1 Faegami

Obamacares Failure A Case Study

Stakeholder Engagement Fair

There were numerous stakeholders involved in the formulation of Obamacare, including the following: federal and state governments, health insurers and other commercial groups related to the policy, political parties and leaders, National Republican Congressional Committee, the Supreme Court, and the general public.

This was reflected in a wide spectrum of opinions regarding what the legislation should look like. The debate between Democrats and Republicans indicates their contrasting positions: "Democrats in the US were in favour of a more socialised solution for healthcare reform, that is, to expand Medicare or create something like it that, along with Medicaid, covered everyone in a 'single payer' system, like that in Canada. While Republican proponents supported a 'less ambitious' law that uses government subsidies mainly to help only those people who are not insurable, leaving the rest of the market to function as normal."[10]

The administration has claimed to have learnt from previous experiences to obtain stronger support for this policy: giving Congress more input to the structure and more information about the policy goals, as well as looking to get support from industry specialists, including insurers, physicians, pharmaceutical companies, hospitals and other providers, and allowing the House and Senate to work through each of their concerns before merging these into a bill.[11]

Political Commitment Weak

Previous healthcare programmes in the US had received more consensual support from political leaders, while the ACA occasioned much more dispute. It was favoured by Democrats but strongly opposed by Republicans.

The process for approval of the ACA bill was also conflictual: “Republicans in the House have voted to delay, 'defund' or repeal the law some 60 times”[12] and it barely made it through Congress in 2010, with a slim Democratic majority. Amid extreme partisan divides along ideological lines, it faced all-out Republican opposition. In March 2010, the ACA was only narrowly passed by the House (by 219 votes to 212), with all 178 House Republicans voting against. "These numbers underline the exacerbated partisanship in Congress and, more generally, the lack of consensus surrounding this reform.”[13]

Public Confidence Fair

Obamacare has been widely debated both among political actors and the general public. Given that its measures have affected people differently (for better and worse), support and approval have been mixed and changing since implementation, and the public seem to be split down the middle in terms of overall support.

According to a Pew Research Center survey from February 2015, a greater share of the public disapproves (53%) than approves (45%) of the ACA.[14] A Kaiser poll found similar results in 2015, with 43% holding a favourable view as against 42% with an unfavourable one. These figures, however, represented an improvement for Obamacare on a previous survey in July 2014, which found only 37% of Americans supporting the policy, compared to 53% who rejected it.[15]

Policy

Clear Objectives Good

The main goals of the ACA were to provide more Americans with health insurance and lower the overall cost of healthcare. When launching the ACA,  President Obama gave some measurable estimates  that helped reinforce these general objectives:

  • Under the Act, the number of uninsured was intended to decline from 50 million to 22 million in 2016.[16]
  • The ACA should reduce annual insurance premiums by USD2,500 for the average family.[17]

Evidence Fair

Evidence used for the implementation of Obamacare was based principally on the existing healthcare system in Massachusetts while there was also input from the testing of pilot programmes aimed at improving the quality of service to users.

Obama declared that the ACA was modelled on Mitt Romney's healthcare initiative in Massachusetts. “It’s because you guys had a proven model that we built the Affordable Care Act on this template of proven bipartisan success. Your law was the model for the nation’s law.”[18] The Romney plan itself has received mixed support, with significant praise of its model from some fellow Republicans, but also some criticism about its method. "The healthcare plans advocated by all three of the leading Democratic presidential candidates — Hillary Clinton, John Edwards, and Barack Obama — are all substantially the same as Romney's. They are all variations of a concept called 'managed competition', which leaves insurance privately owned but forces it to operate in an artificial and highly regulated marketplace similar to a public utility."[19]

Opinion on the Massachusetts model is divided, with some taking the view that it was ineffective. "As Massachusetts has shown us, mandating insurance, restricting individual choice, expanding subsidies, and increasing government control isn't going to solve those problems. A mandate imposes a substantial cost in terms of individual choice but is almost certainly unenforceable and will not achieve its goal of universal coverage. Subsidies may increase coverage, but will almost always cost more than projected and will impose substantial costs on taxpayers. Increased regulations will drive up costs and limit consumer choice."[20]

Additionally, the ACA has added a number of new and amended and/or extended demonstration and pilot programmes. For example, it created the Centers for Medicare and Medicaid Innovation (CMMI), tasked with developing and funding demonstration projects to improve the quality of care for patients.[21]

