Boehner’s Magic Bullet

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A large screen at the Newseum in Washington broadcasts a town hall meeting President Barack Obama held there with Spanish-language media outlets regarding health care issues in the Latino community, March 6, 2014. Obama urged the Latino community to explore their insurance options on Affordable Care Act exchanges, noting that enrollment was still open. Gabriella Demczuk/The New York Times/Redux

In the weeks before the March 31 deadline for millions of Americans to sign up for health insurance, President Obama turned to Hollywood, joking in a viral video "interview" with actor and comedian Zack Galifianakis that NBA wild man Dennis Rodman was not in fact ambassador to North Korea before urging young people to hurry and sign up under the Affordable Care Act "for what it costs to pay your cell phone bill." Obama also revived a social media blitz for his signature reform on selfie queen Ellen DeGeneres's talk show, and the White House released a YouTube video with the mothers of singers Alicia Keys and Jennifer Lopez imploring people ages 18 to 34 to sign up.

These moves to shore up the law dubbed Obamacare come as legal and legislative scrutiny of troubled state-built exchanges escalates. With the federal hub now running smoothly after its belly-flop debut in October, Republicans are planning to hammer the high-profile failures at some state exchanges during the midterm elections this fall. "People are just furious with the failures," argues Greg Walden, a Republican congressman from Oregon, home to the nation's most screwed-up exchange (Cover Oregon, the website built by Oracle Corp. for more than $305 million in federal grants, doesn't work at all). "If the law says we're going to have these exchanges, for heaven's sakes, they should at least work."

Several states that built exchanges that have dire technological tangles, ranging from substantial to catastrophic: Vermont cannot enroll small businesses online; Hawaii has fully signed up fewer than 4,700 people as of early March and says its financing model is unsustainable. Directors of five of the 17 state-built exchanges have resigned in recent months. Republican ire is also turning on the Centers for Medicare & Medicaid Services (CMS), the federal agency overseeing the health care law. They charge that CMS ignored catastrophic mess-ups last summer and missed deadlines at still-flawed exchanges. Reince Priebus, chairman of the Republican National Committee, argues to Newsweek that the troubled state exchanges will "hurt Democrats running in 2014 who voted for this legislation" and "undermine governors running for re-election this year."

Republican strategists believe their strategy has already paid off: In Florida, Republican David Jolly defeated Democrat Alex Sink this month in a special election, thanks in part to pounding Sink for her support of the Affordable Care Act. The takeaway from Florida for Republican candidates elsewhere, says Republican strategist Alex Vogel, is "Hey guys, this works, let's use it."

In Oregon, a Democratic stronghold that was an early proponent of Obamacare, there's plenty of ire to harness. Nearly six months after Cover Oregon launched, the exchange still cannot enroll individuals online, and the part intended to sign up small businesses has been put on the back burner. The relatively few consumers who have signed up and selected an insurance plan—just over 38,800 as of March 1, out of Census Bureau projections of over 600,000 uninsured—have done so via paper applications, and fewer than half of those have crossed the finish line of choosing an insurance plan and paying premiums. On March 20, the interim director of the exchange became the third director in four months to leave the post. In a withering report last month, CMS blamed both state officials and Oracle for inept project management and poorly functioning software, and urged Oregon to dump Oracle.

The Government Accountability Office, Congress's nonpartisan watchdog, opened a probe on the stillborn exchange in early March. "GAO will be looking at the state exchanges, including Cover Oregon, but it has not yet been determined what other states might be included," Ned Griffith, a spokesman for the office, tells Newsweek. Other probes are coming: Representative Darrell Issa, R-California, chairman of the House Committee on Oversight and Government Reform, plans to take a close look at state-based exchanges, his spokeswoman says.

Oregon's governor's seat, now held by Democrat John Kitzhaber, comes up this fall, and his challenger, Republican Dennis Richardson, says the exchange is "an abject failure," and Kitzhaber's "level of detachment" from the fiasco and "the irresponsibility that it displayed...are the reason that I filed to run for governor in the first place."

Oregon is bad, but it's not alone. In Vermont, where small businesses still cannot enroll online and security breaches (most recently by a Romanian hacker) have shaken consumer confidence, Republican lawmakers have asked the state's federal prosecutor to investigate whether CGI Technologies and Solutions, the contractor behind the glitchy website, misled state officials about its progress. Democratic Governor Peter Shumlin is running for reelection in the fall, and Randy Brock, a Republican challenger, has made the technological lapses his primary message.

