"Did Conservatism Torpedo HealthCare.Gov?"
The debate over the dysfunctional rollout of Obamacare’s exchanges has moved past the initial shock into the next phase in the Major Political Discussion lifecycle: ideological angst. “What does the error-plagued debut of Healthcare.gov mean for this or that ideology or worldview?” is the latest question on the table.
The first entrant in this discussion was the risible suggestion that the website’s woes discredit liberalism by showing government can’t handle big, complex projects. The debate improved when, from the left, Mike Konczal argued the web portal’s problems stem from the compromise Obamacare made between liberalism and free market ideology: the law’s exchanges preserve a market in private coverage, rather than pushing private insurers out of American health care entirely with a single payer system.
In a bit of left-right convergance, Ross Douthat gave a conservative gloss to Konczal’s analysis, suggesting the problem was combining that market liberal compromise with the classic leftwing preference for a “universality and comprehensiveness that conservatives don’t think is necessarily worth pursuing.”
So which was it? Did a free market rot in meat-and-potatoes leftwing ideals bring us here? Or was it our obtuse bleeding-heart refusal to admit giving people this much help isn’t worth the trouble?
Neither, actually. The complications built into the policy design of Obamacare were not inevitable parts of liberal compromise with the free market, liberal universalism, or their combination. Rather, they were necessitated by Obamacare’s concessions to conservatism.
Reliance On The States
Conservatives love federalism and federal deference to state power in a principled fashion that liberals, neo or otherwise, simply don’t share. Leaving each state the option to build its own exchange was federalism in action. This was not without advantages. A state-based exchange has far fewer insurers to communicate with, and thus an easier coding task.
The problem was that states could refuse. In the end, 36 states left building their exchange up to the federal government — a development which clearly shocked the White House and contributed to the delays and messy coding that plagued the web portal. It also left HealthCare.gov to grapple with a whopping 170 private insurers spread across the recalcitrant states.
If the states had been forced to build their own exchanges, this could’ve been avoided, but that would have been unconstitutional. Alternatively, we could’ve gone with the version of Obamacare written up in the House Of Representatives and its single national exchange. That would not have avoided the problem of size and numbers, but it would’ve avoided the wait on the states and all the politicking that went with it.
But centrist Senators insisted on a federalist exchange structure. So when Scott Brown won the special election in Massachusetts, giving Republicans back the filibuster and forcing the House to accept the Senate’s version wholesale, the country got the worst of both worlds: a market still fractured along state lines, a dysfunctional mess of states refusing to participate, and a federal government still burdened with creating a web portal for a massive number of private entities.
Keeping The Price Tag Low
Another problem is that Obamacare’s subsidies do something called “means-testing,” policy-speak for adjusting government aid to individuals according to their income.
In this case, the exchanges require coverage plans to meet one of five qualifications — catastrophic, bronze, silver, gold, and platinum — from least to most comprehensive and generous. The value of the subsidies Obamacare provides are pegged to the premiums of a silver plan in a particular exchange, and calculated to ensure an individual shopper doesn’t spend more than a set portion of their income on those premiums. Finally, the the size of that portion changes according to a sliding scale. People with higher incomes pay more of their own money, people with lower incomes pay less.
The problem with this setup is it requires a complicated communication between the insurer, the web portal, and the Internal Revenue Service (IRS) to verify incomes and calculate the subsidies. Obamacare could’ve left this step out and just given everyone the same lump sum of cash, calculated from the exchange’s silver plans and the profile details shoppers themselves input, regardless of their income. It would’ve removed a big hurdle in the programmers’ path, but at the price of much higher overall spending for the law. That’s the basic means-testing trade-off: greater policy complexity in exchange for a lower price tag.
So the problem isn’t caused by a sop to free market ideology or an attempt to get universal coverage, but by the obviously conservative desire to keep government spending down. It’s important to remember how much heartache the Democrats and the White House went through to keep the law’s first decade of operation under $1 trillion to woo conservatives and moderates worried about spending. It didn’t work — Republicans still all opposed the bill — but that’s what the law’s designers were trying to do.
