America's Bitter Pill

by Steven Brill

  In the final analysis, the report said, a “ ‘kynect’ logo treatment featuring lowercase letters and a double-pointed arrow … conveyed a friendly, welcoming feel that helped overcome the negative emotions associated with Healthcare Reform.” It was “low stress and unintimidating” while “suggesting technology.”

  * * *

  *14. I am reminding readers of these terms even though most have health insurance, because polls consistently report that many consumers of health insurance don’t understand the jargon. In fact, most buy based solely on the premium and may not even be aware of the precise amount of the deductible or out-of-pocket limits.

  *15. Disclosure: I teach a journalism seminar at Yale, and my wife and I are loyal alums.

  CHAPTER 17

  A GUY IN JEANS, RED LIGHTS, AND A “TRAIN WRECK”

  January–June 2013

  ON JANUARY 29, 2013, A MAN IN JEANS WALKED THROUGH THE metal detectors in the lobby of the Department of Health and Human Services headquarters on Independence Avenue near the Capitol. Eric Gunderson, who was then thirty-three, had never been in the building, though it was a ten-minute cab ride from his office and it bought more of the kinds of services Gunderson sold than Gunderson’s business could provide over three or four centuries.

  Gunderson ran a small software shop full of twenty-something coders who specialized in doing projects for nonprofits. “Geeks for good,” was how Gunderson would later describe the world they worked in. “We’re not Lockheed Martin.”

  Nor could their headquarters be confused with Lockheed Martin’s facilities, which spanned the world, capturing and fulfilling billions in military and aerospace contracts. Gunderson and his Development Seed coders worked in a converted garage hidden in an alley behind N Street in northwest Washington.

  Gunderson and a deputy made their way to the sixth floor to meet in a large office with Bryan Sivak.

  Sivak was the thirty-seven-year-old chief technology officer at the Department of Health and Human Services. That had been Todd Park’s job, but Park had become chief technology officer of the country, working in the White House.

  Like Park, Sivak had an ideal résumé for someone running major technology projects. With a degree in computer science from the University of Chicago, he had registered his own patents, started two successful software companies, and then become the CTO for the District of Columbia, before becoming “chief innovation officer” for the state of Maryland.

  He and Park had met at various industry conferences, and when Park moved to the White House he recruited Sivak to replace him at HHS.

  Bearded, friendly, always smiling, and with a constant gleam in his eye, Sivak gave off an innovation vibe that seemed out of sync in a government bureaucracy. He even had a sign hung prominently on his office wall that declared, “WE HAVE A STRATEGIC PLAN. IT’S CALLED DOING THINGS.”

  In press interviews and on the speaking circuit he touted the “IDEA lab” that he had set up at HHS.

  “Basically I’m responsible here for executing on the department’s innovation agenda,” he told The Washington Post. “That … includes this idea of challenging the bureaucracy to escape the status quo and think about how we can accomplish our tasks in new and innovative ways.”

  However, when it came to challenging the bureaucracy’s control over its most ambitious project ever—the building of the Obamacare insurance exchange—Sivak, like Park before him, was on the sidelines. The innovations coming from his IDEA lab would operate along the borders of what HHS did, not intrude into the core functions controlled by all of those offices and centers. Besides, he was the chief technology officer of the Department of Health and Human Services, not its CMS unit, and no one at CMS, including its chief technology officer, reported to him. CMS, in fact, “didn’t trust the sixth floor,” Sivak told friends, referring to the floor at HHS headquarters where he and the others with big titles were housed.

  Yet some of his projects were important. Sivak was a near-manic believer in transparency and how big data could be used to achieve it in unprecedented ways. From the day he started the job he had wanted to crunch CMS’s data on hospital pricing in order to present price comparisons to the world. He ultimately persuaded CMS to do that, but, by his own account, that only came after the Time special report on medical prices created headlines around the issue, and his boss, Secretary Sebelius, and her advisers allowed him to push ahead.

  SONYA AND THE POTEMKIN VILLAGE

  Sivak had invited Gunderson to come see him because one aspect of the Obamacare website project that he had maneuvered his way into reviewing was driving him crazy. The design of the home page for the federal exchange (that would now be the gateway for the multiple insurance offerings from thirty-six states) was terrible.

  It was confusing and almost impossible to navigate. It looked like a bureaucracy’s website, not like Expedia or Amazon or any of the other e-commerce icons that the president liked to promise his exchange would be like.

  In the same way that Todd Park had wedged his way into the bureaucracy’s business when he created that comparison shopping website at HealthCare.gov in June 2010—by saying that it wasn’t the real one because it wouldn’t show the subsidies or allow anyone to buy anything—Sivak gently offered the CMS people his help in tinkering with the home page. He promised just to touch up the look and feel, not mess with what happened after the links brought visitors to all the information and forms to fill out that would be behind that page. What he was talking about was merely the simple public relations and marketing associated with what the world would see on the home page when they arrived at HealthCare.gov, he assured the CMS people.

