The memo that could have saved Obamacare

November 4, 2013

Have you read Amy Goldstein and Juliet Eilperin's excellent look at how politics -- both inside and outside the White House -- undermined the launch of Obamacare? If not, you should. I'll wait.

Goldstein and Eilperin post a memo that David Cutler, a Harvard health economist and an advisor to President Obama's 2008 campaign, sent in 2010 arguing that the White House had the wrong team in charge of health reform and they needed to completely overhaul their implementation strategy. It's worth reading in full:

http://www.washingtonpost.com/blogs/wonkblog/files/2013/11/Cutler-implementation-memo-1.pdf

Cutler's argument was that the White House was putting policy experts and political hands in charge of a project that was more akin to launching a start-up than passing a law.

It was, he argued, the wrong leadership -- and they were sitting atop a weakened bureaucracy. Implementation would be run through the Centers for Medicare and Medicaid Services. "You were dealt a bad hand here," Cutler writes. "The agency is demoralized, the best people have left, IT services are antiquated, and there are fewer employees than in 1981 despite a much larger burden." In addition, Republicans refused to confirm a CMS director until 2012.

In this, the memo was prophetic. It was the CMS IT department that oversaw the contractors developing the digital infrastructure of Obamacare. As we now know, they botched it completely.

Cutler's recommendation was that the White House set up "a new structure" to implement Obamacare that would be led by people "who know how to manage health care or other complex operations." The economics team -- including Larry Summers and Peter Orszag -- agreed with Cutler. Names that were bandied about included Leonard Schaeffer, the founder and CEO of Wellpoint. But the idea was ultimately quashed by the health-care team.

The fact that Cutler's idea looks good on paper doesn't mean it would've worked in practice. Perhaps adding another box to the org chart would simply have complicated health-care reform. Maybe the results would've been exactly the same, or even worse.

This kind of second-guessing also needs to acknowledge the underlying dilemma. As Goldstein and Eilperin report, many of the decisions made during implementation were made because they seemed like the best way to protect the process from congressional Republicans. The White House might have made very different decisions if implementation wasn't starved for funds and under continuous political assault.

That said, the process the White House chose was clearly a failure. And it can't all be blamed on Republicans. It's not Speaker John Boehner's fault that the IT contractors were badly managed, the Web site badly built and inadequately tested, and the bad news on all these fronts kept from the White House. Those are problems of management, not political opposition. They're problems that could've been fixed long ago, and if they'd been fixed, perhaps Obamacare's launch would've been very different.

Deep into the memo, Cutler warns that the process the Obama administration was settling on to implement their top priority amounted to "piling new responsibilities onto a broken system." The result, as we now know, is a broken health-care law.

An argument in favor of Cutler's proposal is that the process and people the White House is turning towards to fix the health-care law looks rather similar to what Cutler initially laid out. The rescue effort is being run by Jeff Zients, whose background is in management consulting rather than politics. It's being directed by the White House rather than largely left to CMS. It's making much more use of outside experts with experience launching these kinds of products. It's approaching industry players -- like health insurers -- in a much more collaborative way.

The question it raises is what if this had been the process from the beginning?

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Neil Irwin | November 4, 2013