The Official Obamacare News, Backlash, & Outrage Thread

Grand Potentate

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One stop shopping for all your Obamacare needs. Today's new item, an interview from Ezra Klein with a Health Care Insider on the exchanges:

Obamacare is a bit like the astronaut on top of the rocket’
By Ezra Klein, Published: October 15 at 12:38 pmE-mail the writer


Robert Laszewski is president of Health Policy and Strategy Associates, a policy and marketplace consulting firm that has him working closely with many in the heath industry as they try to navigate the Affordable Care Act, as well as the author of the excellent Health Care Policy and Marketplace Review blog. As such, he has a unique view on how the rollout looks from the industry side. We spoke on Monday. A lightly edited transcript of our conversation follows.


Karen Bleier/AFP/Getty Images

Ezra Klein: You wrote about how the problems on the back-end of the insurance portals, in the way they communicate with the systems of actual insurers, might be as bad or worse than the front-end traffic problems. What are you worried about, exactly?

Bob Laszewski: What I’m worried about is that when people go to their doctor in January they may walk in, and the doctor and hospital won’t find them in the insurer’s computer system or their bank account won’t be appropriately debited or they’ll be signed up for the wrong plan. I’m worried about all these things. Now, we have a few weeks to get this straightened out. But only a few weeks.

EK: Tell me what you’re hearing from the insurance industry that has you concerned.

BL: The insurance industry is literally receiving a handful of new enrollments from the 36 Obama administration-run exchanges. It’s really 20 or 30 or 40 each day through last week. And a good share of those enrollments are problematic. One insurance company told me, “we got an enrollment from John Doe. Then five minutes later we got a message from CMS disenrolling him. Then we got another message re-enrolling him.” On and on, up to 10 times. So insurers aren’t really sure if the enrollments they’ve got are enrollments they should have.

And remember, the insurers have automated all this. They don’t have a clerk sending out a welcome letter and an enrollment card. So if you just let the computer run, it could theoretically issue a welcome letter, a cancellation letter, a welcome letter, a cancellation letter, etc. Now, they’re not doing this right now because it’s all screwed up. They can manage a few dozen per day by hand. But when you’re talking about thousands or tens of thousands or hundreds of thousands, it becomes completely unmanageable.

EK: What do you think went wrong in the design of the federal insurance marketplace. The Obama administration put a lot of focus on this. They knew how important it was. But what they built has, thus far, performed disastrously.

BL: I think they trusted their subcontractors. There’s an astronaut joke that an astronaut is a guy sitting on top of a rocket assembled by the lowest bidders. Obamacare is a bit like the astronaut on top of the rocket. As I understand it, some of these were no-bid contracts, like CGI.

So I think some of the problem is the Obama administration never brought in heavyweight IT people to oversee this. Are there no Democrats in Silicon Valley? Kathleen Sebelius was the governor of Kansas. Mary Tavenner is a nurse and health policy person. Their senior people had no information technology background. And they’re listening to the consultants! There’s an old joke in the insurance industry that you don’t get very far if you bet your career on promises the IT department is making. And these people didn’t just bet their career on it. They bet Obama’s signature project on it!

Something to compare with is they really brought in the A-team from the campaign to promote Obamacare. They have a heck of a team to go out and communicate it when it’s up and running. It’s the best people. But there were no heavyweights brought in to manage the IT.

This project is one of the single biggest IT projects in American history. When and Facebook started they came up as a small company and came up slowly. This had to become prime time on day one. And this business about building it for 50,000 people? You have 50 million people uninsured and 19 million in the individual market and a few hundred million who aren’t eligible for Obamacare but have been hearing about it for years! Did they not think a few of those would go take a look? I think it gets back to oversight. It was a lack of oversight on the part of the Obama administration. They needed to bring in the same kind of heavyweights in IT that the Obama administration brought in to sell this from the campaign.

EK: You said a few minutes ago that they really only have a few weeks to fix this before they run into serious problems for the law. Is anything you’re hearing from the insurance side convincing you that the system is improving that quickly?

BL: There’s no evidence of any improvement so far. I say that factually, not as a shot at them. The question then is will they get there in time? Another mistake they made -- and given the politics you can understand it -- was this thing was really politically secret. I joke in speeches that the CIA director couldn’t get away with an affair but no one could figure out what was going on inside HHS.

They were paranoid because Obamacare was under siege. I understand that. If they were open with their partners there would’ve been criticism, but it would’ve been constructive criticism. None of us had any idea that the government Web site would require security sign-ins before browsing. Why did that have to be a secret? No one will read a newspaper article about that. If it had been transparent I think most of this would’ve been caught upfront. That really hurt them.

One thing the Obama administration has been really paranoid about is rate shock. When someone like me says there’ll be rate shock they say you have to net out the subsidies. That is a fair point. But I think what happened was when they designed their system they were so paranoid about that that they wanted to make sure people browsing got the lowest price. That required signing in so you could see subsidies. And my theory is that’s why they went to the architecture they did even though the IT systems people wanted to go another way.

EK: How are the state exchanges functioning?

BL: They’re not seeing anything like the federal problems. I should say that if you’ve seen one state you’ve seen one state. But to generalize, the vast majority of states really did a good job testing. Some of them didn’t open up with everything. Now, enrollment is not great, but that’s because every one of them had real glitches. And in the states, those actually were glitches -- not a train wreck. So we still don’t have an accurate picture of how many people will sign up. I think if you look at some of the states that opened fairly smoothly, like Maryland or Connecticut or Kentucky, they all had problems but in two weeks we’ll have a better sense of how they’re running. Enrollments are smaller than they need to be right now but the federal publicity is hurting them. The guy in Maryland doesn’t know he’s not on a federal exchange.