  So, Sivak was given the go-ahead. The CMS team had more important things to worry about.

  Sivak had then contacted Gunderson through a friend of a friend because he was intrigued with the software he had heard Gunderson was using.

  Gunderson, too, thought that the best strategic plan was, as the sign in Sivak’s office said, “doing things.”

  “We got the contract as a subcontractor,” recalled Gunderson. “We could never get a government contract on our own. To do that you have to have more lawyers and contracts people than coders. You have to have the suits. That’s not us.”

  Gunderson and three colleagues from his garage, as well as four CMS people and four staffers from the CMS Office of Communications, were soon locked in a room with Sivak figuring out how to redo the home page and sending coding instructions back to the garage behind N Street.

  What would emerge was what would become the famous picture (taken from a stock photo) of a young woman smiling (the team informally called her Sonya) out from a crystal-clear page. In the months that would follow the October launch of the exchange, it was the only part of the site that never broke down and never had to be fixed.

  “We did it all for a bit less than a million dollars,” Gunderson told me. “For us, that’s a pretty big deal.”

  As with Park’s building of the comparison shopping website, the unveiling, in late June 2013, of Sivak and Gunderson’s cool-looking home page—which the president loved—created a Potemkin village. On the surface, things looked great. But behind the façade, where CGI and the other contractors were trying to build the real website—and piling up bills that would ultimately reach $840 million—there was not much to look at.

  “FAST, TARGETED, LOCKED-DOWN DECISIONS ARE NEEDED”

  One of the steps a worried Todd Park took from his new position as U.S. chief technology officer at the White House in the winter of 2013 was to convince HHS secretary Kathleen Sebelius that McKinsey & Company, the blue ribbon consulting firm, should be hired to look in on the implementation effort and, in consultants’ jargon, “pressure test” the process.

  On March 28, 2013, the McKinsey team presented a picture of that process that, for all of its effort to be polite, depicted a debacle. President Obama had come to office promising a new era of efficient, smartly managed twenty-first-century government. Ac
cording to the McKinsey report, it didn’t look like those working on his most important and complicated domestic policy initiative had gotten that memo.

  With less than six months to go before launch there was “indecision” about the system’s requirements, the McKinsey report said. In fact, the staff was “still engaged in program design,” which threatened “a materially high risk of system instability.”

  There was “no end to end business process view across” the many agencies involved outside CMS, such as the IRS and Homeland Security (which had to vet citizenship and legal immigration status), or even “fully within” CMS itself.

  “Fast, targeted, locked-down decisions” were needed “for [the] implementation effort,” but there was “no single, empowered decision making authority.”

  The man who many thought had that authority over building the website never saw the McKinsey report. Henry Chao—the deputy chief technology officer at CMS who had moved there from being the CTO of the Office of Consumer Information and Insurance Oversight when the office became a center—was not at the meeting where McKinsey presented its findings. He would later testify at a congressional hearing that he was never told about the report.

  A second person whom others would later tell me had been in charge—Michelle Snyder, a career civil servant and the CMS head of the Office of Operations—was at the meeting.

  Snyder—along with Sebelius and Marilyn Tavenner, the administrator of CMS—also sat in on meetings the following week in which the McKinsey team went through their findings with HHS officials, including Secretary Sebelius. Snyder then attended a similar McKinsey briefing with Lambrew and others in her healthcare reform policy office at the White House. Snyder, who was strong-willed and turf conscious, was not surprised by the report. She had complained to Sivak and others that she had “twelve bosses, including three or four at the White House, and no one is making decisions.”

  “Streamline decision making” and “name a single implementation leader,” the McKinsey team recommended, while also noting, subtly, that it had worked “with a boundary condition of October 1 as the launch date,” and that “extending the go-live date should not be part of the analysis.”

  There was nothing in the law requiring the October 1, 2013, launch. In fact, in their late 2010 deliberations the White House team had targeted enrollment to begin in July. And some of the earliest internal memos had even suggested 2012 for launch in order to have the program in place before the election, so that a new president would have to undo it instead of block it. But by now President Obama and everyone in his administration, as well as congressional Democrats, had locked onto October 1. There could be no delay. In their view the Republicans would be merciless in their attacks on the administration’s competence if they let the deadline slip.

  Tavenner, who was then sixty-two, is a serious, though outgoing and upbeat, leader. She had worked her way up from being a nurse to a senior executive post at HCA, the giant for-profit hospital chain, before becoming the Virginia secretary of health and human resources. “We knew there were some coordination problems, so the McKinsey report did not surprise me,” Tavenner later told me. “But I was assured by Michelle [Snyder], and Henry [Chao] and others, that they were already being taken care of.”

  Sivak and Park, who sat in on the McKinsey meetings, had hoped the report—which was only about the management process, not the actual progress of the website’s construction—would be a wake-up call that would allow one or both of them to take over, or at least get more involved and bring in new leadership. But Lambrew—who at the time of the McKinsey report was part of the tangled process the consultants complained about because of her habit of sitting on business rules and design sketches sent to her for review—also brushed off McKinsey’s red flags. It was the typical consultants’ second guessing from the sidelines, she told colleagues. To the extent the McKinsey people were right, they had only identified problems that the Obama healthcare reform team was already working on. “Sure, there may be some glitches,” she told a senior White House communications staffer who had heard about the McKinsey report. “But that happens in all launches like this.”

