would have been even less popular had they suggested that it would be deficit increasing, rather than decreasing  our Gross National Overdraft.

But as it turns out, they’re all too willing to throw cost control overboard if it becomes inconvenient.  This is pretty much exactly what critics said they were planning to do–a charge which was excoriated at the time as baseless slander.

I understand why the administration, and Obamacare’s supporters, view coverage expansion as the whole point, and cost-control and anti-fraud measures as incidental side measures that should not be allowed to get in the way of the main task.  I think they are sincere, and their goals are worthy.  But that wasn’t the deal they promised, or the law they wrote.  The deal they promised was that they would be cost-controllers, not the authors of yet another budget-busting entitlement–that they would fight fraud, not abet it.  Ironically, as I was writing this post, I saw the new ads the administration is running–touting their efforts to fight Medicare fraud.

Obviously, I don’t expect the administration to pack up and end Obamacare.  But if they can’t implement all the relevant pieces in time, then they should delay the whole thing by a year, not just little things like the fraud controls they promised.  Yes, that would be embarrassing.  But it wouldn’t be as shameful as promising one thing to get the law passed, and delivering something entirely different.

98 thoughts on “Obamacare Gets Easier to Implement All the Time . . . As Long as You Don’t Care About Losing Major Functions

  1. The taxes to support this kicked in already though, right?

    So … the rest is trivial details?

  2. We have to pass it to find out what’s in it, and implement it to find out what’s not possible to implement. By the time it’s done, it will just be called _bam_car_.

    • It’s just my opinion, and IANAD, but with something big and complicated like this, you generally don’t want to start ripping out major chunks at the last minute, because it usually turns out that other major chunks had a bunch of routines which referred to the stuff you just ripped out, and then you have to rewrite those, which breaks something else . . .

    • Partly an IT administration thing, and somewhat difficult to describe if you haven’t worked on those sort of projects. It’s very difficult to remove partially-complete projects from code, even with good version control software, especially if the project interacts with a large number of other parts of the total product. To take a cooking metaphor, it’s very hard to remove yeast from a meal when the recipe says it’s time to put things into the oven.

      In some cases, you can simply disable the UI and prevent it from even coming up, or disable individual functions, which may be the case here. But it’s dangerous to do that fairly late in the game if the activities underlie a lot of other functionality, since more and more code will expect correct and reasonable values to come from those requests.

      Also, the timetable that the administration set was pretty unrealistic.

    • I don’t think you can just disable the UI here, because the values generated during the verification steps were supposed to feed into the prices users saw, or at least that’s how I understood it.

  3. I opt for the ineptitude explanation.

    I will again state my prediction made 4 years ago- PPACA will end up cover half as many as promised at twice the predicted cost, and I see no reason to change it.

  4. It was definitely a mistake to create a law that relies on an un-built IT system in order to be properly implemented. As anyone with private sector experience or even working-level government experience knows, things almost never go as planned.

  5. I guess the part I don’t understand revolves around the fact that Obamacare is Romneycare and as a self employed MA resident I’ve purchased insurance through the exchanges for years and it works fine.

    As I do now what Megan did 10 years ago, the only theory I have is that every state (like every big company) thinks it’s a unique little flower and can’t possibly go with an out of the box solution.

    • Massachusetts started with a much smaller number of uninsured people, relatively high incomes, and a lot of big employers. The rest of the country doesn’t look much like that.

    • Massachusetts started with a much smaller number of uninsured people,

      So you buy some extra servers – how much does the volume of users have to with the code you need to capture and process the data?

    • I should have also pointed out that they handle the subsidies differently. At least as I understand it, Massachusetts basically dumped all its subsidized folks into Commonwealth Care and handles the eligibility backend through the Medicaid system, not the Connector. This is precisely the bit that the exchanges are having trouble with.

    • I would add that the software I work with can easily be scaled from 5,000 customers to 25,000,000 customers as the data requirements are the same – it’s just a matter of building enough capacity.

