Massachusetts is struggling under ObamaCare. In the state that “inspired” the Affordable Care Act (ACA), with almost universal coverage and a functional exchange, most would assume the transition to the federal law would be largely cosmetic. Yet many BayState insiders have been surprised by the number of brick walls the state has run into during early implementation and are privately expressing deep concerns about the road ahead. Massachusetts is now home to the nation’s WORST-performing exchange.
It’s time the rest of the country take note.
The ACA’s impacts will be widely felt in Massachusetts – from the premium rollercoaster ahead for small businesses to the largely non-functional exchange website, run for by the state-based exchange known as the Connector. Due to the ACA, a majority of small companies will see “extreme premium increases.” As a result state leaders have been reduced to begging the federal government for last-minute waivers and grace periods. In addition, residents will face a disproportionately heavy tax burden to finance the new law due to its industry mix, high-cost insurance and the commonwealth’s higher than average incomes.
Jean Yang, current executive director of the Massachusetts Health Connector, a state based exchange.
To add insult to injury, the Massachusetts exchange has failed in spectacular fashion and lags far behind the federal site in terms of progress toward fixing the problem.
State Has Enrolled .02% of First-Year Goal, 5% Of Three-Month Goal
Recently released U.S. Department of Health and Human Services (HHS) enrollment data through the end of 2013 put a fine point on how bad the situation is at the exchange. The goal for enrollment by March 31, 2014 is 250,000. As of the end of the year, the state had successfully enrolled 5,428 people. Compare that to Oregon, which many consider to be the worst exchange in the country. At 0.8% of the first-year goal, their enrollment of 20,000 looks robust in comparison.
The Connector has recently walked back the 250,000 goal, saying their real goal is 200,000 by March. To meet even this lower threshold, the exchange will have to successfully enroll and collect payment from 3,138 individuals every business day over the remaining 62 days of open enrollment. At their current conversion rate of moving those that have created an account through to selecting a plan, they will need 1.4 million total applications to be started to hit 200,000 in just over two months. This in a state with about 6.5 million residents, the vast majority of whom are on employer-sponsored insurance and one-quarter of whom are on Medicaid.
Exchange Website Has Not Successfully Enrolled A Single Person: Enrollment By Paper And Excel
CGI, the contractor that has been dumped by the feds, is on the job in Massachusetts. Individuals are unable to complete their entire application process online and records are often lost. Even the “functional” features of the website routinely send incomplete information to customer service representatives who have been forced to check each application manually due to the error rate. Residents were being locked out of their online accounts and were often spending hours trying to get answers from customer service, or simply not hearing back from them as promised.
Early on, the Connector stopped issuing 834 enrollment forms to insurers and developed a complicated set of workarounds. The cost of these workarounds has not be disclosed. Insurers are being sent new patient information in Excel spreadsheets and the payment functions have yet to be built. In addition, the Connector has been forced to extend a $1.1 million contract with a third-party administrator because the exchange website can’t handle the composite billing the ACA requires. Chelsea Conaboy at The Boston Globe reported that “The Connector’s new website has performed so poorly that the state has all but abandoned attempts to fix it.”
The Connector’s executive director, Jean Yang, recently admitted the site is unlikely to be fixed by March 31st.
Most enrollments have been via phone. The Connector added over 60 new customer service representatives to answer calls and even then service was poor, with over 10-minute wait times and 30 percent of calls dropped. While performance appears to be improving, the average time for each enrollment by phone has been one hour.
Due to the website issues, the Connector has been reduced to identifying enrollment problems by trolling social media. This followed a stopgap deal the state was forced to strike with insurers to extend coverage for all of the 100,000+ individuals already on subsidized coverage in the exchange until this March. As a result, the Connector is hoping they all will reenroll in March, but it may have to be done on paper.
Commonwealth Temporarily Putting People On Medicaid
As the Boston Globe has reported that, “Without a functioning website, the state has put most applicants into temporary insurance through the state’s Medicaid program and jury-rigged a system for processing others’ applications on paper and with simple software tools.”
The state has placed almost 28,000 individuals, many of whom could fall into the newly expanded 300%-400% of federal poverty level subsidy category which would require them to pay premiums for their coverage, in the Medicaid program. Instead of subsidies being paid for individuals the federal government is also not paying the value of an exchange tax credits. Instead the state and federal government is splitting the cost 50/50. The state has yet to calculate the full cost of this move.