EK: What should the Obama administration do?

BL: I think the feds have to really solve their problems. I wouldn’t go on those sites now. People are just wasting their time. I think Mark Bertolini from Aetna made the comment this morning, and I agree with it that the smart move on the part of the Obama administration would’ve been to suspend the Web system, shut it down, go back, and fixed the problems. They would’ve taken a big political hit from Republicans for, like, two news cycles. But if they could bring it back in a month working smoothly, no one would remember five years from now.

The problem with the Obama administration keeping this open is its five times harder to fix something like this on the run. If it would’ve taken a month to fix it during the shutdown, it’ll take three or four or five months to fix it while it was running.
Here's a good piece on CGI Federal, the main IT player in building the exchanges:
Meet CGI Federal, the company behind the botched launch of
  • by Lydia DePillis, E-mail the writer, Lydia DePillis, Published: October 16 at 12:52 pmE-mail the writer
  • Oct. 16, 2013
  • original

Over the past few weeks, if you've been paying attention at all to the unfolding disaster of people trying and failing to sign up for Obamacare online, one name keeps coming up: CGI Federal, the IT contractor that has orchestrated most of the Web site. By most accounts, it's been a complete train wreck, for reasons both technical and bureaucratic. Here's what you need to know about the company at the center of it all.

What is CGI Federal?


Serge Godin, now a billionaire. (CGI Group)

CGI Federal is a wholly owned subsidiary of the Canadian firm CGI Group, which was founded in Quebec City in 1976 by a pair or 26-year-olds named Serge Godin and Andre Imbeau. (CGI stands for "Conseillers en Gestion et Informatique" in French, which roughly translates to "Information Systems and Management Consultants"). Growing through scores of acquisitions, and providing outsourced IT services to massive companies such as Bell Canada and Quebec's provincial pension plan, CGI's business model depends on embedding itself deeply within an institution.

"The ultimate aim is to establish relations so intimate with the client that decoupling becomes almost impossible," read one profile of the company.

It's now based in Montreal and has a market capitalization of $8.9 billion on annual revenues of about $4.8 billion. Godin, who stepped aside as CEO in 2006, is now a billionaire and makes upwards of $4 million a year. After buying British rival Logica in July, CGI doubled its employee base, and became Canada's biggest tech firm. CGI Group has 72,000 employees in 400 offices worldwide — many of them in India — and 11,000 in the United States, with D.C.-area locations in Fairfax, Manassas, Washington, and Baltimore.

Wait, why haven't I heard of this giant company?

CGI Federal is a relative newbie on the U.S. government IT contracting scene. It bought the U.S. contractor American Management Systems in 2004, but only started ramping up business after 2008, and accelerated in 2010 with the $1.1 billion acquisition of U.S.-based military IT contractor Stanley Inc. That sent its contracting work through the roof:


CGI Federal's contracting volume over the years. (

Still, CGI is only the 29th largest federal IT contractor, with about $950 million in contracts in 2012, compared to number one Lockheed Martin's $14.9 billion. They also don't make high-profile weapons systems, but rather the guts of government Web sites that rarely bear their names.

That said, they've learned quickly, and see the U.S. federal government as their area of biggest growth. CGI Federal's health-care practice has grown 90 percent year over year, largely due to the project. And for a contractor, ballooning projects are a good thing. "In the Federal Government business, we continue to see more extensions and ceiling increases on our existing work, while we further leverage our position on contract vehicles," said CEO Michael Roach on their latest earnings call. Those "contract vehicles" now amount to $200 billion, which Roach later referred to as a "hunting license."

"Accordingly, we continue to view U.S. Federal Government as a significant growth opportunity," Roach continued. CGI Federal now has an $8 billion pipeline of future task orders — doubling its federal business over the period of a year — including big-ticket items such as $871 million for the Defense Information Services Agency, a $143 million contract to do visa processing in China, and a five-year, "indefinite quantity" contract for the Department of Homeland Security and Coast Guard. (It's also working with state governments too — California, for example, handed it a $399 million contract to revamp its tax processing system).

What was their track record before getting the gig?

Experience in similar types of projects is very important in getting federal contracts. CGI had done work in the healthcare arena, and not all of it good: Its performance on Ontario, Canada's health-care medical registry for diabetes sufferers was so poor that officials ditched the $46.2 million contract after three years of missed deadlines, the Washington Examiner reported. A spokeswoman for CGI says that both parties are bound by confidentiality agreements, but they're working on resolving the situation.

It has, however, helped deliver complex projects on time and on budget. Back in 2009, the White House's Recovery Board retained CGI Federal to adapt a well-functioning system it had built for the U.S. Environmental Protection Agency into, another very complex, public-facing and high-volume site that would handle all contracts granted under federal stimulus legislation. This one got built in six weeks, for much less money, and won accolades for its flexibility and reliability.

How did CGI land the contract?

CGI Federal's winning bid stretches back to 2007, when it was one of 16 companies to get certified on a $4 billion "indefinite delivery, indefinite quantity" contract for upgrading Medicare and Medicaid's systems. Government-Wide Acquisition Contracts — GWACs, as they're affectionately known — allow agencies to issue task orders to pre-vetted companies without going through the full procurement process, but also tend to lock out companies that didn't get on the bandwagon originally. According to, CGI Federal got a total of $678 million for various services under the contract — including the $93.7 million job, which CGI Federal won over three other companies in late 2011.