    • It’s not a scale problem (though it will become one if they have to do manual kludges, which I think is where they’re heading). It’s a data integration problem. Commonwealth Connector basically asks you how big your family is and how much money you make, then tells you to go apply for Medicaid if you’re under the subsidy cap. Otherwise, you’re buying a market rate insurance policy.

      Obamacare exchanges, on the other hand, are supposed to calculate your subsidy, verify your eligibility, show you how much each policy will cost you post-subsidy, and then pass you on to the insurer with a token that tells them how much to charge you, or funnel you into the Medicaid system. That’s hard, involving interfaces with two major federal databases and 51 state-level systems. Doesn’t seem to be working.

    • If Obamacare is Romneycare, why was Massachusetts seeking an exemption from Obamacare for small employers?

      Romneyare and Obamacare are obviously not the same.

  6. The incompetence angle doesn’t really cover it. Remember, Obama and Co. lied _repeatedly_ during the process of trying to force this thing into law. Remember the claims that it doesn’t endanger employer coverage? Remember the claims that it doesn’t cover illegals? Remember ‘it is not a tax’? (The SCOTUS somehow twisted that around to be conceive it as a tax, twisting themselves into a pretzel to save it).

    Remember the promise to post everything on line for public review before it was voted on? Remember Max Baucus saying that they had only 2 weeks and therefore couldn’t post it in time? (Ignoring the fact that posting 2000 pages in 2 weeks isn’t even difficult, it could be done quite quickly.) Remember the promise that it did not subsidize abortion?

    The actual goals of Obamacare are fairly simple. The business class, or big chunks of it, wants to offload their healthcare costs. The Dems and social liberal activists want to control access to health care and make more people directly dependent on their activities. All the rest is noise.

    • Really only one SCOTUS–Roberts–claimed it was a tax. One person hardly a pretzel makes. The rest of the judges looked at him like he was a bread stick.

    • Well, not just Roberts. Also Obama administration lawyers. They had to make that claim in order for him to rule that way. (In general, judges are only supposed to consider arguments that the parties make.) Of course Obama lied to our faces to get the bill passed, then instructed his lawyers to say the complete opposite to the Supreme Court.

  7. Massachusetts basically dumped all its subsidized folks into Commonwealth Care and handles the eligibility backend through the Medicaid system, not the Connector. This is precisely the bit that the exchanges are having trouble with.

    Please elaborate, as I’m not all that familiar with how the subsidized plans work.

    • Elaborated above–let me know if it’s opaque.

      Basically, everyone in MA who is eligible for subsidies is getting a version of Medicaid, aka Commonwealth Care, thanks to a Medicaid waiver from the Feds. (Actual Medicaid is called MassHealth). The subsidies also phase out lower, at 300% of the federal poverty line. Subsidy verification isn’t handled by the Connector; it’s handled by the Medicaid office, which does the verification . . . I dunno, however the MA Medicaid office does verification. All the Connector does is tell you, based on your self-identified income, to fill out the form to apply for Medicaid: http://www.mass.gov/eohhs/docs/masshealth/appforms/mbr.pdf

      Then you mail the form, with all your verification paperwork, to the Medicaid office.

      I’m no expert on Massachusetts, so happy to be corrected, but this is my understanding of how it works.

      Obamacare puts people into Medicaid up to 133% of the poverty line, but after that, subsidized folks (up to 400% of FPL) buy insurance on the same exchanges as unsubsidized folks, except the feds pay part of their premium. Obviously, if huge numbers of people had to mail off a giant Medicaid application before they could buy insurance, that was going to be problematic, and politically unpleasant, so the Exchange was supposed to handle that part automatically: verify income with the IRS, check citizenship, tap into a database of employer coverage to see if you were eligible through work. That’s a lot harder than what the Connector is doing, and surprise! It’s not working.

    • Megan,

      I think your mistaken in thinking that the Obamacare subsidy plan is materially different than the Romneycare subsidy plan. But, I’ll have to look into it more in the AM.