No Fix in Sight
Massachusetts was not alone in pushing back its enrollment date until December 31st for coverage starting January 1st and allowing late payment for such coverage. The difference is that its tech issues have remained largely unsolved. If past experience is any guide, the solutions could be difficult to achieve. On multiple occasions, the Connector has taken the site down for “fixes” and been forced to put it back up before the problems were properly addressed. The exchange has not hired any vendors to work with or replace CGI.
According to Priyanka Dayal McCluskey and Bob McGovern at The Boston Herald, one employee from MITRE was hired to review the website’s technical issues. But as of this writing, no plan for how to proceed has been publicly or privately presented to the Connector’s governing board.
The Governor failed to address the controversy in his State of the State address last night, leaving even liberals frustrated. John McDonough wrote about the Governor's speech last night,
This is unacceptable. I can't name a single Massachusetts official who is leveling with the public on this national embarrassment. From what I hear, second and third hand, four months into this disaster, the Patrick Administration has no plan.
No plan. No explanation. No hope.
If there has not been a conspiracy of silence in leveling with the public about what's gone wrong and how it will be fixed, our responsible state officials, including Governor Patrick, are all doing a fine imitation of one.
Who Forgot To Tell the Governor?
According to The Globe’s Conaboy, “In the first weeks of October, Governor Deval Patrick and officials at the Massachusetts Health Connector… maintained a positive message about the site, saying the glitches were minor and the site would improve over time, particularly as improvements were made to a federal data hub needed for processing applications.” What the Governor knew and when he knew it remain unclear.
When Governor Patrick was asked on November 11th, 41 days into open enrollment, if he had any concerns about the website, he was quoted as saying, “No, none at all.” His tune has changed slightly as the problems became more glaring and now he is threatening to sue CGI, but he has yet to comment on his role in the implementation.
Pioneer Institute on Health Connector Woes from Chris Lovett on Vimeo.
Problems Are Much Deeper Than The Website
It is too early to know how successful the Connector will be at meeting the goal of 200,000 -250,000 enrolled in the subsidized side of the exchange by March 31st, yet as of December 31st only 37,361 applications had been started. This is among one of the nation’s worst ratios of applications started to first-year enrollment estimates. If something doesn’t change soon, the financial sustainability of the Connector will be in serious question.
How Did Massachusetts Go South So Fast?
There has been lots of finger pointing, primarily at CGI. Yet at the last Connector board meeting, member Jon Gruber finally asked about the elephant in the room: Whether some blame should fall on public officials for how the website has failed. Just days later former Connector executive director Jon Kingsdale published a perspective piece in the New England Journal of Medicine arguing that public officials should face more accountability for failed exchanges.
In Massachusetts, it remains unclear when public officials knew problems existed. Chris Cassidy reported in the Boston Herald that CGI made it clear in April 2013 (six months before open enrollment started) that they doubted the website would be ready by October 1. They also referenced a renegotiation of the contract in February 2013 under which the state had agreed to let CGI significantly delay functionality of the site. This all suggests that problems were well known at least eight months before open enrollment.
In memos from University of Massachusetts (which holds the main contract with CGI; more on that below) staff to CGI, it is clear that the company’s performance continued to lag even after two major adjustments to the contract. Three months before open enrollment they were still estimated to be two-to-seven weeks behind in 75% of the functional areas they aimed to finish. How many they fixed by October 1st is unclear.
However, up until October 2nd, Connector officials and board members were publicly saying that no issues existed with the website, despite the fact that in was clear in the days following October 1st that there were major problems.
From personal conversations I have had and recent news stories, it has become clear that while the executive director (and most likely other senior staff) at the Connector knew of the problems, the board was never informed and no information was made public or presented at monthly Connector meetings.
Lack Of A Clear State Leader With IT Experience May Be To Blame
In a seemingly strange arrangement, the University of Massachusetts Medical School (not the exchange or Massachusetts’ Executive Office of Health and Human Services) held the main contract with CGI to build the technology behind the exchange. UMass had been granted an Early Innovator grant by the Obama administration to lead the New England State Collaborative for Insurance Exchanges (NESCIES). But when only VT and RI expressed an interest, the project pivoted to focus mostly on Massachusetts. The original projected budget was $118 million. Yet, the federal government proceeded to grant $172 million to Vermont, $139 million to Connecticut, $99.3 million to Rhode Island, $7 million to New Hampshire, and $6 million to Maine for exchange-related activities.
