I saw this article in the Politico:
key player in the Obamacare website’s creation acknowledged Tuesday that up to 40 percent of IT systems supporting the exchange still need to be built.
“It’s not that it’s not working,” Chao told lawmakers at an Energy and Commerce Oversight and Investigations subcommittee hearing. “It’s still being developed and tested.”Financial management tools remain unfinished, he said, particularly the process that will deliver payments to insurers.
A Health and Human Services source said the health plans can receive the payments consumers make when they enroll. The system isn’t yet ready to deliver federal subsidies to insurers.
First, Politico undercuts its own lede. The financial segment is not live in the production environment but it never was scheduled to be live until December. The first subsidy was not scheduled to be sent to the insurance companies until late December if everything works correctly. More importantly, this is not a system failure point as most insurers could get by for a while without Federal subsidy flows.
One of the most important lessons in my career was from a grizzled old bureaucrat:
Not all dollars are equal, some are better than others
I learned this as I interned at a multi-agency, multi-level of government pilot project in college. We were funded through a combination of earned revenue, municipal contracts, state loans, private foundation grants and a federal program grant. Shifting resources from different funding streams was almost impossible. General operating dollars from the feds and earned revenue were the most valued as they could be used for anything. Municipal money could be used for rent, salaries and gas while the state loan was technology only. The foundation money was only allowed to be used for 3 FTEs and a small marketing campaign. We faced quarterly crisis as a particular type of dollar was running short or a funder was holding a check an extra week.
The Exchange revenue from an insurance company point of view are two different types of dollars. The first set of dollars is the individual dollar. These dollars are somewhat unpredictable at the individual subscriber level. The company knows that some people will pay the first month but not the second month, they know they’ll receive some catch-up payments on Jan. 22 when it should have arrived by Jan. 15th for February coverage, they know the income stream is a bit bumpy. There is a discount (probably a small one but a real one) on individual premium streams because there is uncertainty.
The other type of dollars are federal dollars. Insurance companies KNOW the Feds will pay. They are not sure exactly when the money will arrive, but they know it will arrive and it will be a continuous flow. Insurance companies have massive cash or near cash reserves that they can borrow against to smooth out any Federal cash flow bumps and their auditors and regulators will approve these measures because they know Federal dollars are very good and reliable dollars.
Small co-ops and other start-ups that mainly cater to the Exchange market may not have as much breathing room for an interrupted Federal subsidy flow as established insurers, but most insurers could go a while on the combination of individual payments and borrowing against Federal account receivables without it being system compromising.
Baud
Unless we default.
BWAHAHAHAHA
JPL
@Baud: Cruz will again have the opportunity to read Green Eggs and Ham. Good Times.
c u n d gulag
Imagine how much smoother the PPACA rollout would have been, if the Republicans had acted like the Democrats did, when W’s Medicare Part D started.
The Conservatives HATE President Obama.
They even hate the idea, of a President Obama.
How could a N-word beat McCain and Romney?
If President Obama could walk on water, our Conservatives would say, “Typical. The N-word’s too lazy to learn how to swim!”
C.V. Danes
The only dollars important to me at this point are the $630 million spent over three years on this mess.
To have spent $630 million on this project goes way beyond boondoggle, and into outright theft of public funds.
Paul
@C.V. Danes:
Even Glenn Beck isn’t as stupid as you.
$634 million is the amount paid for every single Health & Human Services government contract to the company that built the site for the last 7 years.
To have spent 5 seconds to write your comment goes way beyond boondoggle, and into outright theft of public intelligence.
JPL
@C.V. Danes: What a lot of money, the Braves could have used that for their new stadium. Baseball is America’s pasttime. Since when was health care a pasttime.
Dukeofclay
@C.V. Danes: $630 million is the amount of federal contracts the supervising company has had over the last ten years. Only $70 million was spent on “this project.” Fox News has misinformed you again.
John D.
@C.V. Danes: OK, I have two questions for you: Have you signed up? Have you tried to sign up?
If you answered no to both, then kindly sit the fuck down and shut the fuck up.
