How Obama Blew It

10.20.13

Obamacare’s Rollout Is a Disaster That Didn’t Have to Happen

How cronyism, secrecy, and authoritarianism doomed Obamacare, and why it was all so unnecessary. By Gregory Ferenstein.

Editor’s Note: Another version of this article is published on Crunchgov, TechCrunch's Policy Channel.

Disclosure: I really like the principles of universal coverage under the Affordable Care Act, and I hope it will succeed. But the disastrous rollout of HealthCare.gov represents everything that President Obama promised would be different about his administration—but isn’t. Obama promised open innovation and transparency. Yet startups and hackers are forced to take a backseat to state-run websites, a mediocre government contractor secured the lucrative deal to build the federal exchange, and both HealthCare.gov’s code and enrollment numbers are locked up by tight-lipped bureaucrats.

The president’s signature bill is a cluster of authoritarianism, cronyism, and secrecy. While there have been dozens of reports about the symptoms of Obamacare’s technical problems, there is a single cause: HealthCare.gov was designed as an innovation-free zone.

Authoritarianism And Backward Priorities

There does not need to be a HealthCare.gov, and there need be no state-run websites. The airline industry, for instance, happily farms out the complicated task of price-comparison e-commerce to independent developers, who build all the wonderful sites like Orbitz, Hipmunk, Kayak, and travelocity that have come to serve our airfare needs.

“It’s akin to the state wanting to build a search engine,” says Gary Lauer of the health insurance e-commerce site eHealth. Lauer and the tech startups we talked with say that the federal government could have simply opened up data on prices (like the airline companies) and let tech sites handle the shopping experience.

People familiar with HealthCare.gov argue that government-run websites are necessary to conceal the IRS income data that exchanges use to calculate discounts. Obamacare  is principally designed for the 48 million uninsured Americans. Most enrolling will have some discount based on their age, family status, and income. To protect consumers, the government argument goes, only HealthCare.gov should have access to income data.

However, there are plenty of existing federal systems that securely transmit personal information with private companies. If you use H&R Block or TurboTax to complete your tax return, you already have confidence that tech companies can safely deal with your most sensitive data. “There’s nothing new in this privacy area, nothing new that we haven’t been doing for years and years,” says Lauer.

For instance, ID.me, which facilitates discounts for military veterans, has been a White House boasting point on how startups can handle the identity verification process. CEO Blake Hall tells me in an email that his system could have securely dealt with IRS data. “On the healthcare side, we could absolutely verify identity and attributes, like income, in order to match the profile of an individual with health care plans.”

When push comes to shove, the White House does not trust citizens or the press, and it definitely doesn’t trust the entrepreneurial spirit of small business.

Yet as the regulations were designed, startups take a backseat to government websites. State exchanges are given the option to interface with so-called “web-based entities.” Two of the largest states, California and New York, have delayed tech partnerships for around two years. “In the first year, we can’t custom interface, we don’t have enough bandwidth, we don’t have the technological capacity,” California state spokesperson Anne Gonzales told USA Today.

But it’s unclear why states didn’t prioritize tech companies in the first place. The federal and state governments were overwhelmed with the monstrous task of building a new database for millions of consumers. To this day, most exchanges are still offline.

The implications of HealthCare.gov’s failure represents an existential threat to Obamacare. First, HealthCare.gov’s own calculator may be steering individuals into a cheaper plan that could bankrupt them in the future. “People may be totally motivated by the cost of the policy and spend not an adequate amount of time looking at the deductibles and the co-pays and what is covered,” Kenneth Davis, CEO of Mount Sinai hospital, told me.

Tech startups, such as FuseInsurance, are designing more sophisticated calculators to help consumers find a healthplan that takes into account their specific circumstances. “We built a recommendation engine that compares user needs to plan structure,” says FuseInsurance founder Will Richie. “HealthCare.gov does a good job of listing plans, but it doesn’t go so far as to recommend any of them.”

But, for some reason, the states figured that these essential innovations of FuseInsurance and other tech companies could wait a few years.

Worse yet, Obamacare desperately needs the healthy young bodies of 18 to 34 year olds to subsidize the healthcare costs of their decaying elders. But it’s cheaper for young people to pay the one time legal fine of $95 rather than shell out $200/month for health insurance, so Obamacare risks higher healthcare costs for everyone if glitchy websites send frustrated consumers away permanently.

