Kathleen Sebelius

Kathleen Sebelius testifies about the troubled launch of HealthCare.gov.(Photo by Chip Somodevilla/Getty Images)

Health Care

Obamacare’s problems are creating two tiers of insurance exchanges, a scenario no one ever wanted to see.
By Dustin Volz
November 24, 2013

Red-State America’s abdication on Obamacare sparked fears of a nation divided, one in which some citizens enjoyed shiny new insurance exchanges while their brethren languished in failed or failing systems.

Today, that nightmare is nigh: The federally run exchanges are at a near-standstill thanks to a website so buggy that Jon Stewart christened it a “dot-turd,” while a handful of state exchanges are beating their enrollment goals handily. And barring a rapid turnaround in the federal exchanges’ fortunes, the splintering of America’s health-care system is underway.

Despite President Obama’s assurances and exhortations, no amount of speech-giving or tech-surging is going to fix that any time soon. HealthCare.gov could have been better designed and executed, but the Feds were only ever in the running for second place.

After all, the Affordable Care Act’s architects never expected the federal government to be tasked with figuring out 36 states’ worth of exchanges. And the difference in the degree of difficulty between setting up an exchange for one state versus crafting one for 36 states was always more, health and technology experts say, than the Obama administration was ever going to overcome.

“I don’t think it comes as a surprise to anyone that [the process] is not working as well at the federal level as it is for the state marketplaces,” said Patricia Boozang, managing director of Manatt Health Solutions. “States have an ability to be nimble both in their approach to their system design and responding to issues that crop up … in a way that’s very difficult for the federal government.”

The administration’s attempt to craft one platform for 36 states is complicated all the more by a U.S. system that intentionally allows health policies to vary widely from one state to the next.

Take Medicaid, a federal entitlement program that is run on a state-by-state basis. The Affordable Care Act originally included a provision that would have set a universal eligibility standard for the program, but the Supreme Court deemed that provision unconstitutional, and many states—including many of the same states that balked at setting up their own exchanges—declined to adopt the universal standard.

Now, the feds are tasked with building a single portal to match that state-by-state patchwork. In practice, that means the Feds were responsible for integrating dozens of different Medicaid standards into one portal that is responsive—on the first screen—to your ZIP code, said Wade Horn, a director at Deloitte.

“There’s an old saying that if you’ve seen one Medicaid program, you’ve seen one Medicaid program,” Horn added. “A state-based marketplace only has to deal with one set of rules, it’s own.”

Such was the case in Kentucky, where a functional website has been key to the state exchange’s beating its enrollment targets. Kentucky created its exchange via executive order and attached it to the Cabinet for Health and Family Services, where case workers who specialize in things like Medicaid eligibility worked directly with an in-house, centralized IT department, said Gwenda Bond, a Cabinet spokeswoman.

“We were able to leverage systems that were already in place,” Bond said. “Having the same marching orders and having the expertise [already there] can’t be overstated.” Kentucky brought all relevant stakeholders together and made them work as one unit, an option that never existed for federal IT contractors.

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