
HealthCare.Gov Looks Like A Bargain Compared With State Exchanges - marojejian
http://www.npr.org/blogs/health/2014/05/08/310721495/healthcare-gov-looks-like-a-bargain-compared-with-state-exchanges
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jrochkind1
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.

~~~
HillRat
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.

~~~
fennecfoxen
> 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;

Well, in this case, since the mandate was essentially "implement this very
specific federally-mandated policy monoculture!" there's really not a lot of
gain you could hope to have from the Laboratory model. If the states had the
freedom to vary health care policy in meaningful ways, it would be a different
matter.

~~~
r00fus
Is the requirement to setup an health insurance exchange (or grant residents
access to the federal exchange) a "monoculture"?

If you're informed about the situation, what parts of the state exchange
requirement are "onerous" when compared with the status quo (i.e., what the
insurance industry already requires)?

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YesThatTom2
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.

~~~
jjoonathan
The insurance companies are whining because the exchanges force them to
actually compete. This will put strong negative pressure on their margins. The
extra volume won't come close to making up for their losses.

Before the exchanges and the standardized tiers of care, plans were very
difficult for consumers to quantitatively compare. Most consumers didn't
bother, so insurance companies were able to differentiate themselves with
advertising and "fluff features" (easy) rather than by cutting costs and
increasing efficiency (hard). Not only did consumers pay for the higher
margins that came from fluff-differentiation, but they also never benefitted
from competition over efficiency. The setup was good for insurance companies
and bad for consumers. Now the party is over and the insurance companies are
upset that their cash cow has been slaughtered.

Good riddance.

~~~
joering2
Insurance companies are not whining; on the other hand media do on their
behalf, but insurance companies basically wrote the law, so you won't see
BlueCross or Athena CEO on the news anytime soon "whining" on the new law.

~~~
jjoonathan
I disagree. Not about the fact that politicians and the media put words into
the mouths of insurance companies for the purposes of political gain, but
about you claim that "insurance companies basically wrote the law." I don't
think they made off nearly as well as you think they did.

Also, we wouldn't expect their CEOs to make much of a stink about this, at
least not publicly (perhaps I should have said "hurting" instead of
"whining"). We would expect them to be busy telling investors how they plan to
best take advantage of the new rules. Because that's what they're paid to do.
Any CEO who says they don't know how to do this is begging to be replaced.

We'll be able to tell who was right in 3-4 years by comparing their margins
(or another metric like administrative overhead) to what we see today in the
individual insurance market. I would bet a sizable chunk of money that they
will be much closer to the margins we see in the employer-provided insurance
market today.

~~~
DavidAdams
The insurance companies were consulted and included while the law was being
drafted (over decades, because remember a lot of the groundwork was laid by
the Republicans during the Clinton Administration). But it's not all rosy for
them. They accepted the downside of this approach to healthcare reform because
they saw potential alternatives as being much worse. A single-payer system
would put the lot of them out of business, so they were willing to take some
lumps to ensure that they're part of the American healthcare system moving
forward.

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vinhboy
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?

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georgeecollins
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.

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sdoowpilihp
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
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
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.

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incision
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.

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pingburg
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
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
>> 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]_

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

~~~
bluthru
Why was it ever an option for states to create their own sites? Why bother
with redundancy?

~~~
jjoonathan
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)?

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

~~~
fixermark
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.

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joering2
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?

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marojejian
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.

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001sky
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).]