The Problems of Procurement
A lot of reporting in the aftermath of the rollout focused on the process by which the federal government hires private contractors. It seems to be an irrational and sclerotic process. Which at first blush could back-up conservatives’ skepticism of government, until you consider the most obvious solution is for the government to run much more of its IT construction in house. And contrary to popular belief, there are a number of government agencies that know how to do this sort of thing well.
But in many instances they do lack the expertise, arguably because the government has effectively “lobotomized” itself by failing to pay high-skill workers competitive wages. Contrary to Republican talking points, public sector workers are, on average, compensated slightly less than in the private sector, even after benefits other than wages are factored in. More importantly, that imbalance is not evenly distributed. It turns out low-skill, low-education public workers make slightly more than their private sector counterparts, but high-skill, high-education workers — the ones who would be building a web portal like HealthCare.gov in-house — make much less. On average, $22,966 less for Bachelor’s degree, $36,621 less for a Master’s, $31,233 less for a Doctorate, and $71,785 less for a professional degree.
After all, when do you ever hear of elites “cashing out” by leaving a private firm for public service? The result is a massive skill shortage within the government, as positions are regularly staffed by less-qualified individuals in comparison to equivalent private jobs.
Obviously, remedying that imbalance is something conservatives are passionately opposed to. But it’s also not clear that reforming the contractor procurement process would take us in a direction conservatives favor. Ezra Klein published an interview with IT expert Fred Trotter, who suggested moving to “a much more organic, evolutionary, and open-source approach. Hire four vendors and require all of them to release the code as open source so you can see who is solving the problem how and then compare approaches.” Trotter says there’s no reason this should require more spending: you increase the number of contractors while scaling down the individual projects.
But can you imagine how, say, the arch-conservative Sen. Tom Coburn (R-OK) — who has made a name for himself documenting government program duplication and “waste” that’s often legitimate spending — would respond to this kind of thing? “We have four different contractors doing the exact same thing! Why not cut it down to one for one-fourth the cost?”
Adding It All Up
Now, much of HealthCare.gov’s complexity just comes from dealing with reality as it is. It must interface with the Social Security Administration and the Department of Homeland Security to verify identities and citizenship, respectively. It talks with the Department of Justice to make sure a shopper isn’t in prison. It has to talk to Health and Human Services (HHS), along with the crazy patchwork of other federal health care programs America has developed — the Veterans Health Administration, Medicaid, Medicare, COBRA, CHIP, coverage for Peace Corps. volunteers coverage, etc. — to make sure a shopper isn’t eligible for any of those. (Though it’s worth noting, as Konczal does, that these aspects could also fall under “means-testing,” since part of their purpose is to cut down on the amount of people receiving subsidies.)
Discussions of alternatives — both those to the left like single payer, or to the right like consumer-driven health care — tend to benefit from the hidden premise that these systems would be built on blank slates. But in actuality, they’d have to grapple with these realities as well. We’d still have to decide how to handle identity and citizenship verification, as well as other questions. Would the new system work around the existing health care programs, or subsume them? A single payer program would still need an administrative system — maybe a card, for instance — and a consumer-driven approach would still involve building systems and portals for the high risk pools, for subsidizing or directly providing the catastrophic coverage, for the health savings accounts, and so on.
They’d also have to deal with the same Republican leaders that encouraged states to jump ship on the exchanges and cut HHS’ budget for HealthCare.gov, which together caused a sizeable chunk of HealthCare.gov’s burdens and woes.
So many of the complications that made the web portal’s construction so shoddy grew out from classic conservative impulses: keep spending low, respect federalism as an end in itself, and keep government salaries low. That’s not to say that without those priorities Obamacare would’ve been less complicated than conservatives’ preferred plans or the sort of single payer system Konczal favors. But there’s a good chance it would have been been no worse.