The political squabbling comes as fresh details emerge about Vermont's woes. A former Vermont Health Connect technology employee who claims she was fired in August after criticizing the $167.9 million website says the exchange was less robust than CGI led Vermont officials to believe. This person, who declined to be named because she fears being locked out of future state jobs, says Vermont officials "engaged in magical thinking. They drank the Kool-Aid of 'This will all work out.' "

A CMS document dated August 22, 2013, on Vermont's testing of its exchange with the federal hub shows that not all website services were tested. More significantly, CMS wrote that testing under the "Blueprint Test Scenario"—a milestone indicating a start-to-finish application for a consumer—was "not applicable for the state of Vermont" as of August 22. Vermont officials and a CGI Technologies and Solutions executive have called the tests successful, saying they showed "live connections" and "connectivity" to the federal hub. But those terms do not describe what is actually happening, says Meryl Price, president of Health Policy Matters, a consulting firm. "Connectivity is not the same thing as functionality," she explains.

In Massachusetts, where CGI Technologies and Solutions built a system that has struggled to enroll consumers, an independent consultant proposed on March 4 that the state consider hiring a new vendor to "start over by building a new system." (A related company, CGI Federal, was fired by the White House in January for its bungled work on Healthcare.gov, the federal hub; Massachusetts canned CGI Technologies and Solutions on March 17 and is looking for a new vendor.) A software glitch governing verification of income eligibility has meant that fewer than 800 consumers meeting subsidy requirements have been able to enroll through the Massachusetts Health Connector, around one percent of the target.

Another critical report, by Microsoft, released on March 20, found a welter of technological and managerial screwups in Massachusetts, and says the state risks "increasing its uninsured numbers as a result of system failure."

The governor's seat, held by Deval Patrick, a Democrat, comes up in November; Republican challenger Charlie Baker, a former chief executive of Harvard Pilgrim Health Care, is calling for a White House "waiver" for Massachusetts that would let it opt out of Obamacare-a pardon Obama has already refused to grant.

In another technological bungle that could be fodder for Republicans, Maryland fired its contractor, Noridian Health Solutions, in late February and is formally considering whether to scrap its glitch-ridden exchange and send consumers directly to the federal hub, according to its most recent annual budget proposal. The inspector general's office of Health and Human Services opened a probe of the exchange, which is underpinned by $271 million in federal grants, earlier this month after pressure from a Republican congressman to do so. Lieutenant Governor Anthony G. Brown, a Democrat who oversaw the exchange, is aiming to oust Republican challengers seeking to succeed Democratic Governor Martin O'Malley, whose term-limit is up this November.

Not all state-based exchanges have been flops. Colorado and New York have high enrollment numbers and few glitches. Connecticut, which used Deloitte and KPMG as its lead technology contractors, has done well enough to start promoting its "exchange-in-a-box" solution, which it will license or franchise to other states and sell consulting services.

But Kenneth Arrow, the Nobel Prize-winning Stanford economist whose research has for decades shaped theories and policies governing economics, finance, social science and welfare, says the political lesson may be that state-based exchanges were never a good idea. " 'Local is better' is not true in this particular case," he says. Comparing Obamacare to the federal social security program, which is relatively well-administered, he says that "there's really no good reason why this shouldn't be federal as well."

A flurry of last-minute signups will likely push the current 4.2 million Americans enrolled as of the end of February higher, but the final figure will likely be well short of Obama's goal of 7 million, and it's unclear how many people have crossed the finish line by paying premiums.

For voters, "it's going to come down to personal experience," says Rosemarie Day, president of Day Health Strategies, a consulting firm. And although some consumers are paying more than they did before the Affordable Care Act, the majority are not, says Jonathan Gruber, a Massachusetts Institute of Technology economist who advised the Obama administration on the law. Gruber compares those higher-paying consumers to "people moving from the front of the bus to the back."

The fate of Obamacare "is going to be war of dueling narratives," says Daniel Mendelson, chief executive and founder of health care consulting firm Avalere Health and a former associate director for health at the White House's Office of Management and Budget under President Clinton. "The outcome is going to depend on how much resources are put into telling the story."

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