I keep hearing reports of how this system is an utter failure, yet I was able to create my account and see my options with no problems when I tried 3 weeks ago. I’m not switching my insurance – mu wife and I make too much for subsidies and our current insurance is pretty good – but I did everything BUT sign up for new insurance with literally no difficulties beyond a few timeouts in the middle of the application. I heard more this very morning, as I do most mornings on NPR, about how the system is utterly fucked. Apparently I got into the super-secret-non-asshole system. It’s just very, very, very strange for me to live in an alternate universe where news reports contradict my direct experience.
Nunca el Jefe
@C.V. Danes:I think we can safely file your comment under “chickens need love, too”.
Ben Cisco (onboard the Defiant)
@C.V. Danes: Look bub, you gonna try to fuck poultry up in here, you gotta bring it. This ain’t Triple- ball.
Cassidy
So it appears they’re still paying people to do the talking point thing on blogs. FOX or GOP staffer?
MomSense
@John D.:
Took me 25 minutes–to find out I will save a ton of money. Not quite the equivalent of Wall St CEO but the best investment of 25 minutes I will ever spend.
The “news” is an alternate universe.
Waspuppet
@C.V. Danes: it sure would be, if that number was anywhere within a country mile of being true.
Remember: Conservatives lie. All the time. About everything.
Ben Cisco (onboard the Defiant)
@Ben Cisco (onboard the Defiant): Should have said Triple-A.
@Cassidy: There’s a difference?
Chyron HR
@Waspuppet:
It doesn’t matter how much money Obama stole from Real Americans (to pay for his hip-hop barbeques, no doubt), it just matters that IMPEAAAAAAACH HIIIIIIIIIIIIIIIIIIIIM.
WereBear
First you get disillusioned, then cynical, then informed.
Because we can’t exist in a feedback vacuum.
Now, some people are going to plug themselves into another uninformed structure, like a megachurch or Rush Limbaugh, but we’ve got a good shot at scooping up people who would really prefer operating in Reality; it favors the intelligent and the more mentally stable.
Cassidy
@Ben Cisco (onboard the Defiant): I’m assuming not all dollars are equal.
C.V. Danes
@John D.:
No, I will not sit down and “shut the fuck up.”
I don’t really care if the web site works or not. What I care about is the ridiculous amount of money spent building it.
Do you have experience in managing large scale technology projects? Do you have years of experience in managing projects for the public sector?
If you answered no to the above questions, then perhaps you should kindly sit down and shut the fuck up.
I do have many years of experience in managing large scale projects for the public sector, and I can tell you, based on experience, that there was just way too much money spent on this, even by government boondoggle standards. Whether it ultimately works or not — and I do believe that the techs will successfully cobble something together, because they are the ones who always come through in situations like this — the question of where all the money went needs to be answered.
You may not care how your tax money gets spent, but I do. The states that have created their own exchanges have proven that the public sector can, indeed, get it done, and done well, for much less money. Whatever the technological hurdles involved, it was not $630 million worth.
Violet
Feature not a bug. If Politico’s headline distorts or misleads about the subject matter, there’s a reason for that. Look for whatever rightwing talking point their misleading headline serves. You can even make a game of it, they do it so often: “Find the Wingnut Talking Point!”
Violet
@C.V. Danes:
And if you read the link in Waspuppet‘s comment, you’ll see that it wasn’t even close to $630 million. Go have a look.
RaflW
So here’s a little-told ACA success story: I shopped the MNSure site, Minnesota’s exchange, and didn’t love any of the plans offered. My current plan is ending 12/31 (I could yell and scream cancelled! but I’m not a Fox-bot).
Anyway, my insurer’s Exchange plans don’t look that fantastic, so I shopped the MN Blue Cross public site. My new plan will have zero deductible v. $1,000, 10% coinsurance v. 20% on the old plan, the same $2,500 annual out of pocket max, all on an open-access network (I can keep my doctor).
The new premium? $95 per month less. Yes this will be a fairly expensive plan, its over $300/mo for a 48 year old. But I’ve been locked into a post-COBRA conversion plan for over 10 years and the last bump put it at $425/mo.
The huge change is that I could apply for this Blue plan with no health questions. None. I was terrified of trying to shop for new coverage pre-ACA guaranteed issue.
So, again, vanishing deductible, lower co-insurance, open access network, and $95/month less. Thank you Obama and Democrats!! And I didn’t even need an exchange to buy it, I just needed an end to the pre-existing conditions hurdle for individual plans (though the existence of the exchange prob impacts pricing).
