After last October’s disastrous
launch of HealthCare.gov, the federal health insurance exchange
portal created under Obamacare, the Obama administration decided
that some change, and perhaps even hope, was in order. In January,
the administration fired the original exchange tech contractor, CGI
Federal, and brought on a new firm, Accenture.
Normally, the federal contracting process is slow and arduous.
But the administration needed to make the transition with a minimum
of fuss. Partly that was to ensure continuity of service. But
partly it was because the exchange project was still lagging far
behind schedule. The back-end components that communicate with and
make payments to health insurers—the “financial management
platform”—were originally supposed to be finished before the site
went live in October. But pre-launch delays kicked the work down
the road. In November, during a congressional hearing on the
botched exchange launch, a federal tech official revealed that
between 30 and 40 percent of the system had not been completed. The
expected completion date was revised and pushed back to January.
But when January came along, and the administration decided to
change contractors, the work still wasn’t done. There was still no
financial management platform in place to manage the law’s complex
network of subsidies and risk mitigation payments to insurers.
In a
document justifying the rapid award of the new contract with
Accenture, the administration warned that before long, this could
be a huge problem. “Failure to deliver” the payment
functionality “by mid-March 2014 will result in financial harm to
the Government. If this functionality is not complete by March
2014, the Government could make erroneous payments to providers and
insurers.” Without a finished system, “the entire healthcare reform
program is jeopardized.” Missing the mid-March deadline would
“significantly increase” a variety of risks for the program, and
could “potentially [put] the entire health insurance industry at
risk.”
As an astute reader, you may notice that it is now the end of
April. The mid-March deadline is long gone, and long blown. These
crucial back end systems remain incomplete.
And,
according to a report in Politico, the administration
has no timeline in place for when they will be finished. Nor will
anyone in the know say how much work has been done.
Politico reports that federal health officials “refused to
provide an update on just how much of the back end remains
incomplete, the current issues they face and their latest
timetable.” Not exactly confidence inspiring, eh?
For the time being, payments are being made based on estimates
from insurers rather than actual tracking—basically, they’re
guesstimating. And they’re going to continue guesstimating for a
while. But eventually, at some point, everyone has to start dealing
with reality.
The Obama administration posted a
document earlier this month indicating that insurers will
continue to be paid through an “interim” accounting process—pretty
much a spreadsheet and some informed estimates—until at least
September. When the permanent system eventually goes live, it could
lead to a massive correction that either exposes taxpayers to more
costs or puts pressure on insurance companies to raise
prices.
The best-case scenario here is that the delay isn’t actually
that big a problem, at least not in the short term, and the
administration’s original warnings were misleading—perhaps
intentionally, or perhaps unwittingly. Either way, it’s not good:
They either knowingly overstated the risk, or they still don’t have
a strong handle on many key technical aspects of the exchange
system.
But given those early warnings, and the serious trouble the
administration and its tech vendors seem to be having making this
part of the system work, it’s still at least plausible that there
are more serious tech messes coming in the near future. At minimum,
I suspect, even if there are no major disasters, the federal health
exchange system will continue to be rickety and unstable for a
while to come.
And remember—compared to several of the still-malfunctioning
state exchanges, the federal portal is actually on relatively sure
footing.
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