OIG Lambasts HHS for Exchange Contracting Oversight

By September 17, 2015 Commentary

A health insurance exchange, where people can choose among various health plans with different benefit designs and price points, seems like an undeniably good idea.  So the inclusion in the federal health reform law of a federal exchange which the states could choose to use made sense.  But the bastardized, expensive approach taken to the creation of this exchange made no sense and a new report from the HHS Office of Inspector General verifies that the department was completely inept in its creation. Over half the states opted to use the federal exchange and its design defects and late arrival caused significant problems for consumers.  (OIG Report)  Note that the federal exchange still doesn’t have all the functionality that it is supposed to provide.  You might have a problem when, as the report states, you select 35 different contractors to build the exchange, you don’t use normal processes to ensure that they can do the job, you don’t properly oversee their work, and you ignore obvious shortcomings until it is too late.  This turned into the usual boondoogle for government IT contractors, most of whom have long records of failing to complete projects within budget and on time, partly because the government’s requirements are nonsensical to begin with.   An alternative might have been to just use and adapt one of the insurance exchanges which states had in operation before the reform law was enacted.

Among the most damning findings are a failure to specify, monitor and hold the contractors accountable for contract deliverables; increasing work and payments in an unauthorized manner, and a finding of conflict of interest in one case.  These shortfalls played a substantial role in the delays in availability of the exchange and caused huge cost overruns.  How any rational person can read this report and come to the conclusion that government is capable of effectively managing large-scale projects, especially IT projects, is beyond me.  This hubris behind so much of the reform law was one of my main concerns, and has been amply borne out over and over.   We all would be well-served by more humility from government personnel about their abilities.   And we all, well those of us who still pay any federal tax, bear the excessive costs of these bungled projects.

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