RaflW
@C.V. Danes: I was all set to write a snarky comment about how the federal exchange was a bargain compared to say, the F-35, when I discovered that the fine folks at Wonkblog took care of this a month ago.
Basic upshot: the entire Healthcare.gov debacle cost the equivalent of two F-35s (not including the horrendous ops and maintenance cost of the F-35 going forward, just the procurement cost).
I know, two wrongs and all that, but in the world of boondoggles, this is small potatoes.
Tone in DC
@Ben Cisco (onboard the Defiant):
LULz. Poultry fornication is theft!
I think CVD is getting more than he/she/it bargained for this morning. Just sayin’.
Richard, thanks for this information.
C.V. Danes
@RaflW:
And when they’re done with the fixes and getting it fully operational, the cost will probably be an additional F-35 ;-)
However, the ultimate point in all of this, I guess, is the unspoken rule of consulting: if you’re going to charge your client an arm and a leg for something, then, as a minimum, make sure you make something that works. If the federal web site had launched relatively painlessly, as many of the state exchanges have done, then the money would have been irrelevant, and the contractors would have cashed their paychecks as heroes instead of villains.
John D.
@C.V. Danes: I could engage in a dickwaving contest (why, yes, I do have experience managing large-scale technology projects, just not in the public sector – I’ve been the head of IT at two separate firms for about 15 years), but that’s immaterial.
Your number is *wrong*. Your entire thesis – To have spent $630 million on this project goes way beyond boondoggle, and into outright theft of public funds. – is based upon a lie; a number that is from 6 to 9 times the actual amount. You have yet to acknowledge that. We know where the money went. Our numbers are *from* the contracts to CGI Federal and from the sworn testimony of CGI Federal in front of Congress.
But hey, keep on fucking that chicken. Your manufactured outrage is at least keeping American Manufacturing alive in these times of crisis.
C.V. Danes
@Violet:
Even at this refactored rate, that’s a lot of money, and needs to be investigated. Not just the contractors, but the whole procurement process.
C.V. Danes
@Tone in DC:
Yup!
Chyron HR
@C.V. Danes:
Hearings must be held! Hearings upon hearings! Summon back the HHS witch to the court of the orange king!
Violet
@C.V. Danes: And what would be a rate that would not be “a lot of money” according to you? It would be helpful if you could justify your quote by including all the pieces and factors that had to be dealt with to create the national website–dealing with the various federal agencies that run of different and old computer systems, for instance.
Mike in NC
$630 million would probably be about what we taxpayers paid for a day’s worth of nation-building in Iraq and Afghanistan. Such a bargain!
C.V. Danes
@John D.:
The reasonably refactored rate, from what I read this morning is still between $125 and $300 million. That is still a lot of money for a web site, in my humble experience.
Those of us who have experience in these kinds of projects — yourself included, I’m assuming, based on your comment — know intimately how this shook out. You had a government agency with little to no experience in managing these kinds of projects, trying to act as the lead contractor, while dictating technology mandates to contracting firms that did not want to derail the gravy train. That is what, in my opinion, needs to be investigated.
There is no doubt in my mind that the tech folks who were tasked with making this work were pushing back. And there is no doubt in my mind that the contracting management was focused primarily on maximizing billable hours and were pressuring these same tech folks to just make something that worked. And, apparently, many of these tech folks just threw up their hands and quit in frustration. And in the end, something north of $125 million was spent, and there’s no telling what is being spent now in overtime and what-have-you, just to cobble together something and make it work.
Lokahi
@MomSense:
Indeed. Spent several hours last week shopping plans on the site (having successfully registered my account in mid-October, amidst all the furor about how doing so was “impossible”.
Came away with a Gold plan, deductible and maximum O-O-P on the low end, and $150 a month cheaper than the COBRA plan I have now.
I wrote my Member of Congress about my experience (Rep. Lloyd Doggett, progressive, Austin, TX), and stand ready to shout my success from any rooftop that’s appropriate to counter the false narrative that persists like a nagging rash on our body politic.
