Big Government’s IT Problem

There’s a reason so many states didn't create their own health exchanges. 

Written by Michael Barone

Earlier this week, I was thinking of writing a column about the lying and duplicity of Obamacare backers who argued that the difference between providing subsidies in states with state-run health exchanges and providing no subsidies in states with federal exchanges resulted from inadvertence or a typographical error.

Typical among them was MIT health-care expert Jonathan Gruber. The folks at the Competitive Enterprise Institute found video of him in 2012 arguing that all or most states would create their own exchanges because they wouldn’t get subsidies if they let the federal government run their exchanges. That was just a “speako” (the oral equivalent of a typo), Gruber replied.

And Phil Kerpen of American Commitment published 2010 comments from New Republic health-care maven Jonathan Cohn in which he explained that “a state could opt out of the exchanges.” But it’s “not something I’ve looked into that closely,” Cohn added.

Yet people like Gruber, Cohn, and columnist E. J. Dionne attacked the D.C. Circuit’s Halbig v. Burwell decision – which, quoting the statute’s language, ruled that subsidies can’t be paid in states with federal exchanges – as “judicial activism,” based on a typo.

And White House press secretary Josh Earnest, not evidently a legal scholar, explained that Congress wanted to give lots of people lots of money – so who cares what the law says?

But, on reflection, I decided that there’s something other than blatant dishonesty and political hackery going on here. It’s something that discredits Obamacare in particular and big-government enterprises generally more than run-of-the-mill partisan dishonesty: Cohn in 2010 and Gruber in 2012 evidently really believed that almost all states would set up their own exchanges, because their residents would get more money than if the feds ran the exchange.

That’s how federal powers have increased over the years. Congress can’t order states to adopt policies, but it can dangle money in front of them if they meet certain conditions. That’s how we got the 21-year-old drinking age even though the 22nd Amendment recognizes states’ powers to regulate alcohol.

As Cohn notes, that’s how Medicaid, passed in 1965, worked, too. Forty-nine states signed on by 1972. Only Arizona held out until 1982.

So why did 36 states refuse to create their own health exchanges? One reason is that Obamacare turned out to be massively unpopular. Another is that conservative policy experts argued it would weaken the law. Most important, setting up health exchanges is hard to do. Government doesn’t handle information technology well, here or around the world. The State Department’s visa system is currently offline for weeks, keeping businessmen, tourists, and exchange students from entering the country. The FBI had to abandon a massive IT project after spending hundreds of millions of dollars. These bureaucracies did a good job of delivering passports and maintaining files in the industrial age. But they can’t keep up in the information age. Moore’s Law says that computer capacity doubles in two years or less. Government procurement cycles are a lot longer than that.

Governors and legislators had reason to fear that state health exchange IT wouldn’t work well (as it hasn’t in about half the states that tried), and that they would get blamed — and blamed for being associated with an unpopular law.

All of which suggests a broader lesson. Government was reasonably good at replicating the bureaucratic processes of large corporations in the industrial age. But it’s not very good — it’s often downright incompetent — at replicating the IT processes of firms such as Walmart and Amazon.

Markets work better than government ukase in the information age. The Medicare Part D prescription drug program, with many market components, has produced high satisfaction and costs lower than projections. Obamacare has not done as well.

Obamacare required states to expand Medicaid or lose all Medicaid funds. In June 2012, the U.S. Supreme Court ruled 7–2 that this violates the Constitution. Once they had a choice, some Republican states chose more Medicaid money. But 21 states have said “No, thanks” to the extra funds, and three are debating the issue. Only 54 percent of Americans are receiving Medicaid programs Obamacare promised to give — or impose on — everyone.

This is not what Obamacare boosters like Gruber and Cohn expected. They thought Obamacare money would be too tantalizing to resist. But for many or most states, it wasn’t.

The Obamacare cheerleaders failed to understand that in this information age most Americans mistrust big-government policies.

— Michael Barone is senior political analyst for the Washington Examiner.  This article was originally published at National Review Online.