    • I am repeating the instructions that you get if you tell the MA Connector that you make under 300% of the FPL. They give you a PDF application and tell you to print it out and mail it, along with your backup paperwork, to the MassHealth office. Or go to a Community Health Center to apply.

  8. Obamacare exchanges, on the other hand, are supposed to calculate your subsidy, verify your eligibility, show you how much each policy will cost you post-subsidy, and then pass you on to the insurer with a token that tells them how much to charge you, or funnel you into the Medicaid system

    As you can see from the link to the Commonwealth Connector plans they aren’t Medicaid.

    • Megan,

      From what I understand the Obamacare system and the Romneycare system are similar in how they approach subsidized non-Medicaid health plans.

    • There are two different sets of plans: Commonwealth Connector Plans, which are unsubsidized, and Commonwealth Care, which is subsidized. You don’t get Commowealth Care through the Connector; you apply for it, like Medicaid. But you wouldn’t know that if you weren’t getting subsidized coverage.

    • You don’t get Commowealth Care through the Connector; you apply for it, like Medicaid.

      So, the impossibility is running a report that compares IRS AGI per SS# vs. Subsidized Plan application stated AGI per SS#?

    • The difficulty is hooking into multiple databases, some of which don’t currently have up to date info (the IRS doesn’t know if you got married until you file a return, for example). And keeping those data links going without exposing confidential data to the outside world.

  9. 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.

  10. And keeping those data links going without exposing confidential data to the outside world.

    You run the report and FTP the data it via VPN – I do it every day.

    • How many VPN endpoints, total? Key management procedures? Number of personnel involved in the latter?

      VPN is about the most unwieldy (and leak prone) tool when you need to secure a massive infrastructure.

    • If there are legislative barriers then that’s it. Republicans aren’t going to tear those barriers down and I don’t see how even an administration as high-handed as Obama’s could erect them through regs and EOs.

      There’s something about a large part of this discussion and any promise of future implementation that’s academic, abstract, or surreal. I look forward to Megan’s, or someone’s, detailed projection of the implementation of ObamaCare as written — that is, without any verification of eligibility, ever.

  11. That’s a lot harder than what the Connector is doing, and surprise! It’s not working.

    If for some crazy reason they wanted it to be real time, then you’d be correct.

    But, if they wanted to use the honor system and then run reports and compare the data for 2013 in August of 2014 and send out letters demanding payment or documentation, then they’d be using the same system the IRS since the Kennedy administration.

    • One problem though: with the annual reporting requirement gone (the section 6056 report that triggered the suspension of employer penalties and thus the employer mandate) the exchanges can run all the reports they want, but they still don’t know which employers are large employers required to offer health plans, which employers offered health plans, which health plans complied with the minimum requirements of the law, and which employees were eligible to be covered and didn’t take the coverage. There is no information available to verify the “honor system”. The IRS is not collecting this information so they can’t even look back and see who was not supposed to get a subsidy.

    • Yes, but that’s not actually what they wanted to do, not what the law says as best I can read it, and definitely not what the administration and the wonks were describing. They wanted advance verification as much as possible. In part because a quirk of the law is that the IRS can’t actually collect, the way they do with taxes–they can’t use levies or liens. Basically the only thing they can do is subtract overpayments from other payments you’re owed.

    • Matt,

      In addition, the IRS can run a report asking for all the EIN numbers that are linked to more than x number of W-2s and know who to send out requests to for further documentation.

  12. but they still don’t know which employers are large employers required to offer health plans, which employers offered health plans, which health plans complied with the minimum requirements of the law, and which employees were eligible to be covered and didn’t take the coverage

    So, they send out a four question form to every address linked to a employer identification number.

    • 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.

    • They certainly could do that. But it’s not the law. As HHS notes, there are “legislative barriers”. Which I take to mean they recognize new legislation needs to be passed to make this feasible.

      One other problem is that you can’t necessarily count W-2’s to determine who is a large employer.

