by Steven Brill
Now, I told my editors, I was curious about something else: Launching Obamacare, with its e-commerce insurance exchanges and thousands of other complexities, seemed like the most ambitious domestic government project since Medicare. In fact, it was going to be far more difficult, I pointed out, to pull off than Medicare. Medicare was about getting an identifiable subset of the population to sign up to get something for free. With Obamacare, people had to be sold on buying a confusing product and given exactly the correct subsidy to do so. Even those that didn’t buy—all adult Americans—would some-how have to prove that they had insurance, and employers would have to prove that they were providing it to their workers.
How were they going to do all of that?
So we had agreed that through the summer I would make multiple trips to Washington to look in on how this massive program and its core e-commerce website was being built. I even told my editors that based on the efficient, dedicated people I had seen at the CMS campus in Baltimore while reporting on the vetting and processing of Alan A.’s Medicare bills for the first article, this was likely to be an uplifting saga of unsung heroes. Whatever the political dysfunction in Washington, Obama’s managers and these civil servants were going to prove that big government could work.
The story would come out in late October, after what I thought would be a triumphant launch.
WHO’S IN CHARGE HERE?
As I was returning from my first round of interviews that plotline started to blur. On the train back to New York, I flipped through the notes I had taken while talking with eight people who were working on the project at the Department of Health and Human Services, CMS, and the White House. I saw that almost as an afterthought or conversation starter I had asked each who was the person in charge of the launch of the federal exchange. I hadn’t paid much attention to the answer, until I sat on the train reviewing the notes.
There were seven different answers:
Jeanne Lambrew at the White House;
Michelle Snyder, who ran CMS operations;
Gary Cohen, who ran CCIIO—the Center for Consumer Information and Insurance Oversight that had been demoted from being an office; he got two votes;
Marilyn Tavenner, the head of CMS;
Kathleen Sebelius, the HHS secretary;
Henry Chao, the deputy director of the CMS technology office;
And David Simas, who was overseeing the marketing and messaging of the launch from the White House communications office.
I also noticed that I had asked a spokesman for CMS, who was taking me around for interviews, who was in charge. Now I saw that he had said, “It’s kind of complicated.” Whereupon he had taken my notebook and drawn a diagram with four diagonal lines crossing one another and forming a kind of lopsided triangle. It was incomprehensible.
Finally, my notes reminded me that when I had asked one person at CMS if I could watch the October 1 launch from their control room or command center or whatever they were going to call it, she had responded, “Which one?” There were actually going to be four or five command or operations centers, she had explained: one for each of three CMS offices, another at HHS, and maybe another at the White House.
When I got home that night I told my wife that I was not so sure I was going to be able to write the launch saga I had sold the Time editors on. The launch looked like it had problems.
“THOUGHTFUL” IMPLEMENTATION
By then I also knew that on the evening of July 2, 2013, the Treasury Department had released a statement on its website headlined “Continuing to Implement the ACA in a Careful, Thoughtful Manner.”
The notice began by observing that the country’s private businesses were concerned about “the complexity of the requirements” related to the forms they would have to fill out to prove that they were providing adequate health insurance to their workers in order to avoid paying the penalty for not doing so.
That was an understatement. Everyone involved—employers, White House staffers, and people at the Treasury Department, the IRS, and the Labor Department—had been tied in knots trying to figure out how the names, Social Security numbers, hours worked, and details of insurance coverage for every American worker could be assembled and made to flow efficiently.
Therefore, according to the second paragraph of the website posting, Treasury was giving up, at least for now. “The Administration is announcing that it will provide an additional year before the ACA [Obamacare] mandatory employer and insurer reporting requirements begin,” the Treasury notice declared.
Despite having had three years and three months since the law was signed in that East Room ceremony, the Treasury Department had been unable to complete the paperwork to implement the widely attacked and hotly defended employer mandate. It was just too complicated to be put in place for the launch.
At the time, I had chuckled over the way Treasury had tried to spin the news with that “Careful, Thoughtful” headline.
But what I didn’t know was that this decision, too, was part of a larger story of turf fighting and a breakdown in coordination. I would later find out that Gary Cohen, the head of CMS’s CCIIO, who was one of the people I was told was “in charge,” did not know about the decision until about two hours before the Treasury Department website announcement.
That week, Bloomberg Businessweek had begun preparing a profile of Cohen, to be published in August, with the title “Hidden Hand: The Insurance Expert Behind Obamacare.” His job, the magazine would report, was “to make sure Obamacare doesn’t flop.”
Cohen certainly had enough people to help him. When he had taken the job little more than a year before, in June 2012, there were 30 people working at CCIIO. Now there were 370, many of whom were trying to iron out the details of the employer mandate—until they found out on the evening of July 2 that for now there would be no mandate.
