by Steven Brill
On the afternoon of September 24, 2013, Cruz began what would be a twenty-one-hour-plus mock filibuster*17 calling for his fellow Americans, and especially fellow Republicans in the House and Senate, to resist funding Obamacare. There should be no budget in time for the October 1 start of the new budget year if there was any funding for Obamacare in it, Cruz declared. If the administration didn’t agree, the Republicans, using their House majority, should shut the government down. They should even refuse to extend the debt ceiling when that deadline came in mid-October.
In a talkathon that later devolved into the senator reading bedtime stories from the podium to his children at home in Texas, Cruz began by comparing the need to resist Obamacare to the British failure to resist the Nazis. “Look, we saw in Britain,” he said, “Neville Chamberlain, who told the British people, ‘Accept the Nazis. Yes, they’ll dominate the continent of Europe, but that’s not our problem. Let’s appease them. Why? Because it can’t be done. We can’t possibly stand against them.’ ”
Cruz railed against his fellow senators for not appreciating the risk that Obamacare would destroy healthcare for America’s families. Like Chamberlain, they, too, were not rising to the occasion. “If you’re concerned about the health care of you and your family and if you’re concerned about losing your health insurance and you ask what is the United States Senate doing, the answer is an empty chair,” he said, gesturing around the near-empty Senate chamber.
Cruz then lodged a more general complaint against his Senate colleagues who, he said, seemed more concerned with “cocktail parties in Washington, D.C.” than with their constituents. Referring to calls that he said were pouring in from around the country, begging legislators to resist and defund, Cruz noted, “It is apparently an imposition on some members of this body for their constituents to pick up the phone and ask for assistance.”
As I heard him say that, I picked up the phone and called Cruz’s local constituent service office in Houston. “Could someone there give me information about how to enroll in Obamacare?” I asked, when I was put on the phone with one of the senator’s case workers. “No. We don’t support the bill, and think it’s a bad idea,” I was told. “You should call the federal government’s or HHS’s 1-800 number or something like that.”
I wondered if they would have helped me get a passport if Cruz didn’t believe in the laws allowing foreign travel.
HIDING THE SUBSIDIES
Just as Cruz was picking up steam on the near-empty Senate floor, HHS secretary Kathleen Sebelius—along with Gary Cohen, the head of CCIIO, who was apparently the day’s choice to be the person in charge—was holding a telephone press conference to provide an overview of the insurance offerings that would be available the following week on the federal and state exchanges. They had good news to report.
The overall premiums were lower than the Congressional Budget Office had projected. And in most places, though with notable exceptions, there was likely to be a competitive market because multiple insurers had decided to participate.
Not mentioned, and, in fact, deflected by Cohen when a reporter asked about it, was whether the lower-than-anticipated premiums might be because the insurance companies were offering severely narrowed networks that would limit patients’ choices of doctors and hospitals.
What was also not mentioned was the best news: The way the federal subsidies worked in conjunction with these premiums made the actual cost to most consumers surprisingly low—because the taxpayers were picking up most of the tab. For example, in the Dallas–Fort Worth market, a twenty-seven-year-old with an income of $25,000 could get the second lowest priced silver plan for $145 a month and the lowest priced bronze plan for $74. For a family of four earning $50,000, the lowest priced bronze plan would cost $26 a month. In Mississippi, the same twenty-seven-year-old could get the lowest priced bronze plan for $8. Even in high-cost New York, a family of four earning $50,000 would pay just $282 for the second lowest priced silver plan and $131 for the bronze plan.
That was because the subsidies for these people were so costly—$661 a month for that New York family. But the Obama administration was still reluctant to emphasize that.
“THESE ARE OUR FRIENDS, OUR NEIGHBORS, OUR FAMILIES”
In Kentucky, Governor Beshear had no such worries. He was barnstorming his state, telling people that even if they didn’t like him or Obama, they would like what they saw when they went to kynect and found how little their insurance was going to cost because of the subsidies. “Just take a look on October 1. You’ll be surprised,” he said.
Steven Beshear was relishing the launch. Everything was locked down and ready to go. “We were ready to make history, to take a giant stride for the health of our people,” he later told me.
On September 10, 2013, the governor, his cabinet secretary Audrey Haynes, and exchange director Carrie Banahan sat at a table in the capitol and gave the press a detailed briefing about kynect. Every chart Banahan mounted on the easels was polished and compelling—the home page mock-up, a sample of the marketing literature, charts projecting the numbers of uninsured likely to get subsidies on the exchanges, and the larger numbers likely to be covered by the state’s Medicaid expansion. The most convincing displays were the ones showing how the federal subsidies would reduce costs for those above the poverty line who did not qualify for Medicaid. One sketch of a self-employed farming family earning $34,000 said they would pay $47 a month.
Beshear’s rationale for the whole enterprise was equally compelling, especially because he seemed so confident about it. In the reddest of red states, he and his team had anything but PTSD. He was pushing Obamacare because he knew, he said, that so many of his fellow Kentuckians “roll the dice every day.… They live knowing that bankruptcy is just one bad diagnosis away.… These are our friends, our neighbors, our families.… You sit in the bleachers with them at high school games.”