  BAUCUS SEES A “TRAIN WRECK”

  Max Baucus was not as sanguine. His staff, which had kept in touch with Fowler when she had been at the White House and had its own lines of communication into HHS and CMS, had been telling Baucus that he ought to hold a hearing on the progress in implementing the law he had worked for more than two years to get passed.

  On April 17, 2013—about three weeks after the McKinsey report had been presented to CMS, the White House, and the Department of Health and Human Services—Baucus had Secretary Sebelius come up to Capitol Hill to testify before his Finance Committee.

  Baucus and his staff had heard nothing about the McKinsey report covering the problems associated with building the exchanges, and neither Sebelius nor anyone else in the Obama administration ever told them about it.

  The Finance Committee chairman was instead worried about whether people would embrace the new law by participating in the exchanges.

  “As you somewhat know, Madam Secretary,” he began, “I’m a bit Johnny One-Note on implementation of the law, especially with respect to signups and exchanges, et cetera, and am very concerned not enough is being done so far.… When I am home, small businesses have no idea what to do, what to expect. They don’t know what affordability rules are; they don’t know when penalties may apply.… People just don’t know a lot about it.”

  Then Baucus delivered this prediction: “I just tell you, I just see a huge train wreck coming down. You and I have discussed this many times, and I don’t see any results yet.”

  Sebelius countered that her agency was in the process of awarding hundreds of millions of dollars in grants, which Baucus’s law provided for, to community organizations that would deploy thousands of “navigators,” who would sit with people on the phone or in person and help them enroll.

  However, she conceded to Baucus that although it was now just six months from launch—and less than that before the navigators would have to be given background checks and trained—her agency was still in the process of releasing the Request for Proposals to which the community groups wanting to deploy navigators would have to respond, detailing their capabilities and how much they would charge. Which meant that Sebelius’s agency had no idea who or how many would respond, let alone what it would cost and how many they would be able to afford to deploy.

  “Do you have benchmarks,” the usually mild-mannered Baucus asked. “Do you have dates by which [a] certain number of people know what’s going on? I mean, all these polls, for example, show that we’re not making much headway,” he added, referring to polls consistently reporting that Americans had little idea of how the law worked. “Do you have a goal that [in] two months—or 30 days from now when that same poll is taken that that percentage is down by X percent, and 60 days from now it’s down by X—people know where to go and what to do?… You’ve never given me any data. You just give me concepts, frankly.”

  It got worse:

  SEBELIUS: While we do not have benchmarks for how many people know what, we don’t intend to do polling and testing in terms of what people know, we do have some very specific benchmarks around open enrollment and we have a campaign and a plan to lead up to open enrollment.

  BAUCUS: And what is it—the campaign and the plan?

  SEBELIUS: Well, Mr. Chairman, as we have discussed, there will be people on the ground starting this summer. There will be …

  BAUCUS: How many?

  SEBELIUS: I can’t tell you at this point.

  Baucus also said he was worried about the special exchanges being set up for small businesses to buy insurance for their employees (the provision that Olympia Snowe had insisted on). He had been told they might be delayed. Sebelius told him not to worry. “No, Sir, that is not accurate,” she testified. “The [small business exchanges] will be up and running in every market of the coun
try.”

  THE DATA WHIZ KIDS

  Sebelius did not mention one other weapon at her disposal in making Americans aware of Obamacare and getting them to enroll. Soon after the law was passed, much of the coalition that had secretly contributed to the group that funded ads supporting the law, and attacking vulnerable legislators who opposed it, had gotten together to start another organization whose donors would again remain secret.

  It was called Enroll America, and its purpose was to provide the resources that the House of Representatives, now controlled by Republicans, obviously would not provide to encourage people to sign up. The major insurers had chipped in, but the funding would be dominated by healthcare reform groups, such as the liberal Families USA, and foundations with interests in healthcare reform.

  Although Sebelius would later be attacked by Republicans for helping to solicit donors, including those in the healthcare industry whom she regulated, the purpose was avowedly nonpolitical—to make people aware of a new federal law and get them to participate in its benefits.

  In early 2013, Anne Filipic, a star Obama campaign field organizer now working in the political shop at the White House, had become president of Enroll America. For Filipic, who was thirty-one and had met her husband canvassing for Obama during the 2008 Iowa primary, Enroll America was the start of a new campaign: fund-raising, field organizing, targeting those most likely to be persuadable, and creating the messages and media necessary to do the job. Only this time, every “vote” really counted. It was not a matter of getting to 50 percent plus one.

  Going into 2013, the group had raised $5 million. In 2013, Filipic, as outwardly cheerful as she was intensely focused, would collect $27 million.