Feasibility Fair

Policymakers considered the financial and legal constraints before formulating the ACA, but might not have assessed such constraints to their fullest extent. The federal system in the US allows states to have autonomy in the application of certain legislation, which was the case for this healthcare reform. "The Supreme Court's 2012 ruling found the ACA constitutional, but also struck down a provision saying states had to change how they administered the government health programme, Medicaid. Under Obamacare, states were supposed to expand the number of people who qualified for Medicaid, which had been reserved for the poor, and in return the federal government would provide the states more funding. The court said states could choose not to participate in Medicaid expansion.”[22] This was the case for some states which decided to opt out of the Medicaid expansion, leaving people who were supposed to get coverage outside the bill's auspices.[23]

Overall, the Medicaid expansion proved to be more expensive than was forecast. "Total federal spending on the expansion in 2015 was at least 50% above Congressional Budget Office's (CBO) 2014 projection of USD42 billion. Part of the reason for this unanticipated expense is that states are paying insurers higher rates than the government projected; in fact, spending per newly eligible enrollee was 49% higher in 2015 than was expected by the Obama administration in a 2014 report.”[24]

As a result of the ACA, premiums were predicted to rise by 25% in 2017, and government subsidies were to increase accordingly to help pay for insurance. However, those who should be covered by the Medicaid expansion were ineligible for those subsidies, and some may therefore be unable to afford health insurance at all.[25]

Action

Management Fair

The Department of Health and Human Services (HHS) was responsible for implementation of the ACA, and faced substantial challenges. The diversity of the country – both in terms of individuals as well as the federal system - makes this programme difficult to implement. Accounting for the rights of all 314 million individuals made the management of the programme very difficult.

There are many examples of exceptions from the requirements of the ACA, of which the following is one. "An example is the contraception insurance requirement in health plans without 'cost-sharing' under the law’s market reforms. This posed a serious issue for religious companies. The Department of Treasury, Labor and Health and Human Services recently provided an exception for non-profit religious employers. Unfortunately, this exception does not extend to for-profit employers. This is one example of how an exception was required."[26] It is expected that many similar exceptions will be requested in the future.

Measurement Good

The performance of the policy has been evaluated based on a number of indicators such as the number of people insured, the rise or fall in insurance premiums, and the number of enrolments in the policy.  The main institution in charge of tracking indicators is the CBO, but, given the high profile of the policy, there are also several independent institutions and research firms tracking results and opinion, such as the Cato Institute and the Kaiser Foundation.

The CBO analyses the effects of the ACA under current law, and the effects of proposals to change the law. It regularly publishes a range of reports addressing costs, estimates and outlook related to the ACA.[27] For example, its report on "Federal Subsidies for Health Insurance Coverage for people under age 65: 2016 to 2026" was published in March 2016 and contained a number of projections of the ACA's impact. “CBO and JCT [the Joint Committee on Taxation] updated their estimates of the number of people under age 65 who have health insurance from various sources as well as their projections of the federal subsidies associated with that coverage. Those projections encompass a broad set of budgetary effects that operate under current law, including the effects of providing preferential tax treatment for employment-based coverage, costs for providing Medicaid coverage to people under age 65, and payments stemming directly from the ACA.”[28]

Alignment Weak

The bipartisanship affecting this policy had a significant influence on the collaboration and alignment between the actors involved in its implementation. There were some states that did not approve of the policy, which resulted in a fragmentation of its execution across the nation. The lack of support from certain states continues to exert a direct impact on the coverage of the policy, as they have the right to refuse the extension of Medicaid coverage. “Even if Republicans and conservatives continue to mount fierce political attacks calling for the repeal or gutting of the entire law, more consequential obstruction comes from state-level governors and legislators who can refuse to help establish exchanges to market subsidised private insurance and, more importantly, can block outright the expansion of Medicaid.”[29]

The interdependency of factors has repercussions across the board, affecting the costs and incentives affecting other actors, including the private sector. “Insurance companies are backing out of participating in Obamacare because fewer Americans than anticipated are signing up; that in turn raises insurances costs for everyone, which then further drives down participation. For some middle-income Americans, the subsidies available for buying Obamacare policies are not generous enough, and the fines for not having coverage are too small to encourage them to enrol in plans.”[30]

During the two years before the disastrous opening of HealthCare.gov, federal officials in charge of creating the online insurance marketplace received 18 written warnings that the mammoth project was mismanaged and off course but never considered postponing its launch, according to government investigators.

The warnings included a series of 11 scathing reviews from an outside consultant — among them a top-10 list of risks drawn up in the spring of 2013 that cited inadequate planning for the website’s capacity and deviations from usual IT standards. A few months before, then-Health and Human Services Secretary Kathleen Se­belius had hired another consultant to review the project and recommend ways to improve its management, but its advice was never shared with the technical staff working on the website.

[HealthCare.gov timeline: Final countdown to a flawed launch]

The long trail of unheeded warnings is among the findings from an exhaustive two-year inquiry by HHS’s Office of Inspector General into the failings of HealthCare.gov, which crashed within two hours of its launch on Oct. 1, 2013. The failings tarnished the start of a central aspect of the Affordable Care Act — new insurance marketplaces for Americans who cannot get affordable coverage through a job — and embarrassed the White House, which championed the law.