      Anyway, if they were going to go that route, they may as well reinstate the section 6056 reporting. They actually want employers to voluntarily report next year to “alpha test” the reporting system, but AFAIK they haven’t released any specs on reporting, so no one can develop the software that will be needed yet.

  13. Megan,

    Your deficit reduction figures leave out a huge piece – the “doc fix”. When the bill was written, ~$250 billion of the first ten years cost was going to be funded by repealing (permanently) the doc fix. Yet, here we are three years into the law and it still hasnt been repealed. Straight-lining the total for those three years yields an additional $75 billion in “savings” that never materialized. So, adding that to your other figure means we are really already into the red and the program isnt even up and running.

    Further, Obama and the Democrats knew that repealing the doc fix would be a total disaster for providers. They never intended to do so. In reality, throwing the doc fix repeal into the law was another way to game the CBO score in a similar way the CLASS Act gamed the score. Cynicism at its highest.

  14. “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.”

    The administration is either incompetent or dishonest (or both)? Watching the Benghazi hearings made that pretty clear. This administration is extremely competent at running campaigns (although I certainly wouldn’t vouch for its honesty there). As for the rest …..

  15. this is all about overwhelm the system to fundamentally transform it… to what you ask… to get rid of most our YOUR rights ( Bill of Rights) and control and enslave YOU… the NWO… Bilderberg ( look up and learn)… they own… control this whole world.. WHOLE WORLD… and puppets like O ( our prez) are in bed with them… they are not out for YOUR good… NOT… rethink… new basis… THEY ARE EVIL and control is their goal…

    wake up.. and wake up your friends… you are being enslaved… more and more… each day…

    • I seem to have a problem with the whole “reply to” function. These computer things are really complicated.

    • This is the most correct of anything said here. How could someone not see this as the ultimate outcome. The Obama administration is not stupid. I truly believe they are very smart.

  16. I’m an IT professional, and have been leading multi billion dollar implementations (as a contractor) for the government for 10 years now. I was thrilled to finally see somebody with the requisite background write on this topic. Regardless of whether or not one agrees with Obamacare, liberals and conservatives alike laughed (literally) at the stated goal of taking this system live in October. The true story being ignored is the complete incompetence demonstrated by the administration for even believing this was possible. had they consulted any reputable firm they wousl have been told no. Either they lied intentionally to push their agenda, their pure hubris and arrogance led them to beleive they could actually accomplish the impossible, or they are “willfully ignorant” of reality to an alarming degree.

    • If Congress were to pass a law mandating 100 miles per gallon for all cars, the public would recoil, because the only things that could meet such a standard would be small scooters. However, if Congress included in the law a requirement to develop an engine that will run on only pure water and pureed potatoes, then a neutral scorekeeper like the CBO would “score” the result as not particularly onerous, because the potato engines would solve the problem; the CBO wouldn’t even be allowed to estimate the feasibility of the potato engine. And the people who wrote such a law would be well pleased with the result, as autos would be effectively outlawed.

      This ridiculous hypothetical seems very similar to the process used to enact Obamacare.

    • What’s particularly galling about this IT fiasco is that it was completely avoidable. Even before the ink was dry there was a 100% chance that the Feds were going to have to run at least one exchange. There was a near 100% chance they were going to have to run two. There’s no difference in developing a system that supports 2 exchanges vs. N exchanges, so even without knowing the exact value of N (the number of States telling the Feds to get stuffed), work could have begun immediately on implementing the infrastructure for the Exchanges.

  17. This is a prescient article. One solution to universal health care is to de-link it from employment. Other factors: tort reform; healthcare vouchers based on income; encouragement of free-standing clinics; permit sale of hc insurance across state lines (as in car insurance); repeal Obamacare as we know it.
    .

  18. a total debacle, as predicted, but what do you hear from the corrupt, insipid, feckless national media? nothing. about the rising premiums, the unconstitutionality of a “partial” implementation of a law? nothing not that it’s surprising from an administration that routinely ignores laws and obligations it “doesn’t like.” i loathe this arrogant fop like no one ever….