The U.S. Department of Health and Human Services has unleashed an an army of celebrity ambassadors and field brokers (“navigators” to fish young invincibles into the exchanges, but it seems like tech companies have better ideas. eHealth, for instance, is integrating with the maker of TurboTax to persuade young taxpayers to buy insurance at the moment they have to pay a fine. TurboTax can know if a citizen is uninsurance, and alert them to an easy-to-purchase health plan right before they pay $95.

At least a few states see the benefit of outsourcing the difficult work. Josh Sharfstein, Maryland’s secretary of health and human services, tells me in an email, “We’re looking to move forward with these partnerships because we identified two areas of value: 1) the ability of private partners to increase outreach; and 2) the ability of private partners to bring innovation to plan selection.”

These types of solutions will be entirely absent from California and New York. Ironically, Todd Park, the government’s Chief Technology Officer (a position created by Obama to find creative tech solutions), often espouses the principle of “Joy’s Law” (named for Bill Joy, the legendary founder of Sun Microsystems, Bill Joy), which states,“No matter who you are, most of the smartest people in the world work for somebody else.”

For a year Park has been re-organizing the federal IT system to put data in the hands of private developers, rather than have government websites be the central hub. While Park wasn’t in charge of HealthCare.gov, it is bizarre that the president’s signature initiative would ignore his principles.

Cronyism

“If you want an IT project to fail, allocate a bunch of dollars to it,” wrote former Presidential Innovation Fellow Clay Johnson. “HealthCare.gov isn’t a book by itself. It’s a chapter in an epic saga of large IT implementation screw-ups.” That includes a military veterans health database that is so backed up with unscanned documents that the paper load is collapsing the floor it’s warehoused on.

The company hired to build HealthCare.gov’s failing database, CGI Global, is an established government contractor (established enough to have actually lobbied Congress on the Affordable Care Act). Even though Canada had previously fired the firm for a botched $46.2 million medical registry system in 2011, CGI Global was still contracted to the build the technical keystone of the U.S. healthcare law.

“I think procurement in the federal government is broken. It favors incumbents and the status quo over the lean start-ups in terms of its archaic procurement rules and regulations,” Vivek Kundra, former U.S. chief information officer, told The Washingtonian.

Startups simply don’t have the knowhow to get around the oddly complicated procurement rules—or the congressional ties to curry favor. As a result, a mediocre contractor charged an astounding $93 million for a botched job.

Secrecy

The “most transparent administration in history” has been aggressively silent about HealthCare.gov’s debacle. CGI Global just flat out won’t talk to the press. Kathleen Sebelius, secretary of health and human services, did a widely panned interview with Jon Stewart, where she made the claim that excess demand is crushing the system.

While most computer experts question whether simple demand could cripple a website for weeks, there’s no way to know. HHS violated the White House promise to put website code online for public scrutiny.

A community of programmers over at the popular content aggregator Reddit.com are having a field day criticizing the quality of the little bit of code that they’re able to see without full disclosure. The comments are loaded with tech jargon, but it’ll give you a good idea of how bad people in-the-know view CGI Global’s work:

“View source. They’re loading 11 CSS files and 62 (wat?) JavaScript files on each page, uncompressed and without expires headers. They have blocks of HTML inexplicably wrapped in script tags. Wtf?” joked one commenter.

Now, parts of HealthCare.gov do work. The front page layout with pictures of smiling insured citizens was designed by the smaller and widely respected web developer, Development Seed, which not only had a glitch-free launch, but put up their code to the public repository GitHub.com for criticism.

But, after GitHub’s healthcare page starting filling up with searing criticism, the White House yanked it.

Now, there are all sorts of well-intentioned reasons why the administration would behave in a closed, paranoid fashion. Republicans are circling like vultures for any weakness that could legitimize a delay or reversal of the Affordable Care Act. So the administration sweeps problems under a rug, in the hopes that they can sort out the mess later.

But these tactics are telling about the true values of the White House. When push comes to shove, it does not see democracy as a solution to problems. It does not trust citizens, it does not trust the press, and it definitely doesn’t trust the entrepreneurial spirit of small business.

Like a paranoid ruler, it only trusts what it can directly control. HealthCare.gov could have been a shining example of how an open exchange of ideas makes America a better place, setting precedent for a more innovative government generations to come. That was Obama’s big promise about the change he would bring to Washington. Now, our healthcare system is as broken as Obama’s promise.