Massachusetts exchange staff hailed the contract in a May 2012 PowerPoint presentation as a “one time opportunity to use federal grant money to build new, state-of-the-art systems.” Including the UMass grant, Massachusetts has received close to $180 million to revamp the exchange. The commonwealth, led by two UMass Medical staff who both appear to lack relevant IT experience, signed a contract with GGI worth at least $69 million.
Perhaps the lack of a single agency or person overseeing all parts of the technology and/or the partial ownership of the technology was to blame. The ownership issue has been cited in other states as well as with the federal exchange. In that same May 2012 PPT to the Connector board, it was explained that for the website:
Some components will be owned by the Connector such as the website for QHP shopping
Some components will be owned by EOHHS such as the links to MMIS and MA21
Some components will be shared such as the eligibility rules engine
Then uncertainty over which agency would “own” the remaining parts of the IT project was discussed.
The Wall Street Journal’s Clint Boulton asked two government IT analysts for their take on the Massachusetts situation:
Rick Howard, a Gartner Inc. analyst who covers government IT, said that it is becoming clear that weak vendor contracts, ineffective governance and poor vendor management, are contributing to the insurance exchange failures. “When projects go this far off the rails, it’s reasonable to conclude all parties share in some of the blame, it’s just a matter of determining who and how much,” Mr. Howard said.
Michael Krigsman, an industry analyst and CEO of Asuret Inc., said that the Health Connector project seems poorly conceived, poorly executed and poorly managed under tight timeframes and with ambiguous specifications.
Did Public Sector Greed Play A Role?
Connector staff members have admitted privately that the generous flow of federal dollars was the primary motivation to rebuild the entire website. The federal government was requiring additional functionality of the site under the ACA, but it is unclear if the Connector could have saved taxpayers millions by simply building off the foundation they already had in place.
Lack Of Legislative Oversight Before And During Implementation
Even with growing concern about gaps in coverage, escalating cost to taxpayers, and a myriad of unanswered questions about the way forward, the Legislature has been silent. The Joint Committee on State Administration and Regulatory Oversight, the Joint Committee on Consumer Protection and Professional Licensure, the Joint Committee on Health Care Financing, the Senate Committee on Post Audit and Oversight, or either chambers’ Committees on Ways and Means have all yet to schedule a hearing on the matter. This is in stark contrast to other states with problems at their state-based exchanges.
In numerous blue states that have also struggled to get things up and running, the legislative branch started to turn up the heat.
- In Minnesota, a bipartisan oversight committee has held multiple hearings, and the Legislative Auditor has pledged a “thorough forensic analysis.” Coverage here, here, and here. The state exchange has also had a dozen consultants on site to recommend a path forward.
- In Maryland the Legislature, including the Senate President, has been very active on the issue, including hearings.
- An audit is underway in Colorado.
- In New York, the first day of the legislative session included a four-hour hearing called by the Senate Health and Insurance committees for state exchange representatives to review challenges and opportunities.
- Legislators in Oregon have started to hold hearings on the exchange.
- The Vermont Legislature has held multiple hearings.
Massachusetts Takes “Worst Performing Exchange” Title From Oregon
Reporters Nick Budnick and Jeff Manning at The Oregonian have done a huge public service with in-depth reporting that identifies many of the issues at the state exchange and continues to push for answers. Thus far, there has been no similar effort in Massachusetts.
Budnick and Manning have uncovered and chronicled early warnings about technology issues that were disregarded, exchange officials and high-level Governor’s staff members willfully ignoring the facts, feuding agencies, and efforts to “silence the critics.” As they highlight, the disaster played out in Oregon despite multiple levels of oversight. Maximus was hired for quality review, there is a tech expert at the Legislative Fiscal Office, and tech folks at the Department of Administrative Services were active in reviewing the process.
Massachusetts never built in anything like this level of oversight, so information about the depth of the problems remains very difficult to come by, as Connector and executive branch staff remain tight lipped on the matter.
Finally, Budnick and Manning’s reporting in Oregon also underscored how ineffective federal oversight was in making sure the exchange worked. The former executive director of the Oregon exchange described one such federal review in an e-mail as “neither ‘tough’ nor very relevant. ‘Behind the ball as we are,’ he wrote. ‘I think our federal partners were impressed.’" Perhaps time will reveal that federal officials were impressed with the Massachusetts website as well.
* * *
READ JOSH'S BOOK: The Great Experiment: The States, The Feds, and Your Healthcare (Pioneer Institute: 2012) Follow @JoshArchambault on Twitter and Google+, and The Apothecary on Facebook. Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.
INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.