  19. This is all about protecting the Democrats in the 2014 mid-terms. They are targeting their ad campaigns in districts they hope to win. The theoiry is that if they can sign up enough people for subsidies, they will increase the turnout among the low-information, government-dependent voters they rely upon. This was never about cost control. It was always political, designed to addict as many voters to the entitlement as possible.

  20. Reading Megan and Bronxcobra go back and forth on the difficulty (or lack thereof) of implementation reminds me of a joke about software:

    CEO: This project is just like the last one, so we can do it in two months. Make it so.

    VP Development: Patty the PM is great, and she did the last job in two months. Make it so (and tell me what you need).

    Project Manager: This project is 50% larger than the last and has some significant complexities. Give me fifteen people and I can do it in three months. [VP gives her ten.] Senior Developer, tell me if you need anything else.

    Senior Developer: The last project was finished in two months because we put in a lot of manual kludges that prevent it from being integrated with any future project. (See memo, where I told you that future-proofing would take four months. The future we didn’t proof against is now the present.) In addition to the fifteen coders, I need three database specialists to manage the integration. And two months is a pipe dream. Coder, tell me if you need anything else.

    Developer: The database developer is on another project, can’t start for three weeks, and won’t return my calls. The last batch of code contains notations such as “//MUST LEAVE THIS PIT OF DEPAIR. RESIGNING. WHATEVER POOR SOUL HAS TO UPDATE THIS, YOU CAN EMAIL ME AT YOUCAN@GOTOHELL.COM” To get this completed in four months, I need a vial of virgin’s blood, powdered unicorn horn and whatever other black magic might be applicable. Possibly FORTRAN.

    CEO: Where’s my project???

    It’s always as easy as bronxcobra thinks it is, if you make high-level assumptions and never look at the details. The only exception is if your high-level assumption is “this is significantly more complicated than it looks at first glance.” In which case, you’re probably half-right (because you need to square the complexity you’ve assumed).

    • ROFL Oh my, that’s great! And so accurate.

      I particularly liked your email address. You might be surprised at what programmers put into commented out code. :D Your email address and comment aren’t far off in my experience.

      PS–Fortran is still in use at the 3rd largest data processor in the world. They have to train people to code and test it in-house.

  21. I want to offer a variant of the ineptness explanation. My hypothesis:
    There is no effective substantive communication of bad news from the executive branch agencies into the innermost circle of the administration.

    Imagine being an IT manager working for HHS and trying to pass the word up the chain that this thing just won’t and can’t be ready by 10/1/13. Does this highly politicized WH want to hear that? Are they going to brush aside such an input as coming from a ideological opponent? How open to the input would we expect them to be, if they received such input 9 ro 12 or 15 months before the deadline?

  22. What a well written article. I appreciate your experience as an IT Professional, but also your insight into the complicated world of health care reform. As a health insurance agent for over 30 years, I know the complexities involved, and have always thought this law was unworkable, from many angles. I’m for reforming our health care system, but it must be thoughtful, practical, efficient, and cost reducing. This law is accomplishes none of those goals. One small point of correction, however. I believe the IRS is not allowed to use enforcement techniques to collect the Individual Mandate Penalty (or “tax” as the Supreme Court said), but the IRS is allowed to collect excess subsidies (Advance Premium Tax Credits) if the person received more subsidies than they were qualified for.

  23. I humbly appeal to your common sense. The PPACA as a Bill was a behemoth (who can forget – to pass it to see what ‘s in it). The immigration Bill is a behemoth. Looking objectively at the last 75 years, control of Government comes with large sweeping legislation. I postulate that there is a coalition in congress, copying history to propose sweeping legislation for the power and not for the intended purpose of the legislation.

    Proposition: We the people demand our elected officials to produce small, clean, smart, cheap legislation to pinpoint specific problems.