“HEALTH INSURANCE SHOULDN’T BE BRAIN SURGERY”
When I went to the Puck Building in lower Manhattan in late September to see how the Oscar people were doing with just days to go before launch, I found the same informal loft-like floor, except that, instead of the twenty or so early recruits I had seen earlier in the summer, it was now filled with thirty-seven people.
About a third looked like insurance and healthcare types. The rest were in jeans and T-shirts (plus the requisite hoodie or two), sitting at a long table tapping on keyboards.
There was a Ping-Pong table and a section where free soft drinks were dispensed.
The walls were lined with screens showing dashboards of website visits and incoming phone traffic, most likely coming from the ads Oscar had launched.
Oscar’s marketing firm had produced both online messages and outdoor billboards, which were concentrated in the trendy neighborhoods where the marketers assumed they would be seen by the young professionals—freelancers, coders, actors—whom they had targeted.
“Health insurance shouldn’t be brain surgery … unless you need brain surgery,” proclaimed one of my favorite pitches.
The website had been completed and was now taking inquiries from people who had seen the ads or gotten social media messages suggesting they have a look at this strange insurance company website. They would be contacted after the October 1 launch.
True to Kushner’s original idea, the look and language of the Oscar website—hioscar.com—was jarringly informal, almost as if taunting the Cignas and Aetnas of the world.
In alternating blue and pale green type (which echoed Kentucky’s friendly look, though with a hipster gloss) the home page announced: “Hello, New York, We’re Oscar, a new kind of health insurance company that is making insurance simple, intuitive and human. In other words, the kind of healthcare we want for ourselves.
“Your 24/7 doctor. Talk with our doctors for free,” the next page urged, explaining the telemedicine feature using a sketch of a doctor connected to a patient via a phone.
“Stay healthy with our free perks” t
opped the next page, above cartoon sketches of “free generic drugs” and a blond cartoon character in a doctor’s gown depicting “free doctor visits.” (A “few free primary care visits” were provided each year “so you don’t need to think twice about visiting your doctor.”)
As I spoke with Kushner and his partners, Kevin Nazemi and Mario Schlosser, a small white dog patrolled the floor. “That’s the Tumblr dog,” Nazemi said, explaining that the pet belonged to their CTO, who had worked at Tumblr, the micro-blogging and social networking website.
Looming on the far wall was the Oscar mission statement, also on an electronic screen: “Our way of life: We want to introduce people to the idea of great health insurance.… In a world where health insurance experiences can be inhuman, we’ve created one that isn’t.”
Everything was cool about the whole setup, except perhaps for the body odor that seemed to permeate the open space.
What was not so cool was that nobody who visited the New York State insurance exchange website to shop around would be aware of Oscar’s free telemedicine, generic drugs, or primary care visits. Under the rules, only the name of the company, the premium for each plan (bronze, silver, gold, platinum), and the deductible would be visible on the state exchange page summarizing all of the competing offerings. Only when a shopper clicked through to the Oscar pages would those features be displayed.
The state’s summary page would also display an overall quality rating for the providers in each insurer’s network. For most insurers it was a meaningless measure, based on surveys of hospitals and doctors. It almost always yielded the same “+” for every company. However, because Oscar was a new insurance company, it would get an “NA” for not available, even though all the providers in its network had been in business for a long time and were essentially the same providers that were in the competitors’ networks.
Fortunately for the Oscar team, Oscar’s premiums had ended up being at least the third or fourth lowest in every category, which meant Oscar would be visible at or near the middle of the front page, where the companies were arranged in ascending order of their premium charges.*18 According to consumer surveys, premiums were typically the most decisive factor for shoppers, even if deductibles and other dynamics might be more indicative of what was actually the best bargain.
On the other hand, unlike most of its eight competitors, Oscar would enter the competition with a name that no one knew, and with that NA for quality.
Kushner’s business plan had projected that 7,500 people would sign up by the time the October 1 launch enrollment period ended on March 31, 2014. Oscar would need a lot of word of mouth, propelled by those ads and the distribution of its literature in targeted neighborhoods, to get that many people to click through and buy.
Still, as a crew of new customer service call center people were being tested with mock questions (“I’m thirty-two. Why do I need this?”) in a glass-enclosed room off to the side, Kushner and his partners were pumped.
They thought they had cracked the code. That they understood the numbers. That their outsourced telemedicine doctors would not create a budget hole. That they would kill the competition with what they could save by crunching the data and avoiding their competitors’ last-century paperwork and infrastructure. And that they had created the look and feel and messaging that could break through. For them, this really might be another “disruptive” high-tech home run.
They couldn’t wait for next week’s launch.
“WE’RE GONNA KNOCK YOUR SOCKS OFF”
At 10:51 A.M. on Thursday, September 26, 2013, Henry Chao sent a memo to colleagues around CMS reporting that “it looks like the bar” for traffic—the maximum traffic the exchange could handle—“is set at 10k concurrent users.” That was the amount that another unit of CMS had found that Kentucky could handle.