Because success, savings, and sanity.
ericblair
@C.V. Danes:
Yes, well, since you’re an expert, please educate us on the cost estimation, program management, system engineering, risk management, and technical challenges in a program of this type in a major Federal IT acquisition. Be as technical as you’d like; some of us are rather familiar with the subject and can probably follow along.
Patrick
@C.V. Danes:
You do realize you are comparing apples to dogs here. The state exchanges didn’t have another party that acted in an anti-American way to do whatever it could to destroy a program that had been approved by the voters and upheld by the USSC. It didn’t have to deal with last-minute changes that the federal exchange had to deal with. Furthermore, it didn’t have to deal with some 25 different states and their different criteria.
You make it sound like they are completely the same and the feds just wasted a bunch of money. BTW – your number is bogus. But let’s say it wasn’t, that $634 million is peanuts to what was wasted with OUR money in Iraq.
cleek
@C.V. Danes:
$630M? why, that’s 11 hours worth of DoD budget. what an outrage.
C.V. Danes
@ericblair: @Patrick: @cleek:
All I will say at this point, and then I am done with this conversation, is if you think the government got its money’s worth on this project, then I have some land in the Everglades you might be interested in.
GHayduke (formerly lojasmo)
@cleek:
The DoD never fucks ANYTHING up, so according to our erstwhile friend, it’s immaterial.
Tripod
@cleek:
Yeah, but he’s counting in Grandpa money. From back in the day when nickels had pictures of bumblebees on ’em. You’re supposed to be shocked that gasoline isn’t a bee a gallon anymore.
dmsilev
@C.V. Danes: Your failure to actually answer is noted.
aimai
@C.V. Danes: You have not addressed the basic problem with your complaint which is that the money spent was close to 70 million than your imaginary, fake, 630 million. You might also try to acknowledge the fact that right up until the last minute the IT people couldn’t know how many states where throwing themselves onto the federal exchange and demanding that the feds to their work for them. So the very parameters of the problem were changing up until the last minute before the system went live. The fact that some state exchanges are working well proves not that the feds were doing a bad job but that the federal problem was bigger–with lots of states demanding the service and simultaneously refusing to train or employ navigators (among other things) to help people sign up. In fact the Republicans went so far as to try to criminalize the navigators and investigate them for fraud before they had even begun signing people up.
Tone in DC
Thanks for that summary, Aimai.
I knew the g00per semi-sabotage was bad, but I didn’t realize it was this bad.
gwangung
@C.V. Danes: It’s apparent that what you THINK is going on is far from what is actually going on.
Therefore, your comment is irrelevant and rather foolish.
Howlin Wolfe
@C.V. Danes: Again, if you would get your facts straight, maybe your putative experience would mean something. But you ignore facts in favor of your tribal ideology, so it undercuts your claim. I wouldn’t want a sloppy thinker like you to manage any large project, public or private. So, sit down and shut up.
kc
Speaking of navigators, good luck finding one in SC. I don’t think you can blame the state for that. According to this article in the Charleston Post and Courier, the federal government has awarded 1.2 million dollars to one for-profit Maryland based company to hire and train navigators to cover the state, and so far, they’ve failed to do so.
http://www.postandcourier.com/article/20131116/PC16/131119493/1009/sc-has-over-100-affordable-care-act-navigators-but-just-try-to-find-one&source=RSS
Mnemosyne
@kc:
Healthcare navigators in California are state employees, not hired by the federal government.
So, yeah, I’m afraid it’s yet another area where your state decided to fuck you over and the federal government had to try and step in and resolve the problem despite the roadblocks thrown up by your state’s government.
kc
@Mnemosyne:
So how does this justify the fed’s doing such a shitty job? I’m all ears.
Mnemosyne
@kc:
Well, let’s go for a metaphor. Let’s say that, at your job, your primary work is as an accountant, but they tell you that, starting now, you have to work the front desk as the receptionist three days a week in addition to doing your current job. If you screw up the calls, is that your fault for being a lousy receptionist, or is it their fault for demanding you try to do a job beyond what you’re supposed to be doing?
Again, the feds are picking up the slack for your state, and now you’re bitching at the feds for not doing it well enough. With luck, you’ll get what you deserve, which is the feds saying, Fine, if you don’t like the way we’re doing it, we’ll drop it back into your state’s lap. What? They aren’t going to lift a finger to help you? Too bad, so sad.