As I noted the other day, when Obamacare "czar” Jeffrey Zients announced that the health-insurance exchanges would be working by Nov. 30, he bought the administration some time. Unfortunately for them, most of that time has so far been spent discussing “rate shock” and policy cancellations: the folks in the individual market whose policies were canceled thanks to new regulations and will now have to replace them with something more expensive or that carries a higher deductible.
We don’t actually know how bad a problem this is. Mathematically, two things must be true: There are some people in this country who are losing their current insurance and gaining better insurance at a lower cost, and there are some people in this country who are losing their current insurance and getting worse insurance at a higher cost. And there are some who are now getting insurance they couldn’t afford at all before.Read more »
Lest we need any reminder that the government is not the only organization capable of big, messy information-technology failures, Felix Salmon has laid out some Technicolor meltdowns in the private sector (and kindly references my upcoming book about failure and recovery, which Felix is reading in galleys). He references James Reason’s Swiss cheese model, which I write about in the book. Broadly, the idea is that you may have security layers with a bunch of holes in them, but if you layer enough of them together, you’re still pretty well protected, because the odds of the holes lining up on seven or eight layers are still pretty slim.
There’s a corollary to that, however: The more layers of Swiss cheese you have, the harder it can be to tell if the holes are lining up. Maybe the holes are lined up on all but one layer -- and then that layer shifts, and you suddenly realize that you’re disastrously unprotected. One way to think about this is modern health care: We’ve got all sorts of backup mechanisms if the body fails, even catastrophically. If you get an autoimmune disease, we’ll suppress your immune system; if your kidney fails, we’ll transplant a new one into you. Hips crippled with arthritis? We’ll give you artificial ones.
Last fall, I wrote a long piece for Newsweek about big-box retailers, in which I concluded that Amazon.com had basically made their business model unsustainable; the only question was whether they could switch to a smaller, more curated business format before Amazon put them out of business. Now it’s time to ask whether grocers should be watching their backs.
Yesterday’s Heard on the Street column at the Wall Street Journal discusses Amazon’s push into groceries -- currently operating only in Seattle, but expected to expand into other major cities soon. How worried should Safeway and Harris Teeter be?Read more »
I wrote last week about the "magic pot of money" that everyone thought they had found to fund the Patient Protection and Affordable Care Act -- money that didn’t harm patients or anger important interest groups. One of those magic pots was Medicare Advantage overpayments; it costs more to provide Medicare Advantage (in which Medicare money is used to purchase a private insurance policy) than it does to run patients through traditional Medicare.
At the time the law was being debated, folks like Alex Tabarrok pointed out that those “overpayments” were actually being used to fund extra benefits, as the law required, and that cutting them would be politically difficult. But cuts to Medicare Advantage nonetheless ended up in the law. In fact, they’re one of the major revenue-raisers. The administration has balked at actually letting them go into full effect in the past, but now, reports the New York Post, they are beginning to bite:
Last Friday, Jeffrey Zients, the fellow who’s been tasked with overseeing the fixes to HealthCare.gov, gave a telephone briefing to reporters. Regretfully, I was at a conference and unable to sit in on that call. But I’ve corresponded with people who were, and it’s been thoroughly written up in the Washington Post and elsewhere. The gist: They have a list of what needs to be fixed, and Zients says that by Nov. 30, he expects the website to be working for the vast majority of users. Jonathan Chait remarks:
The administration is obviously putting its neck on the line here. If it fails to hit the deadline, all political hell will break loose. (There is a little wiggle room, as the promise applies to "the vast majority of users.") Therefore, presumably, the administration is extremely confident it can hit this deadline. On the other hand, it was also extremely confident it could have the site working reasonably well by October 1. So Obama apparently believes not only that his administration can fix the technical problem, but also that it has already fixed the managerial problem that caused it to underestimate its technical problem.
There's also the third possibility: The administration has learned that a large meteor will destroy the world on or before November 30, and wants to live out its remaining time on the planet in relative peace, rather than dodging "are we there yet?" questions about the website every day. So basically the possibilities are:
1) They know what they're doing.
2) They have fooled themselves into thinking they know what they're doing, but don't.
That list is amusing, but it's not exhaustive; there is also a fourth possibility, which is that they are buying themselves time. Think of it this way: If the website doesn’t work by Nov. 30, all hell will break loose. How much more hellacious will it get if the president’s tech guy promised that the website would work and it didn’t? Not all that much more hellacious, really.
Over the past month or so, readers have asked me to comment on Matt Taibbi’s article about public pensions. I have various issues with his version of events, but his fundamental point -- public pensions should not be investing with hedge fund managers -- is quite sound. They shouldn’t be investing with hedge fund managers.
The difference between me and Taibbi is that I see public pension officials making bad decisions not because they’re deluded right-wing ideologues, but because they and their predecessors, and the legislators who made the pension laws, made a bunch of awful decisions that have left them with few good options. Plunging pension assets into hedge funds and similarly risky investments was a Hail Mary pass to save a failing system.Read more »
The state insurance exchanges have been the highlight of a so far dismal rollout process for the Patient Protection and Affordable Care Act. When Obamacare's supporters are challenged on the law's merits, that’s where they point to show that the new insurance markets can work -- if governors are committed to making them work.
But a CBS News report discusses a growing source of disquiet: In almost half the states with exchanges, the overwhelming majority of enrollments are coming from Medicaid, not the new insurance markets -- 87 percent in Washington, 82 percent in Kentucky and, last time I looked, 100 percent in Oregon (which delayed opening its insurance exchange in order to work out technical bugs). The Medicaid expansion side of the bill seems to be working fine in the states that opted for the expansion. But the private insurance side doesn’t seem to be getting a lot of pickup.Read more »
During the run-up to health-care reform, a lot of people went looking for what I dubbed “the magic pot of money.” It would be a large expense that could be cut out of the health-care system with very little political pain because it would not cause anyone to miss out on life-saving (or life-enhancing) treatment, and it also did not come attached to a large and powerful interest group that would fight like deranged weasels to save their pet benefit.
There were many candidates for the role of “magic pot of money”: Medicare Advantage overpayments, preventive medicine, uncompensated care provided to the uninsured, electronic medical records, fighting obesity, ending unnecessary treatment and so forth. One by one, most of these turned out to be less promising than they had initially seemed. Medicare Advantage “overpayments” turned out to be providing extra benefits to those enrolled, and so far the administration has chickened out whenever the time has actually come to make deep cuts. Uncompensated hospital care turns out to be a small fraction of U.S. health-care costs (about $40 billion on total spending of more than $2.7 trillion), and it also didn’t fall as far as people had expected in Massachusetts. Preventive medicine turned out to raise costs, not cut them (whatever its other benefits for patients). No one knows how to make people thin. And so we were left with overtreatment.Read more »
I’m spending my morning listening to various contractors testify before Congress. Back in the day, when I worked for a tech consultancy, the technical term for what is going on in this hearing was “Not it!”
Every consultant has sat in a meeting like this, where you painfully try to duck responsibility for unknown bugs and/or the client’s bad decisions while not enraging the client by pointing out the various ways that various powerful people in the institution messed up the implementation. Having been in that position several times myself, it’s hard not to feel empathy for the folks getting grilled. Hope you got those change orders in writing, guys.
I’ve been blogging a lot over the past week or so about the risk of an insurance market "death spiral" -- where young people stay away, so the only people buying insurance are old and sick, causing the cost of insurance to rise over time and pushing ever more healthy young people out of the market.
Adrianna McIntyre says that we shouldn’t worry; there’s a provision in the Patient Protection and Affordable Care Act that deals with this: