7 ms·

HealthCare.Gov Looks Like A Bargain Compared With State Exchanges

32 points by marojejian 12y ago

gjmulhol 12y ago
So basically, (at least some) states that created their own exchanges made a big mistake in doing so.
- TrainedMonkey 12y ago
  I do not see how, given that the money they used were federal. While in terms of entire country that is certainly suboptimal, it is hard to imagine how on a state level getting a grant and using it to generate local business could be bad.
- bluthru 12y ago
  Why was it ever an option for states to create their own sites? Why bother with redundancy?
  - jbooth 12y ago
    Local-perspective decision-making and "50 laboratories" are usually the general line for that kind of thing, with efficiency and consistency being the arguments in favor of federal control. Funnily enough, the states with Republican governors which usually push the local line didn't build their own exchanges, while the states with Democratic governors who are usually friendlier to federal control tended to build one. Politics.
  - untog 12y ago
    To get the legislation passed, basically. It was a nod to states rights issues.
  - jjoonathan 12y ago
    1. Because federalism and states-rights are considered by many Americans to be an important check/balance and 2. because the redundant work created by "upholding that philosophy" is an exploitable opportunity for those in power. #1 = political capital #2 = $$$ What's not to love (if you're a politician)?
  - dragonwriter 12y ago
    > Why was it ever an option for states to create their own sites? Because the plans (as necessary because while the feds set some national standards, they have not displaced the states role as insurance regulators) are state-specific, and the exchange is supposed to provide gateways to both the state-specific insurance plans and the state-specific (and state-operated) Medicaid plans, and because it can also serve additional, related, state-specific functions. The option to fallback to a federally-facilitate marketplace (which, even if it is a shared website for many states, is still state specific) was originally envisioned as the least preferred option for a state exchange.
- jobu 12y ago
  Some failed and some did well. Connecticut did such a good job that other states (Maryland) are buying it. http://www.npr.org/blogs/health/2014/02/27/283526215/connecticut-looks-to-sell-its-obamacare-exchange-to-other-states http://www.npr.org/blogs/health/2014/02/27/283526215/connect...
- SEJeff 12y ago
  Kentucky created their own exchange and have been the poster child for ACA success as a result. It is super ironic given how anti-democratic / anti-obama the state is (I'm from KY, but live in Chicago): http://www.thedailybeast.com/articles/2013/10/17/obamacare-is-winning-in-kentucky-thanks-to-steve-beshear.html http://www.thedailybeast.com/articles/2013/10/17/obamacare-i...
marojejian 12y ago
For the record, I don't think this is a good way to judge value (at this point, certainly). But it does seem more odd to argue the program had a good ROI based on such a cost.
vinhboy 12y ago
That number seems ridiculously high, but shouldn't CPA be calculated from the money spent on "acquiring" the user, not the entire cost of starting the business?
sdoowpilihp 12y ago
Nowhere in the article is the cost of "acquiring" a user, or CPA mentioned. This article is speaking in regards to the total cost of "signing up an enrollee". That is a fairly broad term, and could use some clarification for it to be of any real use.
- dang 12y ago
  Yes, the title was editorialized and we reverted it. Submitters: As the guidelines ask, please do not rewrite a title except when it is misleading or linkbait.
  - marojejian 12y ago
    Sorry! I was trying to clarify not editorialize, as writing " cost of signing up an enrollee" would have bloated the title. will not touch the titles if that's discouraged.
001sky 12y ago
CPA is ~meaningless when the 'acquisition' is mandated by law. It's not like there is any competitive "choice" here. this is simply y taxes spent divided by x people impacted by the law (who have complied). This is basically asking what is the "cost of user aquisition" for an IRS audit. [edit: CPA reference was deleted by mods> https://news.ycombinator.com/item?id=7716613 https://news.ycombinator.com/item?id=7716613 . NB: The "cost of signing up an enrollee" is logically consistent with the context; whereas "user acquisition cost" is really out of place in the context of compelled behaviour (ie, individual mandate).]
pingburg 12y ago
I'd like to see what the projected ongoing costs are for enrollees that continue in the system for the next year. Surely, the cost of maintaining an enrollee is substantially lower?
- Shivetya 12y ago
  so the website and organization behind it cost a small pittance. I still want to know what happened to the other forty million uninsured.
  - ewoodrich 12y ago
    >> I still want to know what happened to the other forty million uninsured. Forty million? It was estimated at 23 million. Here is the breakdown of uninsured from Wikipedia: Illegal immigrants, estimated at around 8 million—or roughly a third of the 23 million projection—will be ineligible for insurance subsidies and Medicaid.[121] [126] They will also be exempt from the health insurance mandate but will remain eligible for emergency services under provisions in the 1986 Emergency Medical Treatment and Active Labor Act (EMTALA). Citizens not enrolled in Medicaid despite being eligible.[127] Citizens not otherwise covered and opting to pay the annual penalty instead of purchasing insurance, mostly younger and single Americans.[127] Citizens whose insurance coverage would cost more than 8% of household income and are exempt from paying the annual penalty.[127] Citizens who live in states that opt out of the Medicaid expansion and who qualify for neither existing Medicaid coverage nor subsidized coverage through the states' new insurance exchanges.[125]
  - mikeash 12y ago
    A lot of them are being covered by their employers due to increased requirements there, and a lot of them are being covered by Medicaid because of widened eligibility there. I have no idea how close they all add up to cover everybody, but you have to look beyond the insurance exchanges to see how well the law is doing in covering the uninsured.
YesThatTom2 12y ago
In other news: Dozens of insurance companies got 8.1 million signups and got the tax payer to fund the marketing campaign and the website that brought the customers to their doors. These insurance companies should be grateful but instead are being dicks about it. The U.S. government should bill the health insurance companies for the cost of the websites.
- tedsanders 12y ago
  In the insurance market, the quality of your customers matters more than the quantity. It's not like McDonald's, where every customer is profitable. So to me, it's not clear that insurance companies should always be grateful for more customers.
  - refurb 12y ago
    Exactly! The gov't is the one who is mandating people sign up. Insurance companies are providing plans through exchanges. If the people who sign up are mostly sick or old (adverse selection), then the premiums the insurers set for 2014 are going to be inadequate. Next year they'll raise them to cover the costs and insurance companies will be blamed for being "greedy". That's what the insurance companies are afraid of.
    - anigbrowl 12y ago
      But we already know that hasn't happened, with 28% of enrolees being the coveted 'young and healthy' demographic.
      - refurb 12y ago
        The administration's target was 38.5%! The 28% is a bit concerning since you want young people paying in but not taking much out. [1] http://www.bloombergview.com/articles/2014-04-21/are-obamacare-s-latest-numbers-good-news-or-bad http://www.bloombergview.com/articles/2014-04-21/are-obamaca...
    - EpicEng 12y ago
jrochkind1 12y ago
Is it just me, or does even the 'bargain' price of $647/enrollment from the federal website... seem surprisingly bizarrely high? (by an order of magnitude or more)? But I'm not really sure exactly what to compare it to as 'typical' for website costs. Any ideas? And of course, presumably (hopefully) the cost will continue to be amortized over the next few years -- more money will surely have to spent on it (continually), but the overall cost per enrollment should theoretically go down, as the initial work continues to be used for more and more enrollments. At least theoretically; in reality, who knows.
- _delirium 12y ago
  > But I'm not really sure exactly what to compare it to as 'typical' for website costs. Some kind of "enterprise" sales-management or HR/benefits-management system might be a reasonable comparison. I wonder if there are published per-user or per-sale numbers on how much a system like that in use at a big organization (IBM or Boeing or Siemens or whoever) would typically cost.
- HillRat 12y ago
  It's really quite ridiculous for the linked report to use a capital:user ratio as a meaningful metric -- it's a bit like building an auto factory, building the first car, then arguing that the car cost $100m to build. Having said that, it's obvious that some states, like Hawaii, are going to fight an uphill battle to make a cost-effective case for their revenue, while states like Oregon failed spectacularly to make good on their requirements. OR's new CIO, Alex Pettit, just recommended killing the whole Oracle-belabored mess and moving the state onto the federal exchange. Pettit doesn't have any blood on his hands from the Cover Oregon debacle (he was hired away from OK after the exchange's failure), but it's still a gutsy move to kill it, since he's the one who has to deal with the politicians. (Plus he's not making any friends at Redwood Shores, and Oracle is going to outlast all the politicians.) I would take away from this the lesson that the political desire to use states as "laboratories of democracy" is sometimes the completely wrong move; one critical, massive, high-risk and poorly-managed rollout was enough, thanks. Adding fifteen more projects on the HHS dime to replicate functionality (leaving aside state-level Medicaid systems) ended up driving up costs and adding more failure points to the system. Ironically, the states that were most resistant to the ACA contributed the most to federalizing healthcare enrollment, a centralization that might be politically antithetical to those politicians but that will probably save time and money in the long run.
georgeecollins 12y ago
This seems kind of a dumb analysis since you will be signing people up for years and it will only get cheaper. If it didn't get cheaper it would be scandalous. This article also seems like a win for federalism. Hawaii's exchange is really expensive. California's isn't as cheap as the Federal Government but it was way more reliable. Having alternatives lets you compare how programs are performing.
EGreg 12y ago
Why didn't they just create a standardized open source tool? Why have 50 separate efforts?
- deleted 12y ago
  [deleted]
- fixermark 12y ago
  Who is "they?" Most of the people in charge of crafting and passing the ACA barely have an understanding of where software comes from, much less anything resembling a best practice for crafting it.
incision 12y ago
Being quite familiar with some of these projects I'd been saying this for quite a while. I'm glad to see that someone has come out and evidenced it.
soAsian 12y ago
So...we're down to measuring our penis size? Federal's dick vs State's dick. Who got the biggest penis that can shove up the tax payer's ass?
joering2 12y ago
Does anyone have (finally?) a good explanation as of why a Canadian company was given the task to create the hc website? Especially since they screwed up in the UK so bad they been basically barred from Gov. contracts?

32 points by marojejian 12y ago

gjmulhol 12y ago

So basically, (at least some) states that created their own exchanges made a big mistake in doing so.

TrainedMonkey 12y ago
I do not see how, given that the money they used were federal. While in terms of entire country that is certainly suboptimal, it is hard to imagine how on a state level getting a grant and using it to generate local business could be bad.
bluthru 12y ago
Why was it ever an option for states to create their own sites? Why bother with redundancy?
- jbooth 12y ago
  Local-perspective decision-making and "50 laboratories" are usually the general line for that kind of thing, with efficiency and consistency being the arguments in favor of federal control. Funnily enough, the states with Republican governors which usually push the local line didn't build their own exchanges, while the states with Democratic governors who are usually friendlier to federal control tended to build one. Politics.
- untog 12y ago
  To get the legislation passed, basically. It was a nod to states rights issues.
- jjoonathan 12y ago
  1. Because federalism and states-rights are considered by many Americans to be an important check/balance and 2. because the redundant work created by "upholding that philosophy" is an exploitable opportunity for those in power. #1 = political capital #2 = $$$ What's not to love (if you're a politician)?
- dragonwriter 12y ago
  > Why was it ever an option for states to create their own sites? Because the plans (as necessary because while the feds set some national standards, they have not displaced the states role as insurance regulators) are state-specific, and the exchange is supposed to provide gateways to both the state-specific insurance plans and the state-specific (and state-operated) Medicaid plans, and because it can also serve additional, related, state-specific functions. The option to fallback to a federally-facilitate marketplace (which, even if it is a shared website for many states, is still state specific) was originally envisioned as the least preferred option for a state exchange.
jobu 12y ago
Some failed and some did well. Connecticut did such a good job that other states (Maryland) are buying it. http://www.npr.org/blogs/health/2014/02/27/283526215/connecticut-looks-to-sell-its-obamacare-exchange-to-other-states http://www.npr.org/blogs/health/2014/02/27/283526215/connect...
SEJeff 12y ago
Kentucky created their own exchange and have been the poster child for ACA success as a result. It is super ironic given how anti-democratic / anti-obama the state is (I'm from KY, but live in Chicago): http://www.thedailybeast.com/articles/2013/10/17/obamacare-is-winning-in-kentucky-thanks-to-steve-beshear.html http://www.thedailybeast.com/articles/2013/10/17/obamacare-i...

marojejian 12y ago

For the record, I don't think this is a good way to judge value (at this point, certainly). But it does seem more odd to argue the program had a good ROI based on such a cost.

vinhboy 12y ago

That number seems ridiculously high, but shouldn't CPA be calculated from the money spent on "acquiring" the user, not the entire cost of starting the business?

sdoowpilihp 12y ago

Nowhere in the article is the cost of "acquiring" a user, or CPA mentioned. This article is speaking in regards to the total cost of "signing up an enrollee". That is a fairly broad term, and could use some clarification for it to be of any real use.

dang 12y ago
Yes, the title was editorialized and we reverted it. Submitters: As the guidelines ask, please do not rewrite a title except when it is misleading or linkbait.
- marojejian 12y ago
  Sorry! I was trying to clarify not editorialize, as writing " cost of signing up an enrollee" would have bloated the title. will not touch the titles if that's discouraged.

001sky 12y ago

CPA is ~meaningless when the 'acquisition' is mandated by law. It's not like there is any competitive "choice" here. this is simply y taxes spent divided by x people impacted by the law (who have complied). This is basically asking what is the "cost of user aquisition" for an IRS audit. [edit: CPA reference was deleted by mods> https://news.ycombinator.com/item?id=7716613 https://news.ycombinator.com/item?id=7716613 . NB: The "cost of signing up an enrollee" is logically consistent with the context; whereas "user acquisition cost" is really out of place in the context of compelled behaviour (ie, individual mandate).]

pingburg 12y ago

I'd like to see what the projected ongoing costs are for enrollees that continue in the system for the next year. Surely, the cost of maintaining an enrollee is substantially lower?

Shivetya 12y ago
so the website and organization behind it cost a small pittance. I still want to know what happened to the other forty million uninsured.
- ewoodrich 12y ago
  >> I still want to know what happened to the other forty million uninsured. Forty million? It was estimated at 23 million. Here is the breakdown of uninsured from Wikipedia: Illegal immigrants, estimated at around 8 million—or roughly a third of the 23 million projection—will be ineligible for insurance subsidies and Medicaid.[121] [126] They will also be exempt from the health insurance mandate but will remain eligible for emergency services under provisions in the 1986 Emergency Medical Treatment and Active Labor Act (EMTALA). Citizens not enrolled in Medicaid despite being eligible.[127] Citizens not otherwise covered and opting to pay the annual penalty instead of purchasing insurance, mostly younger and single Americans.[127] Citizens whose insurance coverage would cost more than 8% of household income and are exempt from paying the annual penalty.[127] Citizens who live in states that opt out of the Medicaid expansion and who qualify for neither existing Medicaid coverage nor subsidized coverage through the states' new insurance exchanges.[125]
- mikeash 12y ago
  A lot of them are being covered by their employers due to increased requirements there, and a lot of them are being covered by Medicaid because of widened eligibility there. I have no idea how close they all add up to cover everybody, but you have to look beyond the insurance exchanges to see how well the law is doing in covering the uninsured.

YesThatTom2 12y ago

In other news: Dozens of insurance companies got 8.1 million signups and got the tax payer to fund the marketing campaign and the website that brought the customers to their doors. These insurance companies should be grateful but instead are being dicks about it. The U.S. government should bill the health insurance companies for the cost of the websites.

tedsanders 12y ago
In the insurance market, the quality of your customers matters more than the quantity. It's not like McDonald's, where every customer is profitable. So to me, it's not clear that insurance companies should always be grateful for more customers.
- refurb 12y ago
  Exactly! The gov't is the one who is mandating people sign up. Insurance companies are providing plans through exchanges. If the people who sign up are mostly sick or old (adverse selection), then the premiums the insurers set for 2014 are going to be inadequate. Next year they'll raise them to cover the costs and insurance companies will be blamed for being "greedy". That's what the insurance companies are afraid of.
  - anigbrowl 12y ago
    But we already know that hasn't happened, with 28% of enrolees being the coveted 'young and healthy' demographic.
    - refurb 12y ago
      The administration's target was 38.5%! The 28% is a bit concerning since you want young people paying in but not taking much out. [1] http://www.bloombergview.com/articles/2014-04-21/are-obamacare-s-latest-numbers-good-news-or-bad http://www.bloombergview.com/articles/2014-04-21/are-obamaca...
  - EpicEng 12y ago

jrochkind1 12y ago

Is it just me, or does even the 'bargain' price of $647/enrollment from the federal website... seem surprisingly bizarrely high? (by an order of magnitude or more)? But I'm not really sure exactly what to compare it to as 'typical' for website costs. Any ideas? And of course, presumably (hopefully) the cost will continue to be amortized over the next few years -- more money will surely have to spent on it (continually), but the overall cost per enrollment should theoretically go down, as the initial work continues to be used for more and more enrollments. At least theoretically; in reality, who knows.

_delirium 12y ago
> But I'm not really sure exactly what to compare it to as 'typical' for website costs. Some kind of "enterprise" sales-management or HR/benefits-management system might be a reasonable comparison. I wonder if there are published per-user or per-sale numbers on how much a system like that in use at a big organization (IBM or Boeing or Siemens or whoever) would typically cost.
HillRat 12y ago
It's really quite ridiculous for the linked report to use a capital:user ratio as a meaningful metric -- it's a bit like building an auto factory, building the first car, then arguing that the car cost $100m to build. Having said that, it's obvious that some states, like Hawaii, are going to fight an uphill battle to make a cost-effective case for their revenue, while states like Oregon failed spectacularly to make good on their requirements. OR's new CIO, Alex Pettit, just recommended killing the whole Oracle-belabored mess and moving the state onto the federal exchange. Pettit doesn't have any blood on his hands from the Cover Oregon debacle (he was hired away from OK after the exchange's failure), but it's still a gutsy move to kill it, since he's the one who has to deal with the politicians. (Plus he's not making any friends at Redwood Shores, and Oracle is going to outlast all the politicians.) I would take away from this the lesson that the political desire to use states as "laboratories of democracy" is sometimes the completely wrong move; one critical, massive, high-risk and poorly-managed rollout was enough, thanks. Adding fifteen more projects on the HHS dime to replicate functionality (leaving aside state-level Medicaid systems) ended up driving up costs and adding more failure points to the system. Ironically, the states that were most resistant to the ACA contributed the most to federalizing healthcare enrollment, a centralization that might be politically antithetical to those politicians but that will probably save time and money in the long run.

georgeecollins 12y ago

This seems kind of a dumb analysis since you will be signing people up for years and it will only get cheaper. If it didn't get cheaper it would be scandalous. This article also seems like a win for federalism. Hawaii's exchange is really expensive. California's isn't as cheap as the Federal Government but it was way more reliable. Having alternatives lets you compare how programs are performing.

EGreg 12y ago

Why didn't they just create a standardized open source tool? Why have 50 separate efforts?

deleted 12y ago
[deleted]
fixermark 12y ago
Who is "they?" Most of the people in charge of crafting and passing the ACA barely have an understanding of where software comes from, much less anything resembling a best practice for crafting it.

incision 12y ago

Being quite familiar with some of these projects I'd been saying this for quite a while. I'm glad to see that someone has come out and evidenced it.

soAsian 12y ago

So...we're down to measuring our penis size? Federal's dick vs State's dick. Who got the biggest penis that can shove up the tax payer's ass?

joering2 12y ago

Does anyone have (finally?) a good explanation as of why a Canadian company was given the task to create the hc website? Especially since they screwed up in the UK so bad they been basically barred from Gov. contracts?