The omens do not auger well for a happy ending

Two articles in the same day on complementary topics leading to an interesting conclusion.

I deal with clients all the time who have major projects, including major IT projects, go south. They are over budget, they are late, they fail to deliver the anticipated benefits, they generated unexpected negative consequences. Happens all the time. You can reduce the odds of this happening through evidence-based decision-making, rigorous measurement, organizational change management and good old fashioned program management. But the biggest, most complex projects are inherently risky. You can reduce the risk but you cannot eliminate it.

But sometimes you don't do any of that. With Obamacare you had a set of policies that never garnered a majority of support from the electorate, zero support from the opposition, the legislation was flawed and poorly crafted owing to shifting political circumstances and the implementation was nothing short of disastrous.

There was an underlying real issue of some 15 million to 45 million people uninsured depending on how you measured lack of insurance. The administration said 45 million people. Opponents claimed that included non-citizens, people who were covered under other programs, people who could have coverage but had chosen not to sign up for it, etc. They claimed only about 15 million citizens actually had no access to insurance. And this was in contrast to the 85-95% of people who had insurance and were satisfied with it.

So the legislation is passed, and five years later the law is still slowly being implemented with all the functionalities and costs and process changes and court challenges still working their way through. We are still a long way from knowing whether this will turn out well or not. The opponents are still opposed, the public is still skeptical, the results are still out.

The first article is How HealthCare.gov Went So, So Wrong by Megan McArdle.

The Centers for Medicare and Medicaid Services inspector general has issued a new report on what went wrong with the Obamacare insurance exchanges. Or rather, one thing that went wrong: how the agency mismanaged the contracts so that they experienced significant cost overruns.

You can take this report as a searing indictment of the agency and its contracting personnel. I took something rather different away from reading it:

The architects of the law were incredibly naïve.
Federal contracting rules are crazy.
Why do I say the architects were naïve? First of all, because it seems clear that no one -- neither legislators nor administrators -- had any idea that the exchange they wanted was a very hard technical problem. They specified a site that would do real-time verification of identities and subsidies, price search, and handle payments to insurers.

This system had to be built in three years, and moreover, it could not be built the way Silicon Valley would do it: start small, roll something out, see what works and what doesn’t, then iterate, experiment, and scale until you finally arrive at the site you wanted to build. No, this site had to work on Day One, in every state in the nation that declined to build its own exchange. That was a very tall order, and no one seems to have given it much thought. Even when a manager in CMS tried to get the administration to scale things back, officials refused, and apparently simply failed to consider the possibility that trying to do too much would mean they ended up with nothing at all.

She goes on to detail the comprehensiveness of the failure at a project management level.

But what about at the policy level? Yes, it was delayed and over budget. But did it solve the problem it was seeking to solve? Are the 45 million now covered by insurance? That's where the second article comes in. Uninsured Numbers Drop as Poverty Rate Holds Steady by Robert Pear.

The number of people without health insurance dropped last year by 8.8 million, to a total of 33 million, but there was no statistically significant change in income for the typical American household, the Obama administration said Wednesday.

Obamacare has added hundreds of billions of dollars to the federal budget and the federal deficit so far. It has forced virtually everyone to adjust their insurance coverage, including all the hours of research in making those decisions. It has forced innumerable people to buy insurance they once chose not to have. It has imposed huge structural changes on the insurance industry and the healthcare industry. To what end? It is clear that virtually all the promises made during the selling of the policy have been broken. No, you can't keep your insurance if you like it. No, you can't keep your doctor. No, you won't have more choices. No, it won't cost less.

But projects can be late in their delivery, can cost more and deliver less than expected and there still be a net benefit, even if that benefit is less than promised.

Which brings us back to the core of the problem to which Obamacare was the solution. We had 45 million people without coverage. Did Obamacare solve that problem? Apparently, No. We had 45 million without insurance and now we have 33 million. We reduced the problem by only 25%.

It is too early to write-off Obamacare as one more catastrophic example of good intentions leading to bad policy. The law won't be fully implemented for another couple or three years by which time perhaps costs will start coming down, choices improving and everyone will have insurance. But at this point in time, the omens do not auger well for a happy ending.