It's also true that CGI Federal began lobbying as it started winning government work. According to OpenSecrets, it has spent $800,000 since 2006 lobbying on several different tax and appropriations bills. That's nothing, though, compared to the many millions of dollars deployed by heavy hitters like Lockheed Martin, Booz Allen and Raytheon.


Can't be an IT contractor without doing a little bit of lobbying. (OpenSecrets)

What exactly were they responsible for?

According to a June report from the Government Accountability Office, a total of 55 contractors were retained to work on the rollout of the federal health-care marketplace. CGI Federal was the primary one, and had received $88 million out of the $394 million that had been spent at that point (the next biggest recipient got $55 million). Along with building sites for the states that elected to participate in the federal marketplace, it's in charge of knitting all the pieces together, making Quality Software Services' data hub work seamlessly with Development Seed's sleek user interface and Oracle's identity management software — or "designing an IT solution that is adaptable and modular to accommodate the implementation of additional functional requirements and services," as CGI Senior Vice President Cheryl Campbell put it in a September hearing on the progress of the site.

What exactly went wrong?

That is a matter of some disagreement. And the answer isn't necessarily that CGI is wholly responsible.

Some people think that the system was underfunded: Donald Berwick, who administered the federal Centers for Medicare and Medicaid Services in 2010 and 2011, says the site failed because they didn't have enough money to build it from the start. Others point fingers at the Department of Health and Human Services, which took years to issue final specifications, preventing CGI from really getting started until this spring.

Either way, it's clear that the site itself isn't well constructed: IT professionals told the Wall Street Journal that in addition to specific pieces not working, the whole thing was "built on a sloppy software foundation," potentially due to the haste with which code was written. Slate described just how difficult it is to coordinate multiple contractors creating different components of a complex Web portal.

Evan Burfield, who founded the relatively small company that helped build on top of CGI's, says the problem lies more in a federal procurement apparatus that makes it nearly impossible for an agile newcomer to bid on projects that in the private sector would take much less time and money. Plus, with so many contractors, everyone could technically fulfill the requirements in their statement of work, and the thing can still not work in the end (though it was arguably CGI's responsibility, as the "systems integrator," to make that happen).

"If it had been a $4 million Web site, it would've had higher likelihood of being a success," Burfield says. "It's not just CGI. It's any collection of government contractors, if you put them together, will find a way to put together something complex enough to justify $400 million."

Even though White House technology officials like Todd Park understand the value of lean development and have taken steps to open the procurement system to smaller companies, the overall structure of contracting rules would require an act of Congress to change.

What's it like inside the company these days?

The debacle has taken its toll on the working environment at CGI Federal's 10-story complex in Fairfax, Va., according to a staffer working on a related project who asked not to be named. "There's been a lot of agitation and anger, because CGI really prides itself on having family flexibility," he said, noting the firm's liberal telework policy. Instead, the Obamacare contract has sucked more and more staff off other projects, and people have been working around the clock to first get the site ready for Oct. 1, and then fix it when things started to go wrong. "There's a lot of frustration," the staffer said. "People are getting sick, fainting in conference calls."

That's only an escalation in an already unstable work environment. The firm has grown very quickly and turnover is high, as people get poached by larger contractors that can pay higher salaries, the staffer said. Offices sometimes have more contractors than full-fledged staff — which makes things difficult when you're putting together a project that requires as much specialized knowledge as a health-care exchange.

One thing is clear, though: CGI's leadership is really excited about the health-care work, and wants everyone to think it's going okay. Last week, they held an annual meeting with a dinner reception at a nearby Marriott. "They addressed some of the health-care exchange things that people have been hearing on the news," the staffer recalled. "Vague things about how health care is changing in the U.S. and how CGI is going to be at the forefront of that. 'You guys have probably heard some stuff, but this is indicative of any huge rollout of any project.' "

A CGI spokeswoman declined to comment on the staffer's observations.

How's the market reacting to it?

Pretty well actually! Here's the one-month chart from the New York Stock Exchange:



CGI Group's stock has been on the upswing since its huge acquisition of Logica, which added $3 billion in market cap. And it hasn't been punished much by the negative press in recent weeks, either. TD Bank Securities research sent the following note to clients:

"Our concern was that CGI (as a main contractor on the federal health exchange) would be linked in a negative way to exchange difficulties. This by and large has not happened – there is no indication that CGI failed to deliver on its commitments — and the stock is up 4% since Oct. 1 (when enrollment in exchanges began)."

Because of how federal contracting works, it's also unlikely that CGI will be less competitive on bids in the future.
A good account of how the programming is being done on the website, and why everything's probably been getting screwed up:
Err Engine Down
  • by David Auerbach
Of all the terrible websites I’ve seen, ranks somewhere in the middle. It has been difficult if not impossible to sign up, and customer service has been inadequate. But it’s certainly better than the NYC Department of Education site that I attempted to help a friend navigate two years ago, in hopes of her getting paid her actual salary instead of a default salary; the blatantly inept Web code got the best of us. And it’s better than the evanescent Web encyclopedia Cpedia, which rolled out with pages that literally consisted of nonsense (such as “Clickbooth Cuil but not avail due to flooding traffics and making their servers ‘too hot’ to handle”). The problems plaguing aren’t due to a unique coding failure or a unique government failure—plenty of products have had similar early deficits, such as the Electronic Arts server bugs that rendered SimCity unplayable by most for more than a week after it was released this March. So’s failures are not uncommon—they’re just exceptionally high-profile.