  24. Megan,

    I agree with you that exchanges as they were designed in the ACA are a massive IT undertaking. Which is why we should have not touched the employers at all but instead offer everyone a tax credit (like McCain proposed in ’08) and cap the employer-sponsored insurance deduction. I do not believe that an employer in a medium-sized corporation can just drop health coverage for all its employees, to even if this is financially advantageous (employers don’t do this now, do they?). With a tax credit, employers could simply be required to return employee health costs to employees as wages. The employees would then purchase insurance with the tax credit, adding a little bit of their own money. This would be much easier to implement and more effective.

  25. The Obama administration is refusing to implement the parts of the law they find inconvenient. The ACA contains no justification for doing so.

    Of course, they have ignored other laws that they don’t like. Just like all banana republics do.

    • If I have to live in a banana republic I’d like the tropical weather to ease my suffering, please.

  26. “When the law was passed, deficit reduction was supposed to be a hair under $120 billion, though that actually rose slightly after it passed.”

    When I examined CBO scoring and budget/deficit projections just before ACA passage, the 10-year deficit reduction for the entire bill was about $138Billion, $119B of which was specific to the health care component of the law (most of the remainder dealt with a student loan program). The interesting thing at the time was the time profile of revenues and costs going into that $119B reduction — i.e., front-loaded taxes and deferred expenditures — such that by the last 3-4 years of the period it was basically a wash, in effect miniscule deficit impact suggesting that on an ongoing basis the claim of deficit reduction was very tenuous at best. And now with CLASS and other elements of the law that were supposed to drive portions of the deficit reduction already dropped by the way-side, plus this apparently open invitation to fraud at the Obamacare chuckwagon that is the premium subsidy “honor system,” not too hard to see that ACA is just another budget disaster in the making.

  27. I was a BSA at a very large health insurance company when this abomination was passed. We sat around at lunch one afternoon and brainstormed the things that would go wrong on such a project:

    1. 50+ databases of varying age, structure and language, containing data on each state’s “approved” health insurance plan details, supposedly tied together
    2. The definition of “family”–everyone living at an address? The IRS definition? How is the dollar amount changed when a couple separates, grandma moves in, etc?
    3. A web-based application attempting to behave as a mainframe (lots of laughs over that one)
    4. 50+ varieties of connectivity: VPNs, etc.
    5. Verifying data real-time in a web environment with millions of inquiries per minute/hour
    6. Fraud prevention, detection and prosecution

    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.

    The closest the federal government comes in any way to performing the tasks of health care claim processing and payment is verifying membership for Federal Employee Plan members, and even that is sketchy. Manual intervention is regularly required.

    The Bureau of Prisons uses a third party contractor who sends the BoP a PDF file of supposed remit pages and the BoP pays whatever they’re told. That process is so rife with fraud it’s astonishing.

    The bureaucrats who cannot perform the standard functions of every single insurer in the country are somehow going to know how to do those functions and–even better–create brand new processes to accomplish Obama’s grand vision?

    We knew before it was signed that the whole thing is an unworkable fiasco but Obama thinks he’s so much more intelligent than we. His mere command is sufficient to make it work. Anyone who believed that was either hopelessly naive or a liar.

    • Oh, how could I forget the most vexing, and hence most amusing, issue we discussed? How will this system account for people who reside in one state and work in another (Kansas City, for example) and people who move across state lines in the midst of the plan year? Must one notify the federal government prior to a interstate move? If so, how does that happen? And how would the public react to that requirement?

  28. The law was written by Congress trying to get Republican support and responding to Republican attacks by including even more Republican patches.

    The Democratic health reform would have been easy to implement: Medicare for everyone, replacing employer,individual insurance and Medicaid, all from Washington using the existing Medicare system.

    • Easy to implement – debatable.

      Possible to pass into law – no (and not debatable.)

      Fiscally feasible – no (although debatable.)

  29. Not addressed anywhere is the possibility that most eligible people will choose not to sign up for exchange-based programs. It’s like not addressing the possibility that illegal immigrants will choose to “remain in the shadows” rather than choose the “pathway to citizenship.”

