Obamacare's technology mess
At least a half dozen state exchanges won't offer full online enrollment thanks to unresolved software problems.

WhiteHouse.gov/David Lienemann

Members of the Cabinet watch as President Obama makes a televised statement on a possible government shutdown, in the Roosevelt Room of the White House, Sept. 30, 2013.

Article Highlights

  • Obamacare won't fail. It will crash.

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  • Pres Obama is bracing Americans for problems as Obamacare rolls out this week, but what he calls "glitches" are hardly routine

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  • The Obama team has set a low bar for itself, but they may be underestimating the cost of a shoddy roll out.

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  • Obamacare is about the federalization of the entire system, but the IT backbone can't keep pace with the political ambition.

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President Obama is bracing Americans for inevitable problems as the Affordable Care Act rolls out this week, but what he calls "glitches" are hardly routine. Information technology is ObamaCare's Achilles' heel. The faulty IT will expose Americans to lost data, attempts to enroll online that fail and the risk of fraud.

There are two key technological flaws in ObamaCare. First is the "hub"—the software to link servers at the Treasury Department, the Internal Revenue Service, Homeland Security and state agencies to verify the income and health-insurance status of enrollees and ensure that they are eligible for subsidies. The other flaw is the "portal"—the federally run IT platform that is supposed to let consumers compare health plans and select one that best suits their needs.

In planning ObamaCare's IT infrastructure, the Centers for Medicare and Medicaid Services (CMS) dawdled for more than a year under Administrator Donald Berwick until Marilyn Tavenner took over in December 2011. Even then the agency was slow to outsource key contracts and turned to what insiders say were not top-quality programmers. CMS did not sign a contract for a backstop system to process paper verifications and do paper verifications of online applications until July.

The Health and Human Services Department did not begin testing the chief pieces of this IT system until August. The testing found that states couldn't consistently link to the federal portal (a problem that persists in some states), and that the hub couldn't reliably verify if a person is eligible for a subsidy, or accurately calculate how much the applicant is eligible to receive. HHS prevented independent watchdogs, including its own inspector general, from examining the systems before they go live on Oct. 1. The result is a host of troublesome gaps and dangers.

The biggest risk involves data security. The Obama administration created unnecessary opportunities for fraud with the White House's pork-minded insistence on funding favored community groups to employ "navigators" to solicit applicants and help them input their personal information, such as income and Social Security numbers. The navigators were hastily hired and trained (they are still being hired) and were not given extensive background checks. The personal data for millions of people will be entrusted to these navigators—and to a computerized system that has been rushed into operation.

Another technological hurdle involves health-insurance subsidies. At least a half-dozen states, including Colorado and Oregon, have said that they won't offer full online enrollment through their exchanges because the federal hub that is supposed to link to help them determine the subsidies people are eligible for isn't working properly. A link to Medicaid agencies also isn't functioning. This link is necessary to ensure that someone applying for a subsidy under a health plan is not Medicaid-eligible under his state's rules.

If the hub can't verify this, the individual will get booted from the ObamaCare enrollment system and shifted to a call center for confirmation by an ObamaCare agent who is likely to be fielding a deluge of complaints. Some people will end up getting subsidies they weren't qualified for. Washington eventually will have to try to claw back the money. This will create a massive pay-and-chase challenge as people move in and out of the exchanges and get subsidies that many of them won't even know they didn't deserve.

The subsidies will likely present other woes. For example, separate cost-sharing subsidies intended to reduce a person's out-of pocket costs are subject to the budget sequester. As a result, some of the reductions in co-insurance won't materialize. Patients won't know what they will owe for doctor visits, prescriptions or hospital stays. The Obama administration hasn't begun to address the issue.

As for medical care, the current ObamaCare software doesn't even try to take a serious stab at letting consumers match the health plans on the exchanges with their particular medical needs, or with their providers, at the point of enrollment. In some cases—but not necessarily all—they can click through to the plans to ferret out the information they need.

On Friday, HHS finally awarded a $380 million, four-year contract to manage appeals from consumers fighting for benefits that the insurance plans have denied. If it was hard to appeal medical claims through your current insurance plan, wait until you have to call a remote federal contractor.

The technology and privacy problems presented by ObamaCare aren't likely to be mere rough patches that can be easily smoothed over. The provision of health care is an inherently local endeavor, and it increasingly appears that so is applying for health insurance. ObamaCare is an attempt to federalize the entire system, but the IT backbone appears unable to support this political ambition.

In September, the Minnesota state health-insurance exchange inadvertently disclosed several thousand Social Security numbers before the exchange even opened for business. Once the entire, gargantuan system is fired up nationwide, data leaks are almost a certainty.

That's the thing about technology: Glitches happen. Usually they're annoyances. Now, more than ever, they're going to involve the government and your health.

Dr. Gottlieb is a physician and resident fellow at the American Enterprise Institute. He is the Republican appointee on the HHS Federal Health IT Policy Committee that works on electronic health record guidelines for doctors' offices but has nothing to do with the rollout of the ObamaCare exchanges. Mr. Astrue was the Commissioner of Social Security until earlier this year.

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