The Redditors picking apart the client code have found some genuine issues with it, but’s biggest problems are most likely not in the front-end code of the site’s Web pages, but in the back-end, server-side code that handles—or doesn’t handle—the registration process, which no one can see. Consequently, I would be skeptical of any outside claim to have identified the problem with the site. Bugs rarely manifest in obvious forms, often cascading and metamorphizing into seemingly different issues entirely, and one visible bug usually masks others.

There are a few clues, however. The site’s front end (the actual Web pages and bits of script) doesn’t look too bad, but it is not coping well with whatever scaling issues the back end (account storage, database lookups, etc.) is having. I tried to sign up for the federal marketplace six days after rollout. The site claimed to be working, but after I started the registration process, I sat on a “Please Wait” page for 10 minutes before being redirected to an error page:

“Sorry, we can't find that page on”

Except that wasn’t the problem, since the error message immediately below read:

“Error from: https%3A//”

To translate, that’s an Oracle database complaining that it can’t do a signup because its “engine” server is down. So you can see Web pages with text and pictures, but the actual meat-and-potatoes account signup “engine” of the site was offline. A good site would have translated that error into a more helpful error message, such as “The system is temporarily down,” or “President Obama personally apologizes to you for this engine failure.” But it didn’t.

This failure points to the fundamental causeof the larger failure, which is the end-to-end process. That is, the front-end static website and the back-end servers (and possibly some dynamic components of the Web pages) were developed by two different contractors. Coordination between them appears to have been nonexistent, or else front-end architect Development Seed never would have given this interview to the Atlantic a few months back, in which they embrace open-source and envision a new world of government agencies sharing code with one another. (It didn’t work out, apparently.) Development Seed now seems to be struggling to distance themselves from the site’s problems, having realized that however good their work was, the site will be judged in its totality, not piecemeal. Back-end developers CGI Federal, who were awarded a much larger contract in 2010 for federal health care tech, have made themselves rather scarce, providing no spokespeople at all to reporters. Their source code isn’t available anywhere, though I would dearly love to take a gander (and so would Reddit). I fear the worst, given that CGI is also being accused of screwing up Vermont’s health care website.

So we had (at least) two sets of contracted developers, apparently in isolation from each other, working on two pieces of a system that had to run together perfectly. Anyone in software engineering will tell you that cross-group coordination is one of the hardest things to get right, and also one of the most crucial, because while programmers are great at testing their own code, testing that their code works with everybody else’s code is much more difficult.

Look at it another way: Even if scale testing is done, that involves seeing what happens when a site is overrun. The poor, confusing error handling indicates that there was no ownership of the end-to-end experience—no one tasked with making sure everything worked togetherand at full capacity, not just in isolated tests. (I can’t even figure out who was supposed to own it.) No end-to-end ownership means that questions like “What is the user experience if the back-end gets overloaded or has such-and-such an error?” are never asked, because they cannot be answered by either group in isolation. Writing in Medium in defense of Development Seed, technologist and contractor CTO Adam Becker complains of “layers upon layers of contractors, a high ratio of project managers to programmers, and a severe lack of technical ownership.” Sounds right to me.

Likewise, the bugs around username and password standards—for example, the fact that the username required a number but the user interface didn’t tell the user about it—are not problems of scale. They’re problems of poor cross-group communication. I’d bet that plenty of people knew what was going to happen when the site rolled out, but none of them were in a position to mitigate the damage.

I imagine there was a dialogue last Monday afternoon that went something like this:

FRONT-END DEVELOPER: Why does the username have to have a number in it?

BACK-END DEVELOPER: It’s in the government username regulations. Didn’t you read them?

FRONT-END DEVELOPER: No, we don’t do accounts, we just hand the input to you.

BACK-END DEVELOPER: And we told you your front-end the input was no good! See the ErrEngineDown in the URL?

FRONT-END DEVELOPER: Fine, fine. Sigh. Nice to finally talk to you, by the way.

BACK-END DEVELOPER: Yeah, you too. Are you in D.C.?


BACK-END DEVELOPER: Know any good jobs in D.C.? I hate this place and they’re furloughing me as soon as we fix this mess.

Each group got its piece “working” in isolation and prayed that when they hooked them together, things would be okay. When they didn’t, it was too late. It is entirely possible that back-end developer CGI is primarily at fault here, but no one will care because they just see that the whole thing doesn’t work. As you learn early on in software development, there is no partial credit in programming. A site that half-works is worse than one that doesn’t work at all, which is why the bad error handling is so egregious. You always handle errors.

There’s also evidence that the problems go beyond technical considerations. The “Please Wait” page source had this line in it:

<!--- <p>In a hurry? You might be able to apply faster at our Marketplace call center. Call 1-800-318-2596 to talk with one of our trained representatives about applying over the phone.</p> --->

Most userswill never see this message, because it was commented out—i.e., marked to be ignored by the browser instead of displayed in the HTML, forcing you to wait the full 10 minutes to get the error before they even give you the phone number. Again, this sort of problem was clearly not anticipated.

Bugs can be fixed. Systems can even be rearchitected remarkably quickly. So nothing currently the matter with is fatal. But the ability to fix it will be affected by organizational and communication structures. People are no doubt scrambling to get into some semblance of working condition; the fastest way would be to appoint a person with impeccable engineering and site delivery credentials to a government position. Give this person wide authority to assign work and reshuffle people across the entire project and all contractors, and keep his schedule clean. If you found the right person—often called the “schedule asshole” on large software projects—things will come together quickly. Sufficient public pressure will result in things getting fixed, but the underlying problems will most likely remain, due to the ossified corporatist structure of governmental contracts.