  30. An interesting implication of Obamacare implementation without the legislated measures to control cost is this is a new reason why this country needs to continue to have an overall debt limit controlled by congress. Giving everyone everything they might want and paying for it by just creating more money eventually won’t work. And this uncontrolled Obamacare situation is a new form of this, which may pop up anywhere/anytime as Obama decides to give stuff to his constituents regardless of what our laws say. So overall limitation on the debt limit by congress may be our last gasp at keeping some relationship between what people consume and what they produce.

  31. It’s all part and parcel of the Blue (i.e., Progressive) worldview:

    Government is always the lowest cost service provider because it can eliminate the expenses of profit and competition (and unnecessarily high executive compensation). And because the returns to scale are always positive, centralized economic planning not only works but is always more efficient than “the market.” So even if Obamacare becomes vastly more expensive than originally envisioned, total national healthcare spending will be lower. And the distribution of services will be fairer.

    Never mind that all of this is fantasy…

  32. @janegalt You say “But as I understand it, there’s an interesting wrinkle with Obamacare: the IRS cannot seize the money from your bank accounts, or take normal enforcement actions as they would with other sorts of overpayments. The only way they can get the money back is to take it out of your tax refund. If you don’t get a refund–if you owe a bit at the end of the year, or you don’t file a tax return because you’re too poor–then all they can do is keep a tab and hope you have a refund later.” But I thought that was about enforcing the individual mandate, not anything about IRS overpayments of subsidies.

  33. Well written regarding the state of implementation. It is a bit naive to think, however, that 2014 elections play zero role in delaying the employer mandate. Best case political scenario for the Dems is 100% of all current FTE not currently with coverage to be added…plus 100% of businesses not dropping current coverage. I suspect 80% is even ambitious but we’ll see. A 2014 mandate shakedown is a very hot political potato for the Dems, particularly the ones who voted for it or against its repeal.

  34. There has been a 4 Year timetable to get this done. The states were never going to go “All In” so there should have been a framework and ultimately a package in place to have states opt in from Day One FOUR YEARS AGO. IE: If “Alabama” doesnt open an exchange, then let the address entry into the first data base open it for them into the national exchange. This is: 1) Crazy that they cant get it up after four years. 2) 24/7/365 Reality in DC that programs this poorly managed are par for the course.

    We have lost the Employer Mandate and the ability for Individuals to go to the exchanges. But yet have STILL BEEN PAYING TAXES FOR FOUR YEARS.

    THAT WAS THE PRIORITY, The rest of it was just justification for raising taxes and more horrendous mismanagement from DC.

  35. I just discovered you because one of your anti-ACA posts was reposted elsewhere, as if you are an expert. Are you a lawyer? Are you qualified in any other way to analyze anything as complex as ACA? Please. I’m so sick of right-wingers trashing every effort to help people stop going BANKRUPT because of our “wonderful” privatized health care system. Get with the program. The Supreme Court ruled it was constitutional. Or maybe you’re one of those people that still thinks the South should secede.

    • I love that this is the story now. Obamacare was passed to help people avoid medical bankruptcy. Ignoring the work that disputes this finding (the best alternative explanation is that medical expenses only lead to bankruptcy when the health condition leads to loss of income also), there are many simpler ways to help people avoid bankruptcy than the Obamacare monstrosity. The McMegan health insurance plan, for example which would pick up someone’s medical expenses after 10/15/20/whatever percent of annual income. Would require no subsidies, no giant multipart apparatus, and no giveaways to favored constituencies.

    • I love that this is the story now. Obamacare was passed to help people avoid medical bankruptcy. Ignoring the work that disputes this finding (the best alternative explanation is that medical expenses only lead to bankruptcy when the health condition leads to loss of income also), there are many simpler ways to help people avoid bankruptcy than the Obamacare monstrosity. The McMegan health insurance plan, for example which would pick up someone’s medical expenses after 10/15/20/whatever percent of annual income. Would require no subsidies, no giant multipart apparatus, and no giveaways to favored constituencies. If the goal was bankruptcy avoidance, we went about it the worst possible way.

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