The findings are contained in a “case study” to be released Tuesday. It represents the most penetrating look ever into what went wrong with the building of the federal insurance exchange and what was done to fix it. It is based on interviews with 86 employees of HHS, its Centers for Medicare and Medic­aid Services (CMS) and companies that worked on the project, as well as on several thousand emails, memos, government contracts and other internal documents.

Rep. Marsha Blackburn (R-Tenn.) asked Secretary of Health and Human Services Kathleen Sebelius who was responsible for failures in the rollout of the Affordable Care Act's Web site. (The Washington Post)

Many of the basic contours laid out in the 84-page report are, by now, familiar: Federal health officials failed to recognize the enormity of the undertaking, were disorganized and fragmented, were hampered by late and shifting ACA policies, had too little money, used poor contracting practices, and ignored problems until it was too late.

But the inquiry unearthed vivid details that have not been public. And it concludes that the central reason for the problems rested not with the shoddy work of vital IT contractors but with mismanagement by federal health officials carrying out this part of the law.

“CMS didn’t need a technical surge, they needed an organizational surge,” an agency employee told the investigators. A lack of leadership, the report says, “caused delays in decision-\making, lack of clarity in project tasks and the inability of CMS to recognize the magnitude of problems as the project deteriorated.”

The investigators also concluded that once the crisis erupted (only six people nationwide managed to select health plans through HealthCare.gov on its first day) the initial repair blitz was not primarily the result of the “tech surge” ballyhooed by the White House — the talent quickly imported from Silicon Valley and other leading IT firms. The turnaround was fostered mainly by an abrupt culture shift in which government workers, contractors and the tech imports worked hand in hand, initially at a command center in Herndon, Va, Va. Within two months, about 4 in 5 consumers could use the website.

Over the past two years, top federal health officials have apologized for HealthCare.gov’s troubled start, and President Obama has called it a “well-documented disaster.” CMS spokesman Aaron Albright said the problems cited in the report taught the agency lessons about “leadership, accountability and prioritization” that it has applied to its work since.

Among the report’s revelations:

●In the summer of 2013, CMS officials asked CGI Federal, the main contractor building HealthCare.gov, to demonstrate a simple feature called Account Lite, intended to let consumers create accounts before enrollment began. CGI was behind schedule and, when it finally did the demonstration, federal workers found 105 defects.

The Obama administration's Affordable Care Act headache was comedic gold for late night hosts in 2013. (The Washington Post)

●On Sept. 26, five days before the launch, CMS officials discovered that the website had capacity for just a fraction of the planned number of consumers who could shop for health plans and fill out applications. That afternoon, CMS officials drove to the Laurel, Md., offices of a contractor, Terremark, and ordered its managers to double the capacity within 72 hours.

●Another contractor, QSSI, which was building the system for consumers to create accounts and verify their identities, underestimated the capacity required because its leaders did not know that consumers would not be able to browse health plans unless they first created an account. Just after midnight on Oct. 1, when HealthCare.gov began to run, QSSI’s staff members were in their office, watching as “everything was turning red on our screens,” indicating that people couldn’t get onto the site, the report says.

Before the site opened, CMS had not tested it end to end to see how the parts worked together. “You can’t test what is not built,” a contractor told the investigators.

Such last-minute chaos stemmed from decisions and dynamics that had begun much earlier, the investigators said. The ACA provided HHS with $1 billion for the administrative expenses of implementing the law, but the department “ceded over half these funds” to the Internal Revenue Service and other agencies carrying out parts of the law, aggravating its own financial strain.

And delays occurred, in part, because of close scrutiny of the CMS’s work by the White House staff, even on relatively minor issues. CMS employees were frustrated, the report says, “with the discussion around changing the term ‘nationwide health insurance’ to “health insurance’ in official documents.”

Work was hampered, too, by turnover of key staff at the CMS Center for Consumer Information and Insurance Oversight, which oversees the marketplace.

As the launch date neared, the report says, CMS officials and workers became “desensitized to bad news about progress,” doing little to respond to warnings and remaining too optimistic.

By the next spring, that had changed. On April 1, 2014, the day after the first enrollment season ended, the agency’s leaders met for three days of “ruthless prioritization” for the second sign-up period that fall. They listed the unfinished work on the website and, after considering what each item would require, cut the list in half.

Even today, after 9.6 million people nationwide signed up during the third enrollment for ACA coverage, HealthCare.gov “faces ongoing challenges,” the report says, including the completion of the website. One last part is an automated payment system with insurers. CMS began to use the system last month, starting with insurers whose own IT systems were ready for it.

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