We live in a world that embodies the paradox of George W. Bush’s responsibility society (aka the “ownership society), where authority and accountability are increasingly separated. Keep an eye out to see if CGI suffers any consequences whatsoever. Vermont just decided to double CGI’s contract pay, so I’m not optimistic. Power flows upward while responsibility flows downward, which is why you couldn’t pay me to work as a government contractor. It’d be like going back to Microsoft.

Doomed From the Start
It would be an understatement to say that this month’s rollout of the Affordable Care Act, U.S. President Barack Obama’s initiative to ensure that all Americans have access to health insurance, has not gone according to plan. On October 1, the online insurance marketplaces that are the lynchpin of Obamacare (as the law has colloquially become known) were opened for business -- but it quickly became clear that they are not functioning properly. Computer malfunctions have prevented enrollment, consumers are frustrated, and politicians and pundits are attacking Obama for the resultant “train wreck.” The problems are all the more embarrassing given that publicly funded health-insurance programs are commonplace in most other countries.

But the fact that the White House is having trouble implementing Obamacare also should not come as a particular surprise. It is not that the Obama administration is especially incompetent. Rather, the program it is charged with executing is a complex public-private hybrid that has no real precedent elsewhere in the world. The blend is purely American: Policymakers in the United States have a history of jerry-rigging complicated programs of this sort precisely because they have little faith in government. The result is a self-fulfilling prophecy that fuels only deeper public cynicism about the welfare state.

Among the advanced industrialized countries there is no real parallel to Obamacare. In part, that is because most countries established universal health insurance long ago, some fairly gradually. By contrast, the United States is abruptly expanding coverage to millions -- probably around seven million people will be purchasing insurance coverage through the new exchanges by 2014. Even the closest precedents fall far short of this. In the mid-1990s, Switzerland boosted health-insurance coverage to try to reach the four percent of the population that was not yet covered. But that was in a country whose entire population was seven million. In 2006, the Netherlands adopted a health-care system in which individuals could choose their coverage from competing health plans. Yet, unlike in the United States, virtually all individuals and their families were already covered, and the vast majority opted to keep the plan they had.

The real source of Obamacare’s current problems lies in the law’s complexity. A straightforward way to assure coverage would have been to extend an existing, well-worn program to more people. This is how most other countries guarantee health insurance. In the British National Health Service, there is little that beneficiaries need to do in order to receive health insurance, as all residentsare automatically entitled. Other countries rely on private intermediaries that provide insurance -- nonprofit insurance funds in Germany or Switzerland, for example, or a mix of proprietary and nonprofit insurers in the Netherlands. Even in those instances, benefits packages and entitlements are highly standardized, making these health-care systems relatively uncomplicated from the standpoint of beneficiaries.

In the United States, political antipathy to government programs precludes this kind of straightforward administrative solution. Faced with such hostility, policymakers regularly rig up complex public-private, and often federal-state, arrangements that are opaque to the public, difficult to administer, and inefficient in their operation -- what Andrea Louise Campbell, a professor of political science at the Massachusetts Institute of Technology, and I describe as a Rube Goldberg welfare state -- because of the complicated way in which it achieves even basic tasks -- and what the political scientist Steven Teles aptly labels a “kludgeocracy.”

The Affordable Care Act’s health-insurance exchanges exemplify the labyrinthine quality of U.S. social policy. The first hurdle for consumers is figuring out if they are eligible for the new benefits: Although anyone lacking insurance can shop for it on the new health-insurance marketplaces, only those with incomes in a certain range are eligible for subsidies. The subsidies vary by income. Those already enrolled in a government health program such as Medicare do not need to buy coverage on the exchanges, a source of confusion for some seniors who assumed they needed to shop for a new plan, perhaps because they (understandably) mixed up the exchanges with the open enrollment period for the marketized versions of Medicare -- the Medicare Advantage and the Part D drug plan.

The new health-insurance exchanges are also meant to help people find out if their incomes are low enough to qualify for Medicaid, in which case they will get their insurance in a different fashion -- through the Medicaid program run by the state where they reside. Yet because the Supreme Court overturned the Affordable Care Act’s mandate that states expand Medicaid, about half of the state governments are refusing to do so. That means that eligibility standards vary widely across the country. Thus, two people with the same poverty-line income in Arkansas and neighboring Mississippi will not be eligible for the same health program: In Arkansas, the person will go on Medicaid, whereas in Mississippi the person may choose to buy a plan on the health-insurance exchange but would receive no subsidy for it.

The information systems underpinning the insurance marketplaces have to mesh multiple government and private databases in order to determine eligibility, entitlement to benefits, and available plans. It is not surprising, then, that the system has broken down in numerous instances. It also requires considerable coordination between the federal government and the 50 states, which are allowed to set up their own health-care exchanges. So far, only 17 states, including the District of Columbia, chose to manage their own exchanges, while seven others entered into varying forms of federal-state partnerships. Another 27 states left it up to the federal government to set up the exchange, and it is the federal marketplace, which has received a very high volume of visitors, that has had the most operational difficulties.

The burdens of implementing Obamacare were dumped on a federal agency -- the Centers for Medicare and Medicaid Services -- that already oversees enormous national programs on a limited budget. Although the agency received some funding increases, it operates with less than one-tenth the number of federal employees of the Social Security Administration. Those who are fearful that the agency would gain too much influence over U.S. health care systematically starved it of resources. Thus, much of its work is outsourced to private contractors, whose performance is highly variable, as the current problems in the health-insurance exchanges reveal.

