Friday, April 25, 2014

I want my money back

Like many people, I have been following the saga of the failed state health care exchanges, Massachusetts being one.  But a sentence in today's New York Times article about the Oregon exchange took my breath away:

Oregon has received $305 million in federal grants to build its exchange, according to the Congressional Research Service.

The Census Bureau reports the number of households in Oregon as 1.5 million. So we (yes, we) have spent about $300 per family to produce nothing.

As we look at that CRS report, we see that Massachusetts got $170 million for the same purpose and couldn't get its act together.  Hawaii, $205 million.  Maryland, $171 million.  And, in addition, according to the Pioneer Institute report, "Failure at the Connector will cost Massachusetts taxpayers over $100 million dollars this year" because 160,000 Massachusetts residents are on temporary public Medicaid coverage even though they don't qualify for MassHealth.

On Oregon, the Times reports:

[I]n February, the federal government delivered a devastating critique of the Oregon exchange, saying it had “no integrated project schedule” and no “overarching dedicated project manager” to keep work on track. Moreover, it said, the state did far too little to supervise its main information technology contractor, Oracle.

I strongly support the goals and purposes of the Accountable Care Act, but this level of managerial incompetence is breathtaking.  Shouldn't we as federal taxpayers ask for the failed states to return the US grants they received?  Perhaps, then, the states will have an incentive to recover the spent funds from the contractors they hired.


BenK said...

The purpose of the ACA - ironically, "affordable," not "accountable" [sic] - was to insert the government as a regulator throughout the healthcare system to an even greater degree than Medicare already allowed. Given the track record of central governance, this is logically equivalent to supporting "managerial incompetence."

Anonymous said...

Paul, from your varied career you probably know better than us how difficult it seems to be for governments to enforce accountability, seemingly much more so than private corporations. Why is this, in your experience? Certainly they wield significant leverage if they would use it.


Barry Carol said...

In the private sector, sometimes seemingly good ideas for new products or services fail to gain traction in the market even if the business plan is well executed. People involved in such failures should not be treated harshly as long as they learn from the experience. The health insurance exchange failure in Oregon and a few other states, by contrast, is more a failure of execution. I think there needs to be some accountability here along with fundamental reforms to increase the probability that similar projects will be more likely to succeed in the future. Wasting a lot of money without anyone being held accountable just feeds into the stereotype that government is inherently inefficient and/or incompetent and can’t be trusted to spend our money wisely.

Dan Munro said...

Frankly - I'm surprised it's not more. At least by this accounting - a shade under $1B ($946M).

Personally - I think history will recognize these losses for what they really represent - dollars spent in an effort to reverse a trend that been spiraling in the wrong direction for about 30 years.

Correcting that will cost a LOT more than $1 or even $10B (especially when you consider that CMS Fraud alone is estimated at about $70B/year).

In that sense - these $'s are more of an indictment of Government Tech Procurement than it is anything healthcare related. Something I wrote about when struggled mightily to get lift:

Paul Levy said...


Government officials do not believe in the concept of sunk costs. They will continue to apply more and more resources to a problem in the hope of achieving success, even after a private firm would have stopped and written things off.

Paradoxically, it is the fear of being held accountable that causes them to squander even more.

Barry Carol said...


I completely agree about the sunk costs. The biggest problem I have with government, especially at the federal level, is the reluctance to admit failure. I’ve never heard any one in government say something like: this program isn’t working. We thought it would work; we believed in it and fought for it. Our intentions were good but it’s not working so let’s kill it and try a new or different approach. Instead they tend to want to throw more money at it in hopes it will ultimately work.

Virtually every government department, agency or program claims to be underfunded. I’ve never heard one admit to being overfunded or even adequately funded. I’m not saying that market based solutions are always the answer but I get exasperated when I see our tax money being spent on programs that don’t work or, even if they do help a lot of people who need them, are also subject to significant fraud which often seems to be accepted by politicians and civil servants alike as little more than collateral damage.