Cohen’s boss, CMS chief Tavenner, was not told until two days before about the employer mandate being jettisoned, and only after the decision had been made by Lambrew at the White House, at the urging of the Treasury Department and with the unenthusiastic approval of the White House communications office.
When the Congressional Budget Office got news that the mandate had been dropped, it “scored” the loss of the penalties expected from enforcing it as costing the government $12 billion. It was not a game changer for a trillion-dollar program. However, it was real money, even in Washington—amounting, for example, to 150 percent of the annual FBI budget.
“WAY OFF TRACK AND GETTING WORSE”
Six days following the announcement that the employer mandate was being put aside, a series of panicked emails about a broader problem circulated through CMS.
Gary Cohen’s Center for Consumer Information and Insurance Oversight—the unit that had been demoted from an office but was still supposedly responsible for the coordination of everything on the website—had finally realized that the CMS technology group (the Office of Information Services) was not anywhere close to on schedule in building the website.
The July 8, 2013, email chain started with Jeffrey Grant, a staffer at Cohen’s CCIIO, emailing his immediate bosses. “We just got off an extended set of development planning meetings with OIS,” Grant wrote, referring to the CMS Office of Information Services, where deputy director Henry Chao was supposedly in charge of the website. “The upshot,” he continued,
is that the FM [the federal insurance exchange] build appears to be way off track and getting worse. We also were finally told that there are only 10 developers total working on the build for all functionality. Only one of these developers is at a high enough skill level to handle complex issue resolution, which now appears to be required for all aspects of our build.… We are one week out from production deployment, and we are being told already that it doesn’t work.… Due to coordination issues between CGI [the main contractor] and [another contractor] there has been no independent testing and CGI still cannot support user acceptance [consumer] testing, originally scheduled for e
arly June.
It was now July 8—less than three months before launch. Any commercial website of this complexity—certainly sites like Orbitz or Amazon, to which Obama and his team compared the coming exchange—would have long since locked down everything and begun rounds of user testing.
The email continued with a list of other woes. It concluded with this indictment of lead contractor CGI: “So, while OIS [the CMS information services office] has always said we had an independent team for [the exchange] development, they have never revealed the seriously substandard level of staffing that this team has. We believe that our entire build is in jeopardy.”
What was as revealing as the problems Grant’s email outlined was how, for all of its explosive meaning, it didn’t fly around the Internet the way juicy emails often do. More to the point, it didn’t even fly around the government, or for that matter within CMS, itself. It stayed in its Washington silo.
Grant sent the email to only two midlevel bosses in CCIIO, not even to Gary Cohen, the CCIIO head. (I’m pounding away on the acronym here to help you get the feel for the culture that produces these kinds of bureaucratic meltdowns.) The email was not sent to Henry Chao or anyone else at the division that the author was complaining about—Chao’s Office of Information Services. It was only after the email had been forwarded up the chain, at about 6 P.M., to two more levels of CCIIO people—but still never to CCIIO boss Cohen—that it was sent to Henry Chao for comment.
Chao’s response was immediate. He didn’t use it to raise questions about what was going on. Instead, he forwarded it to two of his deputies and to two people at CGI with only this request: “Can you get me a response on this to refute what Jeff [Grant, the original email’s author] is saying?”
To Chao, this was an opening salvo for a debate about the quality of his work, not an effort to identify and solve a problem. The Grant email needed to be refuted, not considered and acted upon to help ensure a successful launch of the country’s health insurance exchange.
By 10:15 the next morning, a CGI executive had responded to Chao and others in Chao’s office (but with no copies to anyone at CCIIO) that “I met with the FM [insurance exchange] team.… While I understand some of Jeff’s [Grant’s] concerns, there is a bigger picture around where we stand with FM and our plans to get the work done.” The CGI executive then outlined plans to add staff, though he said that the current staffing levels were “per the budget.” In Beltway contractor language that meant CGI was going to ask for more money than was in its original contract.
The CGI executive continued his rebuttal, writing that any “defects” were “being addressed,” while hinting that some of the features planned for the launch might have to be delayed: “We are working through program-wide priorities” was the code for that.
The CGI executive also wrote that “we still don’t have all the requirements” spelled out, meaning some of the business rules had still not been decided, and, he added, “we are facing some challenges where prior decisions are being re-opened.” In other words, any delays won’t be our fault.
The highest ranking official who saw that email chain was Chao. He never passed it up to his superiors at CMS. He never sent a reply back to Jeffrey Grant or anyone at CCIIO, which they could circulate to higher-ups. Instead, he called Grant and said that his team had looked into the issues he had raised and that this was all a matter of how, in the course of managing priorities, sometimes some aspects of a project would look like they were being neglected when they weren’t. Everything was under control.