The larger irony here is that administering a complex public-private health-care system often requires more government, not less. Yet the very same impulse that created this system also impairs the government agencies that could effectively oversee it. The programs, as a result, are messy and confusing. It should be no surprise that trust in government is so low. Obamacare’s early difficulties may provide an easy target for politicians, but those politicians have only to look into the mirror to see who bears responsibility.

Search Tools Wanting on Many Exchanges
Fabrizio Costantini for The New York Times

SHELBYVILLE, Ky. — As he was trying to sign up for health insurance through Kentucky’s new online exchange this month, Kenny Wheeler hit a wall.

Mr. Wheeler, an independent sales representative with a neuromuscular disorder, had succeeded where many in other states had failed, getting through a thicket of log-in pages. But when he tried to find out whether two health plans he liked would pay for his medications or let him keep his current doctors, he could not.

He called one doctor on the spot, but the receptionist could not tell him whether the practice was in the new plan networks. Nor could Mr. Wheeler, 61, get quick answers from the insurers themselves. Exasperated, he put off completing his application.

Since the new health insurance exchanges opened for business on Oct. 1, millions of people who have visited the online sites have been unable to enroll because of technical problems and software glitches. But many people who are getting through the log-in process are encountering a different set of problems when they try to determine whether policies sold through the exchanges will provide the doctors, hospitals or drugs they need.

Most of the 15 exchanges run by states and the District of Columbia do not have provider directories or search tools on their Web sites — at least not yet — so customers cannot easily check which doctors and hospitals are included in a particular plan’s network. Most allow customers to search for providers by linking to the insurers’ Web sites, but the information is not always accurate or easy to navigate, health care experts say.

At this stage, even many doctors are uncertain about whether they are contracted with exchange plans from state to state because the plans — and even some of the insurers — are so new.

“I’ve had to do all this legwork on my own,” Mr. Wheeler said.

Ellen Boyd, 62, of Torrington, Conn., said she had tried to check whether her doctors were in a plan offered on her state’s exchange by clicking a link that took her to the insurer’s Web site. But it appeared that she had to go ahead and buy a plan before being able to check which providers were in its network, she said.

“I thought I would be able to go to the Web site and pop in a name and get a yes or no answer,” said Ms. Boyd, who has osteoporosis and ulcerative colitis and wants to stick with her current doctors. “It makes your hair hurt, I’ll tell you.”

Exchange officials say they plan to make it easier for customers to see which providers and drugs are covered as they continue to refine the new Web sites. But for now, a lack of quick and easy search tools is adding another layer of frustration in the opening weeks of a program that has been plagued by technological problems and political attacks.

Problems finding providers or drug coverage are occurring mainly on state exchanges paradoxically because those Web sites are working better than the federal insurance exchange used by 36 states. The federal exchange has been so crippled by technical problems that most consumers have been unable to advance far enough to compare plans, search for providers or review drug coverage.

A survey of state exchanges gives a sense of some of the challenges consumers face in searching for information about plans. Only exchanges in Colorado, Kentucky, Nevada and Washington State currently have search tools on their Web sites that allow users to type in a provider’s name and quickly see which plans includes that provider in their network.

California had to take its search function offline last week after it was found to include inaccurate information and to freeze up when people tried using it. California says it hopes to have its search tool back up and running as soon as this week.

Several states, including Maryland, Oregon and Rhode Island, are moving to incorporate search tools on their Web sites. But for now, people in those states must link to other sites or comb through long lists of providers manually.

In the states with no search tools, including Connecticut, Hawaii, Minnesota, New York and Vermont, the exchanges just link to insurer Web sites that health care experts say can be difficult to use. The federal insurance exchange also links to the provider directories of insurance companies that are offering plans on it.

Robert Laszewski, who heads a health policy consulting firm in Alexandria, Va., said that navigating the provider directories on insurance company Web sites could be particularly complicated and time-consuming if someone was considering plans from multiple insurers.

“You might have to compare four plans for every insurance company you are looking at,” he said, “and each of them are going to present the information in a different way. It really is a mess.”

Claire McAndrew, a senior health policy analyst at Families USA, a consumer advocacy group, raised an additional concern, saying that some exchange Web sites may be linking to insurers’ overall provider directories instead of directories that are specifically for the health plans offered through the exchanges, which may be narrower.

“Everything with these exchange Web sites is an evolving process of improvement,” she said, “and I don’t think provider directories are any different in that regard.”

Still, to her, that the health care law requires exchange Web sites to make provider directories available at all was a step forward. “The fact that we even have a standard in place that every state will be working on meeting is better than what we had before,” she said.

When Mr. Wheeler, who sells diving equipment, tried to use Kentucky’s provider search tool on Oct. 4, neither his primary care doctor nor his neurologist came up as participating in either of the plans he was considering. Several days and phone calls later, he was able to confirm that both doctors were in the plan offered by Anthem Blue Cross and Blue Shield, but neither were in the network of a less expensive plan he had been eyeing, offered by the Kentucky Health Cooperative, a new nonprofit insurer.

It took more digging — and the help of an insurance agent — for Mr. Wheeler to determine that the Anthem plan would cover the expensive drug he takes for his neuromuscular disorder, myasthenia gravis. Kentucky’s online exchange is still working on a tool to allow customers to check what drugs are covered under each plan, said Gwenda Bond, a spokeswoman for the exchange.

