Talking Business

November 4, 2013

Business principles ignored in setting up

The bureaucrats now apologizing for the stillborn ignored or violated principles introduced to any first-year business student or learned the hard way by experienced executives. The blown startup will be a business school case study for a long time.

It’s a paradox of government that it’s better run as a business.

The bureaucrats now apologizing for the stillborn ignored or violated principles introduced to any first-year business student or learned the hard way by experienced executives. The blown startup will be a business school case study for a long time.

• No single person was clearly in charge.

According to a

Washington Post article

last weekend, some in the administration lobbied President Obama to appoint an outside health reform “czar” with expertise in business, insurance and technology. Instead, those running the overall effort were political appointees who relied on standard government contractors.

“They were running the biggest startup in the world, and they didn’t have anyone who had run a startup, or even run a business,” David Cutler, a Harvard professor and health adviser to Obama’s 2008 campaign, told the Post.

Maybe this guy could have done better: Marc Benioff, founder and CEO of Bay Area global cloud provider “We would have done this” for a fraction of the price, “and it would have been working perfectly,” he told Politico. “But we were turned away.”

Speaking of expense controls, you can’t even find a good estimate on how much the website cost. Reports range anywhere from $93 million to well more than $600 million.

• Realistic deadlines weren’t set.

An experienced executive would have quickly admitted deadlines were going to be missed and wrangled more time. You would rather be criticized for missing a deadline than releasing a flop.

The administration had already tweaked the Affordable Care Act so many times that it could have delayed the website and just accepted paper or phone applications — pretty much what happened anyway.

• Problems were hidden from higher ups.

In the business world, you don’t surprise your boss. It’s a good way to get fired.

• Complexity was valued over simplicity. The website is stuffed with features needing 500 million lines of code. CNN Money noted that Microsoft’s Windows 8 has about 80 million lines.

• Comprehensive trial runs and testing weren’t completed. Little thought apparently was given to a good consumer experience.

Before the enrollment part of the website even opened for applications, consumers should have been able to compare prices and health plans and run scenarios to see what subsidies they might get.

Businesses screw up product or tech system launches all the time. And this isn’t the first time the launch of a government project has had problems. The rollout of the Part D prescription drug benefit under Medicare in late 2005 was also rocky.

Liberals are taking some comfort in that. But they really shouldn’t. The Part D issues were true glitches, and millions had enrolled for the benefit within weeks.

The price for the breakdown will be steeper than a mere business flop or usual government snafu.

It’s a mystery why the president didn’t ensure that the website for his signature program would roll out smoothly. The breakdown shatters his repeated pledge to “rebuild people’s faith in the institution of government” and “make government cool again.”

The New York Times noted that in his State of the Union addresses, Obama routinely reinserted sentences about government efficiency after aides had removed them, thinking they were boring.

“We shouldn’t just give our people a government that’s more affordable,” he said in his 2011 address. “We should give them a government that’s more competent and more efficient. We can’t win the future with a government of the past.”

The breakdown is even more crucial because it could undermine the entire law.

The older and possibly sick will navigate a balky website, but the ACA especially needs young buyers. As has been reported widely — see the Star’s

A1 story

Sunday — premiums from the young and healthy will pay the hospital and doctor bills of the older and sick, as well as help subsidize premiums for the less well off.

The young won’t try a bad website dozens of times.

(One redeeming value of the ACA might be to overcome the historic resistance to health insurance among the young. It will educate them about how insurance works: You pay now, even for things you may never use, and benefit somehow later. Conservatives shouldn’t criticize this aspect of the law.)

The breakdown could also push the enrollment deadline past March 31. Analysts say that would leave insurers without an adequate rate base and force them to reset premiums higher than they otherwise would be the next year, further driving the young away.

Finally, there’s an ultimate practical effect. Without the exchange working well, millions will continue without health insurance for months or even longer, endangering their health further.

In a Sept. 17 column, I urged ACA opponents to not use suicide tactics against it. Letting people see the law in action, I argued, might be the best approach to changing it.

I also again pointed out that believers in big-government solutions have a special obligation to make them work.

The ACA has made important reforms to health insurance, and an online marketplace promised to be a key one. One could never have thought, in HHS Secretary Kathleen Sebelius’ own description, that it would be a “debacle.”

The administration says it can fix, and failure is not an option.

But the troubled website could mean that the ultimate success of the ACA isn’t an option either.

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