Monday, December 16, 2013

Who Messed Up the Obamacare Website? Maybe Private Industry

The flawed rollout of the Federal insurance exchange website has been a huge embarrassment to the President and seems perfectly designed to reinforce the basic economism narrative that the government can never do anything right and that all matters ought to be left to the so-called free market. It’s therefore instructive to review what has happened to one of the state websites, in Maryland, that also has failed to perform as promised (while other state sites, I gather, have been working well). Instead of being a simple parable about how government always messes things up, the true story is more complicated and lays a huge portion of the blame at the doorstep of the private sector.

The story can be found on the Health Care Renewal blog:
--which in turn cites the original coverage in the Baltimore Sun by Meredith Cohn and Andrea Walker:,0,6559272.story

To get the full picture I need to explain that Dr. Scot Silverstein, who blogs for Health Care Renewal about information technology, is very experienced in IT systems for physicians and hospitals, so has had a lot of opportunity to observe the IT industry at close quarters.
The whole story is quite convoluted and it also appears that we don’t know a lot of the story. The Sun reporters sought government e-mails about what went wrong with the Maryland site, but the state officials refused to release a number of the e-mails. Why? Because the withheld e-mails “involved the decision-making process of high-ranking executive officials.” Now, I would have imagined that that’s exactly why the reporters wanted to see those e-mails, and why the public arguably has a right to know what’s in them. But back to the actual website.

Maryland figured it would need a lot of help to get this website operational, and signed up a firm called Noridian to a $71M contract to construct the website. In doing so state officials bypassed the usual procurement procedures, presumably so they could get to work more quickly.
Noridian, having convinced the state that they knew exactly how to design and launch this website, then decided that they didn’t know how to do it after all, and turned around and subcontracted with another firm, EngagePoint. Apparently Noridian at least initially withheld this bit of news from government officials.

Noridian and EngagePoint between them kept reassuring the state that all was well and everything would work just perfectly and on time, leading several officials to make reassuring promises to the public which later came back to haunt them. The website went live and promptly crashed, and some time later the various parties were still trying to pick up the pieces.
As to why the site was such a flop, Noridian replied with a long list of excuses, as to how the site was such a complicated thing to develop and how many different, disparate functions all had to be coordinated in the same place—much more complex than Amazon selling you a book, for example. Dr. Silverstein’s response to this is telling. When you hire an IT firm that’s competent, he says, you expect them to tell you just how hard the job is going to be, how long it will take, and anything you need to know to make it work properly up front. His suspicion, based on his own sad experience, is that in order to snare the contract, Noridian deliberately put out a grossly overoptimistic schedule and work plan. Then, when everything blew up in their face, they suddenly discovered how hard things were after all.

Dr. Silverstein drew on his medical experience to note that, had a surgeon operated on a patient and encountered really nasty but easily foreseeable complications, and then tried to use the difficulty of the surgery as an excuse for not having anticipated and planned for the complications, we’d have a name for that—malpractice.
All this was bad enough, but it promptly got worse. Noridian and EngagePoint started pointing fingers at each other over the blame for the debacle. Eventually Noridian cancelled its contract with EngagePoint, but tried to keep the EngagePoint staff at their jobs and expected them to fix what was broken. EngagePoint sued and Noridian countersued. While the lawyers slugged it out, nothing got fixed.

I am reminded of stories from the very early days of fire departments in the U.S., when fire companies were private, for-profit firms. They would show up if your house was on fire and offer to put it out for a fee. If two rival companies both got to your burning house at the same time, they’d get into a fistfight out in the street as to who had priority to fight the fire, all while your house was burning down.
Not to suggest that the Maryland state government is blameless in this tale of woe and intrigue. But we eventually decided that if fire protection was going to be done in the public interest, we needed to get the private profit motive out of the picture. Maybe a similar lesson ought to be learned about how best to make an Obamacare website that works.

Saturday, December 7, 2013

Welcome to the Club, Mr. President—Obama on Economic Mobility

President Obama gave a speech to the Center for American Progress in Washington this past Wednesday on the theme of economic mobility:

Paul Krugman described this speech in his column as important, despite the relatively ho-hum if not actively negative reaction of the press:

Looked at from a political point of view, the speech seems to affirm Krugman’s analysis that it’s a sort of coming out of the closet for the President. Obama makes quite clear that he’s speaking as a fellow progressive and that he intends to conduct himself as such for the remainder of his term. Apparently, all pretense (if it ever was pretense) of being a centrist and being above all dedicated to bipartisan solutions, no matter how much he might have to give up to cut a deal with the Republicans (who usually refused to cut a deal anyway), is done with as a failed effort. Just as it is hard to imagine that the Congress could get any more partisan and nasty just because the Democrats changed the Senate rules to limit filibusters, it is hard to imagine that the Republicans could scorn Obama any more because he made this speech.
Our point of view here, however, is related to economism. I have quoted from previous Obama speeches, both in The Golden Calf and in this blog. As a rule, in the past, I was quite happy if I could identify one or two passages in an entire speech that seemed fully expressive of an anti-economism posture. In this speech, on the other hand, I was hard put to find a passage that did not seem to me to call out economism for the flawed ideology and policy that it is.

The main focus, as the title indicates, is the way that income inequality in the U.S. has led to a loss of economic mobility. It is simply no longer true that a poor person, or the poor person’s children, can hope that through hard work, or education, or whatever, they will become reasonably well off.  Obama labels this as a serious challenge to who we are as a nation.
Along the way, the President trots out many of the statistics that people worried about income inequality commonly cite—like the CEO who was content to make20 to 30 times that the average worker made in the 1960s now makes 273 times as much, and that the top few percent of the population are running off with an increasingly disproportionate percentage of wealth and new economic growth. He deals with many of the standard ploys that economism’s defenders use to defend the status quo (like the claim that raising the minimum wage would hurt poor workers) and points out why all of them are misguided or inaccurate. He insists that government policy must play a major role in redressing the problems.

The road back from economism (maybe that’s a good title for the book that refutes the standard reading of Hayek’s The Road to Serfdom) will be long and difficult, but it has to start with the flaws of economism becoming the subject of robust political debate. As I explained in The Golden Calf, for far too long, economism has thrived on the widespread belief that the key portions of its ideology are nothing but common sense and that no rational politician could possibly disagree with them. Just to call them out and to insist that the debate must start is a major step forward.