Over all, Mr. Wheeler said, the news is good: it looks as if he will qualify for a federal subsidy to help cover the cost of his new plan, bringing the premium price down to $483 a month, from $797. But he said he had spent about 12 hours on research and phone calls since he started to explore his options. That surprised him.

“When I introduce new products to customers, when I walk in their door, I know what I’m talking about and I can answer any question that they have,” he said. “You would think with something as important as insurance, that’s the way it would be.”

Out of Network, Not by Choice, and Facing Huge Health Bills

Published: October 18, 2013 177 Comments

Once the cardiologist figured out why Raquel and Michael D’Andrea’s 9-week-old daughter was so frail and unable to eat, he immediately sent her to the hospital for heart surgery.

“He told us to go home, get packed and get to the hospital, where they will be waiting for us,” Ms. D’Andrea said. “That was very shocking, but we did it.”

There was little time to think about the intricacies of their insurance plan, but Ms. D’Andrea knew she had already selected a comprehensive plan a few years earlier. She gave her insurance card to the hospital staff, but her daughter, Sienna, was ultimately treated by several doctors who were not in their plan’s network.

“We assumed that because we showed them our insurance card and nobody had any objections, we were covered,” said Ms. D’Andrea, 35, of Farmingdale, N.Y. “But I also wasn’t in the mind-set to ask, or to have them stop doing heart surgery on her.”

Sienna left the hospital in early March, two weeks after a successful operation repaired her aorta. But she had a rough road ahead. She went home with a feeding tube in her nose.

And just a few weeks later, after vomiting through the night, she spent another 17 days in the hospital. As the family finally arrived back home in mid-April, piles of bills from out-of-network doctors started to roll in.

It’s not uncommon for patients who visit an in-network hospital to learn later that they’ve been treated by out-of-network providers, resulting in thousands of dollars in charges. And while the Affordable Care Act generally caps what consumers must spend out of pocket when using providers within their plan’s network, it doesn’t protect consumers from large bills from outside providers. Those providers may be free to charge the consumer for the balance of the bill that the insurer did not pay, known as “balance billing.”

“When the doctors work in the hospital, not for the hospital, which is often the case, they’re not obliged to join the same networks as the hospital,” said Karen Pollitz, a senior fellow at the Kaiser Family Foundation. “And patients generally have no say in selecting those doctors. Sometimes the patients don’t even see them — for instance, if their X-rays get sent to a radiologist or their tissue to a pathologist,” patients won’t even know the name of that doctor until the bill comes.”

This generally happens because the hospitals don’t always assign doctors to the patient. Individuals may begin treatment with a doctor who accepts their insurance. But if that doctor refers the patient to another specialist, or works with an anesthesiologist who isn’t in the network, the patient is likely to end up with a bill from that provider, said Gerard F. Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins University Bloomberg School of Public Health. “About the only thing you can do is to go to a hospital where the M.D.’s are all hospital employees,” he added.

Some states limit the amount that out-of-network hospitals and doctors can charge above what insurance has covered, experts said, but there are no federal curbs on balance billing. The new health care law, does, however, offer some protections for people who need emergency care: insurers cannot charge more for co-payments and co-insurance for emergency services than they would charge when you use in-network providers. Insurers must also pay out-of-network emergency providers according to a standard schedule, in hopes of lessening the likelihood that patients will be left with enormous bills.

Still, there’s nothing in the law that stops health care providers from billing consumers for the balance, which is what often happens — and exactly what the D’Andrea family experienced. “This is not an issue that the Affordable Care Act fixes,” said Timothy S. Jost, a professor at the Washington and Lee University School of Law and expert on health care laws. “It is conceivable that the problem gets worse for some people if the Affordable Care Act encourages narrower networks, which some people think it might do.”

If consumers use providers within their network, their annual out-of-pocket costs will vary depending on the type of plan they choose (bronze, silver or gold, for example) and their household income. But the new law states that those expenses cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014. (This is true for all plans bought on the exchange, and for many individual plans.)

So what sort of recourse do consumers have when they receive big bills from out-of-network providers? The first step is to make sure your insurance plan paid what it should have, since many plans provide some coverage for out-of-network services. And if you were treated for an emergency service (in an emergency room or an extension of it), make sure the insurer paid at least what they would have paid to an in-network provider, said Cheryl Fish-Parcham, deputy director of health policy at Families USA, a Washington consumer advocacy group. Consumers should also check to see if their state has any additional protections against balance billing. Finally, consumers should talk to their providers about reducing any remaining charges.

Consumers would do well to follow the lead of Ms. D’Andrea’s mother, Livia Cooper. The couple relied on her to deconstruct and analyze the reams of invoices that arrived in their mailbox — including a collection notice — since they were busy caring for Sienna.

Ms. Cooper spent countless hours poring over the bills, trying to make sense of it all. “It was so overwhelming,” said Ms. Cooper, who had to close the women’s boutique she ran with Ms. D’Andrea so they could focus on Sienna, who is now 9 months old. “We received department bills and there could be 60 invoices on one printout. You would have a bill for $8,100 from one department or $6,500 from another department. It was hard to figure out what was covered, what wasn’t covered and what was balance-billed.”

The billing service for the doctors initially wanted the D’Andreas to enroll in its budget plan, which Ms. Cooper refused to do before figuring what the couple actually owed. Her persistence ultimately paid off. She finally reached a supervisor in the billing department and explained that “we had insurance, were paying the co-insurance, co-payments and deductibles, and could not afford to pay any more than what we were obligated,” she said. She also pointed out that the providers were paid what they would have been paid if they were in the network.