Worse, it was not clear why Chao thought the bar was set even that high. About an hour earlier he had received an email from one of his deputies stating that the only testing done so far had been for five hundred concurrent users.
On the morning of Sunday, September 29, a worried Todd Park emailed Chao, with a copy to CMS operations chief Michelle Snyder, asking if “the team” had run various kinds of performance and capacity tests. He got no answer before the launch.
Meanwhile, President Obama and his White House aides had begun to lower expectations. However, they were still focused on how many people would enroll, not whether they would be able to. So in background briefings they emphasized that October 1 was simply the beginning of a six-month enrollment window and that in Massachusetts most people had waited until near the end of that state’s sign-up period before enrolling.
October 1 was not Election Day; it was the beginning of a campaign, they explained, without dwelling on whether the voting machines were going to work.
On Monday, September 30, Obama told NPR, “I would suspect that there will be glitches.… When Massachusetts, just one state, set this up, it took quite a long time. It took several months before everything was smoothed out.”
The president was not trying to underplay what he suspected would be a disaster. He was clueless, not deceptive. He really thought there might be glitches, but that they would be minor. That is what his senior staff told him. There would be some hiccups, but this was really going to work. People would come to the site, sign up, and all the bitter politics would be in the past. Just like Social Security and Medicare.
White House chief of staff Denis McDonough had a friend who had been pestering him with calls in September. The friend warned the chief of staff that his insurance industry contacts thought the exchange wasn’t even close to being ready. One had even told McDonough’s friend that his company was thinking of pulling out to avoid being involved in what was going to be a fiasco. “My people say he’s overreacting to some last-minute problems,” McDonough had assured his friend.
Now, on the evening of September 30, just hours before the launch, McDonough called the same friend. “Based on the reports I’m getting I think we’re gonna knock your socks off tomorrow,” he promised.
* * *
*17. Under Senate rules, it was not actually a filibuster because the speech was required to end at 1 P.M. the next day.
*18. Under the rules for the New York State exchange, as well as other exchanges, insurers set their rates without knowing the rates of their competitors and could not change them for a year once they were set.
CHAPTER 20
THE CRASH
October 1–3, 2013
A FEW MINUTES AFTER MIDNIGHT ON THE MORNING OF OCTOBER 1, 2013, CMS administrator Marilyn Tavenner was sitting by the phone in her apartment watching television. She was nervous. She had told her staff to call her as soon as the website was up so she could check it out.
Now she called into the office to find out what the problem was. Why hadn’t anyone called her?
“No problems,” one of her deputies said. “We just wanted to watch it for a while before we called you. It’s fine.” Tavenner smiled, then went to sleep.
At the shack in Frankfort, Kentucky, Carrie Banahan had organized a full-staff celebration to mark the launch. She and her fellow Kentuckians were used to the fireworks show, called Thunder Over Louisville, that the Kentucky Derby puts on to kick off the week of celebrations around the big race. Fireworks were too dangerous for the low-ceilinged shack, so Banahan had arranged for a room full of Bubble Wrap—the kind used to protect fragile goods when they are shipped.
At 12:01 she popped the first bottle of champagne, and flipped the switch on kynect.ky.gov. Everyone stomped on the Bubble Wrap. Thunder Over Kynect.
A “BITTERSWEET” MORNING
The first challenge at the Department of Health and Human Services and its CMS unit later that morning had to do only indirectly with Obamacare. True to Ted Cruz’s promise, Republicans had refused to pass a budget unless Obamacare was defunded. They were also threatening not to pass an increase in the debt ceiling.
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p; Opposition to Obamacare had shut down the government, and seemed on its way to causing a more calamitous default on the national debt.
More immediately, this meant that the first job for the senior staff at HHS and CMS wasn’t to worry about traffic or enrollment at their new website, but to figure out which “nonessential” employees they had to send home because they could not be paid.
Beyond the most senior people, the definition of who was “essential” depended largely on what budget bucket they were in. That meant hundreds of people who had worked on Obamacare had to leave the building as it was launched.
“It was so bittersweet,” recalled Chiquita Brooks-LaSure, a veteran healthcare reform advocate who was one of Gary Cohen’s deputies at CCIIO. “We were finally giving people coverage in this country. But now we were sending our colleagues home who had helped make it happen.” Even Mandy Cohen, a highly regarded physician who was overseeing policy and communications with the non-insurance healthcare community, had to be furloughed.
At his Bethesda, Maryland, office, Gary Cohen had planned a morning celebration for his 370 CCIIO staff members. The festivities were scrapped. Instead Cohen had to furlough about 40 percent of his people, before driving into Washington to join Tavenner.
At about 8 A.M., Tavenner met with senior staffers, including Brooks-LaSure and Julie Bataille, who ran the CMS press relations shop. Bataille reported that there was no news of any import yet from Gary Cohen’s CCIIO command center in Bethesda, Maryland, the command center run by CMS Office of Operations head Michelle Snyder in Baltimore, or the tech command center overseen by Henry Chao and housed at an office rented by contractor CGI in Herndon, Virginia. Everything seemed to be working, but they had no enrollment numbers.