The Problem With The Affordable Care Act: Why Badly Designed Laws Produce Bad Implementation

By David Schultz

Successful implementation of a law is significantly dependent upon its original design. Public policy scholars often point out that the politics/administration is less real than imagined and that the drafting of laws and their implementation are not separate. There are connections between the politics of policy ratification and those of implementation. Many of the issues not resolved or thought finalized during the legislative process are carried over and fought again during implementation. Issues related to goal confusion or conflicts brushed aside in Congress often plague administrative agencies when they take over enforcement of a policy. Badly designed laws lead to badly implemented policies. This appears to part of the problem with the Affordable Care Act.

The federal roll out of the Affordable Care Act (Obamacare) health care exchanges has been a disaster. The design and implementation of the Act offers a lesson in what not to do in terms of public policy and public administration, with the real lesson being less about what government cannot do and instead about the limits of market-based solutions.

What is wrong with the Obamacare rollout? There are several self-inflicted wounds by the Obama administration with its implementation. As the recent congressional hearings have shown, the Obama Administration did a terrible job in terms of project management. Yes, it was a complex project with over 50 private vendors designing the website. However, the hearings report some fundamental mistakes were made. The mistakes began with the bidding process. Due to the complexity and cost of bidding on federal contracts, only a few firms can do such a project. They have achieved a virtual monopoly in terms of working with the federal government, thereby assuring that the government did not necessarily get the best designers but instead the ones who could jump through the bidding hoops.

Second, there was no real clear specifications regarding what the goal or design of the exchange websites should look like thereby making it difficult for vendors to envision the end product. Third, the Obama administration appeared to do little in terms of coordinating the vendors to work together, with each designing a different piece. It was not until two weeks before the rollout that any comprehensive testing was initiated. Fourth, it has become clear that at almost no point were the ultimate users – those individuals and businesses seeking health care bids – consulted in terms of what would make the interface friendly and easy to use. Fifth, instead of borrowing designs from other industries that have easy to use interfaces – such as car insurance companies or mortgage lenders – it appears that the federal exchange web site was done by literally “reinventing the wheel.”

These self-inflicted wounds must be viewed in light of the external problems faced by the Obama Administration. Implementation of the Affordable Care Act came under intense political opposition by Republicans in Congress and in the states. Under normal circumstances, as with past major legislation, the President could go back to Congress for changes or tinker with the law to address original design flaws. Obama has not had this opportunity. There was insufficient money to design and implement which forced the Department of Health and Human Services to scrimp and muddle its way around congressional intransigence.

Few would have thought that the federal government would have been responsible for implementing most of the health care exchanges. The Affordable Care Act was really designed for state implementation. While states have a longer history and better expertise with managing insurance than the federal government, Republican opposition forced the federal government to run most of the exchanges. Literally, too many eggs were put in one basket and the federal government did not have enough money to build in redundancies in case of systems failure. Simply put, the lion’s share of the implementation was placed under the responsibility of one cabinet department instead of being spread across many governments thereby multiplying the chance that one failure could be catastrophic.

In addition to Republican sabotage, the Obama Administration was pressed for time. Legal challenges to the Affordable Care Act delayed certainty of its constitutionality until the Supreme Court upheld it in June 2012. Then the 2012 elections furthered delayed implementation. After these elections, the federal government had to wait another few weeks to see which states were going to run their own exchanges. Thus, it was perhaps not until early 2013 that the federal government and its vendors really had an idea regarding the scope of the size of the exchanges that they had to manage.

By all accounts, it probably made sense to delay rollout of the exchanges a few months. However, Obamacare is wrapped up in politics, which renders any reasonable delays nearly impossible. For Obama, delay means failure or the risk that as 2014 or 2016 approaches, the law could be repealed if it is not implemented. It is best to go with a flawed design on time than to wait to improve it because there may be no tomorrow.

The morale of the story here is not about general government incompetence, as some would contend. Instead, the final problem with the Affordable Care Act rests with two original design flaws in the law. First, the legislation was meant to appease interests groups and build on an existing system of health care insurance. There were too many moving parts and too much capitulation to the industry for the law to work. The second problem was the premise that economic markets and competition can deliver health care in an efficient, equitable and affordable fashion. The fact that the current health care delivery and insurance system is the most expensive in the world, with 48 million uninsured and mediocre outcomes, attests to that. The Affordable Care Act is a testament to a foolish belief that market mechanisms will solve health care problems.

 The Affordable Care Act assumes that consumers can make choices about health care and will buy insurance, if affordable. It assumes that insurance companies will offer policies if markets exist. The law assumes that consumer choice and vendor competition will produce savings. None of this was true before and there was no reason to think that it should have worked under this act. If anything, the Affordable Care Act speaks to the limits of free market approaches to delivering vital government services such as health care. No one in their right mind thinks the U.S. military should fights wars and make a profit doing it or that police and fire departments should let market mechanisms determine how the bad guys are caught and fires put out.

In the end, the real problem with Obamacare was its original design and belief that market solutions could solve market failures. That flaw, along with implementation problems and political sabotage, makes the Affordable Care Act a lesson in how not to design laws and administer policy change.

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