As a result, many of their bills were reduced, and some were forgiven. The surgeon who repaired Sienna’s heart was in the plan’s network, for instance, but the assisting surgeon was not. And even though the insurer paid the assisting surgeon the same amount as the main surgeon, Ms. Cooper said that the couple was billed for $4,100, or the balance not covered by insurance. The billing department asked the couple to file an appeal with the insurer, which they did. As a result, the insurance company paid an additional $700 and the surgeon wrote off the balance.

Ms. D’Andrea and her husband, who operates a small entertainment and D.J. business and also refurbishes homes, ultimately paid about $10,000 in out-of-pocket expenses, Ms. Cooper estimates.

Since the couple’s current health plan will terminate at the end of the year, they are now trying to choose a plan on the New York exchange that includes Sienna’s doctors — another tedious process. “Sienna’s situation is such that it makes us very nervous,” said Ms. Cooper, who is helping the couple research various plans. “You don’t know who the doctors are on different plans because there are no lists.”

As my colleague Abby Goodnough reported earlier this week, many of the state-run exchanges do not have provider directories or search tools on their Web sites — at least not yet — so customers cannot easily check which doctors and hospitals are included in a particular plan’s network.

And even though the D’Andreas could not have known that out-of-network doctors were treating their daughter, it underscores how important it is to ensure all of their providers will be on the plan they ultimately choose. “Basically, if you’re out of network,” Ms. Cooper said, “you’re out of luck.”
Oh look, Obama lied. Who could have ever guessed?

For thousands, keeping your old health insurance policy isn’t an option
  • by Anna Gorman and Julie Appleby
  • Oct. 19, 2013

WASHINGTON — Health insurance companies are sending notices of cancellation to hundreds of thousands of people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more expensive policies.

Insurers say the cancellations are necessary because the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010. At least a few are canceling plans sold to people with pre-existing medical conditions.

By all accounts, new policies to replace the canceled ones offer consumers better coverage, in some cases for comparable cost – especially after the inclusion of federal subsidies for those who qualify. They cover 10 “essential” benefits the law now requires, including prescription drugs, mental health treatment and maternity care, and they generally have lower thresholds for what consumers will have to spend before the plan picks up the full cost of treatment.

But the cancellation notices, which began arriving in August, have shocked many consumers in light of President Barack Obama’s promise that people could keep their plans if they liked them.

“I don’t feel like I need to change, but I have to,” said Jeff Learned, a television editor in Los Angeles who must find a new plan for his teenage daughter, who has a health condition that has required multiple surgeries.

An estimated 14 million people purchase their own coverage because they don’t get it through their jobs. The impact of the cancellations has been felt across the country.

Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual business in the state. Kaiser Permanente in California has sent notices to 160,000 people – about half of its individual business in the state. Insurer Highmark in Pittsburgh has canceled about 20 percent of its individual market policies, while Independence Blue Cross, the major insurer in Philadelphia, is canceling about 45 percent.

Both Independence and Highmark are canceling so-called “guaranteed issue” policies, which were sold to customers who had pre-existing medical conditions when they signed up. Policyholders with regular policies because they did not have health problems will be given an option to extend their coverage through next year.

Consumer advocates say such cancellations raise concerns that companies may be targeting their most costly enrollees.

They may be “doing this as an opportunity to push their populations into the exchange and purge their systems” of policyholders they no longer want, said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog in California.

Insurers deny that, saying they are encouraging existing customers to re-enroll in their new plans.

“We continue to cover people with all types of health conditions,” said Highmark spokeswoman Kristin Ash.

She said some policyholders who may have faced limited coverage for their medical conditions will get new plans with “richer benefits,” and the policies, “in most cases, will be at a lower rate.”

Paula Sunshine, vice president of marketing with Independence Blue Cross, said the insurer hopes the canceled policyholders will “choose Blue when they decide on a new plan.”

Some receiving cancellations say it looks like their costs will go up, despite studies projecting that about half of all enrollees will get income-based subsidies.

Kris Malean, 56, lives outside Seattle and has a health insurance policy that costs $390 a month with a $2,500 deductible and a $10,000 annual limit on her share of costs for doctor visits, drug costs or hospital care.

As a replacement, Regence BlueShield is offering her a plan for $79 a month more with a $5,000 deductible but that limits her potential out-of-pocket costs to $6,250 a year, including the deductible.

“My impression was . . . there would be a lot more choice, driving some of the rates down,” said Malean, who does not believe she is eligible for a subsidy.

Regence spokeswoman Rachelle Cunningham said the new plans offer consumers broader benefits, which “in many cases translate into higher costs.”

“The arithmetic is inescapable,” said Patrick Johnston, CEO of the California Association of Health Plans. Costs must be spread, so while some consumers will see their premiums drop, others will pay more – “no matter what people in Washington say.”

Health insurance experts say new prices will vary, and much depends on where a person lives, their age and the type of policy they decide to buy. Some, including young people and those with skimpy or high-deductible plans, may see an increase. Others, including those with health problems or who buy coverage with higher deductibles than they have now, may see lower premiums.

Blue Shield of California sent roughly 119,000 cancellation notices out in mid-September, about 60 percent of its individual business. About two-thirds of those policyholders will see rate increases in their new policies, said spokesman Steve Shivinsky.

Like other insurers, Blue Shield let customers know they have to make a decision by Dec. 31 or they will automatically be enrolled in a recommended plan.

“There is going to be a certain amount of churn in the marketplace as people have to make their decisions,” Shivinsky said.

Jay Hancock of Kaiser Health News contributed to this story.

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