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Bill George

Harvard Business School Professor, former Medtronic CEO

Obamacare Overpromised and Underdelivered

As the disastrous rollout of Obamacare’s federal insurance exchange continues, politicians are palpitating over what went wrong.

On Tuesday Marilyn Tavenner, head of the Centers for Medicare and Medicaid (CMS), expressed regret for the difficulty people have receiving insurance. In typical fashion for the Obama administration, she blamed the contractors and high portal traffic. While President Obama has publicly apologized, no one has yet explained what really went wrong.

This fiasco is rapidly becoming Obama’s Katrina, and it could get a lot worse before it gets better. Hurricanes eventually subside, but flawed software systems rarely heal themselves. Throughout the push for national insurance reform, the President and his Democratic allies in Congress repeatedly overpromised and underdelivered. The Republicans didn’t help the situation, opposing Obamacare long after the U.S. Supreme Court declared it the law of the land.

We can trace the origin of the problems back to the inception of the Affordable Healthcare Act (AHA), which tried to accomplish far too much, far too fast. Instead of offering limited insurance coverage for catastrophic events, the President “overpromised” by offering full health care coverage for all Americans–without a sound way to pay for the cost of 30 million new enrollees. He promised individuals they could keep both their doctor and their insurance plan, knowing full well that the high standards of Obamacare would cause many physicians to refuse inadequate reimbursement and many insurers to drop their plans. 

As egregious as these errors were, they are overshadowed by the “underdelivery” of the information technology system managing these processes.  Better management certainly could have prevented these problems, but once they arose, the White House staff chose to treat this challenge as a political issue, not a business issue. Eager for power, President Obama’s staff, which has little experience in complex healthcare business issues, did not properly delegate this initiative to the head of Health & Human Services (HHS).

As a consequence, an extremely complex web and software application challenge is being treated as a political issue. The White House communications staff has tried to control the rollout of the healthcare exchanges, taking a political approach instead of recognizing this as an extremely complex technical and business issue. Sadly, this approach is quite typical of the Obama administration which has repeatedly placed politics ahead of leadership and sound management principles.

The fundamental error that Sebelius and Tavenner made was to think they could manage this massive project internally, instead of putting an experienced healthcare contractor in charge. As a result, no one wound up in charge. In her Congressional testimony on Tuesday, Tavenner ducked responsibility, blaming the contractors for the myriad problems involved.

All too late, HHS figured out it needed a general contractor. Fortunately, it chose CGI Federal and Quality Software Services (QSSI), a unit of UnitedHealth Group that was willing to step up immediately to the challenge. United’s Andy Slavitt, one of the nation’s leading healthcare experts, has personally taken charge of the project. He has been given an impossible deadline of November 30, 2013 to fix what would take most companies 6-12 months. We can only wish him well. If the deadline is missed for sound technical reasons, let’s hope that the Obama administration doesn’t try to blame QSSI instead of stepping up to its own responsibilities for these failures.

Many of us in the business and healthcare communities recognized this disaster in the making. We felt powerless to do anything about it though—especially since we weren’t being asked.

At the start of his second term, the President should have replaced a skilled politician like Secretary Katherine Sebelius with a seasoned healthcare veteran like George Halvorson, former Chair and CEO of Kaiser Permanente, the nation’s largest non-profit healthcare system. Halvorson, who retired at the end of 2012, successfully implemented the nation’s leading health care information system at a cost of $1.8 billion. It’s still not too late for the President to ask Halvorson to save his beloved plan.

Ironically, the states that built their own health care exchanges, such as New York, California, Kentucky, and Minnesota, have fared much better than the federal exchange. What the Obama administration should have done was to test out its system on a pilot basis in one or two states before rolling it out nationally. That’s what any private company would have done.

When the federal exchange is finally up-and-running, we can turn our attention to the real questions: how many people will actually sign up? Will they include the healthy young people the administration is counting on to offset the high cost of older, sicker Americans? How will people react to their inability to retain their current plans and their doctors, a direct contradiction of the President’s promises? How will the government fund the high cost of the new patients in the system?

Ultimately, this administration must get serious about focusing on improving the health of our population rather than focusing downstream when people are really sick. An integrative approach to health in mind, body and spirit that integrates the medical system with a wide range of health and wellness practitioners is required to put America on a healthier path and bring health care costs in line with other nations. Without this, we cannot bring costs under control. Without tackling that fundamental challenge, any IT system is built on a shaky foundation.