Bloomberg News

Obamacare Contractors Failed Expectations, Tavenner Says

October 29, 2013

Obamacare Contractors Blamed for Site as Tavenner Apologizes

Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services, during a House Ways and Means Committee hearing in Washington, D.C., on Oct. 29, 2013. Photographer: Andrew Harrer/Bloomberg

The official most responsible for the rollout of the Obamacare health-insurance exchange blamed outside contractors for the website woes, not her staff, in testimony before a U.S. House committee.

The Centers for Medicare and Medicaid Services, led by Marilyn Tavenner, was responsible for building and running the exchange website that is supposed to let people compare and buy health plans, aided by tax credits. Tavenner today apologized to Americans, saying the exchange’s flaws are “not acceptable” and vowed the healthcare.gov site “can and would” be fixed.

“We are seeing improvement each week,” she told the House Ways and Means Committee. The agency relied on “private sector contractors, just as it does to administer aspects of Medicare. Unfortunately, a subset of those contracts for healthcare.gov have not met expectations.”

Tavenner said an “initial wave of interest stressed” the system, built under the Patient Protection and Affordable Care Act of 2010. She wouldn’t say how many people may have been shut out because of flaws with the exchange. She did say enrollment numbers for the main site would be released in mid-November and the delayed Spanish-language and small-businesses versions of the exchange would be online by the end of November.

“Had the administration provided more forthcoming answers and shared in a transparent manner the reality of the challenges it was encountering in the implementation process, I suspect many of these glitches could have been avoided,” said Ways and Means Committee Chairman Dave Camp, a Michigan Republican.

Personal Apology

The exchange has been plagued by delays and error messages that have prevented some people from completing applications. A few days ago, the data hub that routes tax information to sites run by the federal government and 14 states lost connectivity after workers tried to replace a broken networking component.

Tavenner offered a personal apology to “the millions of Americans” who haven’t been able to use the exchange.

“I want to apologize to you that the website is not working as well as it should,” she said. “I want to assure you that healthcare.gov can and will be fixed.”

Kathleen Sebelius, secretary of the U.S. Health and Human Services Department, is scheduled to appear tomorrow before the House Energy and Commerce Committee. Tavenner’s agency is part of the Department of Health and Human Services.

Resignation Calls

Written remarks by Sebelius for tomorrow’s hearing echoed Tavenner, saying “the experience on healthcare.gov has been frustrating for many Americans.”

A handful of Republicans in the House and Senate have been calling for Sebelius to step down. Senator Lamar Alexander of Tennessee, the top Republican on the Health, Education, Labor and Pensions Committee, said Sebelius should be asked to resign.

“No private sector chief executive officer would escape accountability after such a poor performance,” Alexander said today. “To expect the secretary to correct in a few weeks what she’s not been able to do in 3-1/2 years is unrealistic.”

President Barack Obama last week appointed Jeffrey Zients, his incoming chief economic adviser, to first advise the health department on fixes to the system before taking on his other job. The federal site, which Zients declared “fixable,” serves consumers in 36 states, including Texas and Florida. He said the site should be running smoothly by the end of November.

Placing Blame

That would mean two months when the consumer website at the heart of the $1.4 trillion U.S. health-care overhaul won’t be fully operating.

Units of CGI Group Inc. (GIB/A) and UnitedHealth Group Inc. (UNH:US), which designed healthcare.gov, told the House Energy and Commerce Committee last week that a branch of the health agency was responsible for the end-to-end testing of the site that they said should have been done months earlier. The U.S. government did final tests just days before the site went public, while similar projects are tested for months, the contractors said.

Tavenner, at the hearing today, shifted some of the blame back onto CGI. “We’ve had some issues with on-time delivery,” she said, adding that the government is still working with the contractor to resolve the flaws in the site.

The Obama administration last week named UnitedHealth’s Quality Software Services unit as the system’s lead contractor, taking over a decision-making role formerly filled by officials at Tavenner’s agency.

Ticking Clock

“The clock is ticking on a website that’s broken,” said Representative Kevin Brady, a Texas Republican. The public’s “health care isn’t a glitch. It’s what they depend upon.

Websites run by most of the 14 states that chose to build their own have performed better than the federal site.

Representative Sander Levin, the top Democrat on the Ways and Means panel, said Republicans have ‘‘erected hurdles” to the exchange rollout, and that some states are operating their exchanges with few problems.

“The reality is that the Affordable Care Act, which Republicans are failing to work on with Democrats, is working quite effectively in states running the marketplaces,” Levin said in his testimony. “The website for the federal insurance marketplace must be fixed and it is being fixed.”

Representative John Lewis, a Georgia Democrat, echoed that sentiment saying there has “been a deliberate and systemic attempt” by Republicans to derail the health law.

“Health care is a right and not a privilege,” Lewis said.

Enrollment Deadline

The rocky debut of the insurance exchange is cutting at the heart of the Affordable Care Act, Obama’s domestic policy centerpiece designed to offer medical coverage to most of the nation’s 48 million uninsured. Now, after three years of trying to dismantle the law generally known as Obamacare, Republican lawmakers are seizing on the website’s flawed debut.

While enrollment runs through March 31, the application deadline to have coverage effective Jan. 1 is Dec. 15.

Even some Democrats are calling for delay. Jeanne Shaheen, a New Hampshire Democrat who voted for the health law in 2010, is among 10 Democratic senators who wrote the administration last week to ask that the six-month enrollment period be lengthened. The call for the delay is linked to provisions in the law that require all health plans to be compliant by January with new regulations, including a prohibition against charging sick people more than healthy customers.

Insurer Cancellations

Sebelius said last week that extending the first enrollment period for the law could complicate 2015 planning for health insurers, who must submit rates for the second year of the program just months after the first enrollment ends.

There is at least one other complication. The Affordable Care Act raises the overall standard for health care in a way that existing plans failing to offer those added benefits, such as prescription drug coverage and free preventive care, can’t be sold after this year even if they’re cheaper.

With the online site expected to face difficulties through November, Americans may have only weeks to find replacement coverage, and many may end up paying higher premiums.

Insurers have already begun sending cancellation notices for policies that won’t meet the new standards, contradicting Obama’s repeated promise that people who like their existing coverage would be able to keep it.

“My constituents are frightened,” said Brady, the Texas Republican. “Like millions of Americans, they are now being forced out of a health care plan that they like.”

Tavenner said the plans being canceled are inferior to the coverage being offered on the exchanges because they don’t provide the minimum benefits required by the law.

To contact the reporters on this story: Alex Wayne in Washington at awayne3@bloomberg.net; Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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