The email chain was not shared with anyone at the White House—where Jeanne Lambrew and David Simas in the messaging shop had been “re-opening decisions” about some of the rules and about the look and feel of the planned e-commerce site.
ARE THEY GOING TO “CRASH THE PLANE”?
For all the assurances Chao gave the people in CMS outside his shop, he was hardly sanguine. On July 16, 2013, a week after he had received and seemingly accepted CGI’s rebuttal to Grant’s warning, Chao emailed key members of his staff about CGI, directing them to “convey just how low the confidence level” in CGI was at CMS. Chao told his staff to make clear to CGI how angry he was that the company had just made a “request for more money … when we constantly struggle to get a release done.”
But for Chao it was not really about the money. “I just need to feel more confident they are not going to crash the plane at take-off, regardless of price,” he concluded. “Just get that message conveyed.”
One of Chao’s staff members thought their usually calm boss was, he later told me, “starting to lose it. He was talking about a plane crash.”
Yet the next morning, when Chao and his boss, Marilyn Tavenner, testified on Capitol Hill before a House subcommittee about how the build was progressing, he didn’t seem worried about the plane crashing.
“As of this month, all the infrastructure and the required, you know, hardware, software capacity, all of that is available and up and running,” Chao calmly assured the subcommittee, though he added this qualifier: “The specific application software, such as … the enrollment and eligibility pieces, the loading of the [insurance plan] information to process an enrollment and a payment to an issuer, that is an ongoing process. All that code and those databases are still being built throughout the summer.”
“So both of you are testifying today that these shortfalls … are going to be 100 percent complete on October 1st,” one congressman asked.
“Correct,” said Chao.
“Yes, sir,” replied Tavenner. “We will start October 1, and we will certainly have hiccups along the way, and we are prepared to deal with this.”
“HIGH RISKS” AND “DEFECTS”
As Chao and Tavenner were testifying on July 17, a consulting firm called TurningPoint was delivering a brutally pessimistic report to CMS about the progress of the project. TurningPoint had been hired to issue a series of what is called “independent verification and validation reports,” which monitor whether the contractors working on a project are on schedule and on budget.
TurningPoint’s July 17 presentation delineated so many “high risks” and “defects” that the McKinsey consultants’ April report looked cheery by comparison. This was not just a critique, as McKinsey’s was, of disjointed management and foot dragging. TurningPoint also delved into all the technical specifics, such as whether the website was being built with enough capacity to handle anything close to the traffic and complex transactions it might generate. “The existing capacity planning is not adequate,” the auditors said. “The system’s capacity to support future growth cannot be verified.”
There were pages of red flags, in the form of reddened areas on grids, detailing all varieties of small and large technical shortcomings.
But Chao cannot be criticized for not telling Congress about TurningPoint’s warning. He didn’t know about it, he later testified at another congressional hearing.
TurningPoint’s reports were kept in a silo at CMS separate from Chao’s silo. The firm had been hired by Gary Cohen’s Center for Consumer Information and Insurance Oversight, not by Chao’s Office of Information Services. And by the time someone at CCIIO shared it with relatively low-level people at the Office of Information Services, those Office of Information Services staffers thought it was incorrect, dated, or otherwise not worth bumping up to Chao.
Nonetheless, on July 20, Chao was apparently worried about the assurances he had given Congress three days before. So he sent an email to his staff and to the team at CGI, to which he attached a C-SPAN video of his testimony. “I would like you [to] put yourself in my shoes standing before Congress,” he wrote, “which in essence is standing before the American public, and know that you speak the tongue of not necessarily just past truths but the truth that you will make happen, the truth that is a promise to the public that millions of people depend on for us to make happen.”
Although demonstrating that, as his colleagues had told me, he was not
a good communicator, it seems as if Chao was trying to rally his staff to make his testimony turn out to be true even if it was “not necessarily” true when he gave it.
Six days later, another flurry of internal emails at CMS warned that the small business exchanges were not going to be able to be launched in October. Like the employer mandate, they had to be thrown overboard. Those were the exchanges, meant to allow small business owners to buy insurance online for their employees, that HHS Secretary Sebelius in April had told a concerned Max Baucus would be up and running on schedule “in every market in the country.”
Meanwhile, at the White House, the only Obamacare news was good news. On July 18, 2013—the same day that a Treasury Department official was quoted, despite the looming trouble with the small business exchanges, promising that no other provisions of the law would be delayed the way the employer mandate had—President Obama was back in the East Room delivering a speech hailing the billions of dollars in insurance premiums that had been refunded to consumers because of the medical loss ratio rule. There was no particular news hook for the event; the 2012 rebates under the rule had been distributed months before. The president simply invited some of the families that had gotten rebates to a speech reminding America of what David Simas had long since identified as the most politically winning aspect of the law.
A CAMPAIGN REUNION
