Exactly Why the Exchanges Aren't Ready and Will Have So Many Flaws

A nice list from Megan McArdle at Bloomberg: 

1. They didn’t expect Republican opposition. 

Here is how Democrats mapped out the future in March 2010: Law passes on party-line vote, using slightly sketchy but hardly unprecedented parliamentary maneuver. Public gets excited about finally having affordable, easy-to-access, high-quality coverage. Obama, Democratic legislators, greeted with flowers when they attend public meetings in advance of midterms. All right, maybe that doesn’t happen, but the bill is growing more popular, and people are starting to ask uncomfortable questions of Republicans who didn’t vote for it, and besides, everyone hates Republicans. Hopefully 60-vote Senate majority is regained in 2010 midterms, but even if not, given the growing public support, Republican minority has to start cooperating with Democrats to fix all the weaknesses in the law, which, after all, was a draft bill that was never supposed to pass as-is.

Here’s what actually happened: Bill didn’t get more popular. Democrats who had voted for itwere punished at the polls, and they lost their House majority. Republicans who were enraged at the party-line vote and the procedural maneuvering repeated the smug brush-off they’d been given by the president: “Elections have consequences.” They refused to help Democrats repair the gaping holes in the bill, or appropriate extra money for the rollout.

2. The architects fundamentally misunderstood the difficulty of what they were proposing. 

Republican opposition hasn’t helped, obviously, but I don’t think they can take that much of the blame for the problems in the exchanges, because computer programming is not one of those things where adding lots of bodies solves the problem. Although more appropriations might have helped, they wouldn’t have solved the fundamental problem, which is that the people who were describing this amazing system seemed to think that if something could be easily described in English, it must not be that hard to do. I asked a couple of people who should have known how this was all going to work shortly after the bill had passed. They were quite certain that everything was under control -- of course there might be a few bugs on the first day, because that happens, but there would be no serious issues with the IT side.

This is a common tendency among even very smart people -- I once had the president of a German bank tell me that his voice recognition software obviously wasn’t working, because he wanted it to be like the computer on "Star Trek: The Next Generation." I had to gently explain that that "computer" was in fact an actor.

People tend to think that computers doing things they couldn’t do must be very smart and advanced, while computers doing things they can easily imagine -- like making a Travelocity-style website for health insurance -- must be basically pretty simple. After all, any clerk or insurance agent with the right security clearances could do basically what the exchanges were supposed to do, minus one shiny interface. So why would it take longer than three years? Startups build websites in a few months!

But as any developer will tell you, it’s more likely to be the opposite. Teaching a computer to calculate a ballistic trajectory, which is something that people have difficulty doing quickly, is pretty easy; that’s why NASA could launch the Apollo 13 missions with computers much less powerful than your laptop. But it’s really hard to teach a computer to recognize faces, which is something that you do instantly, hundreds of times a day, without thinking about it. Computers are incredibly specific -- every little thing has to be broken down for them just so. Moreover, when you’re trying to put different computers together, all those very specific instructions begin to clash. Suddenly you realize that one computer thinks that dogs are an example of “pets” and one computer thinks that dogs are an example of “animals” and how do you get them to talk about dogs without accidentally telling one computer that a crocodile is a pet?

What the exchanges were supposed to do was actually very, very hard. Unfortunately, if you’re not an IT project manager, it sounded very easy, because you could train a file clerk to do it in a few hours.

3. IT was not central to the process. 

There’s no cabinet-level IT position -- a mistake, in my view. When your processes depend heavily on information technology, your IT policy is your policy. Hedge funds get this, and corporations are starting to. But too many organizations don’t. They set goals and expectations without a voice in the room who can tell them what is realistic, and what isn’t.

4. All major IT implementations take longer than you think. 

Go back to the specificity: You don’t know how long something takes until you’ve broken it down into tiny little parts. As I saw one developer point out online recently, if you’ve done something a bunch of times, someone will already have automated that process. So big new jobs definitionally involve a sizable number of relatively novel problems, which means that you definitionally don’t really know how long it will take. Because people are biased toward optimism, the natural result is that most projects slip their deadlines.

5. They set an aggressive legal deadline. 

Politically, this made sense: They didn’t want to risk letting Republicans get into office and screw with their historic law. But that left them with no authority to set more realistic deadlines for the exchanges to go live. In a private-sector implementation, someone would have gone to the client last year and told them that they needed to push back a year, or more. For all I know, this did happen, but this was politically DOA.

6. They left development too late. 

It was crazy to let states wait until early 2013 to declare whether they’d run an exchange. It was a desperate play for political legitimacy that got them little and cost them much-needed time in the states. Decisions like this are why I say that IT did not have nearly enough of a seat at the table.

7. Government procurement rules are dumb. 

I’ve banged this drum before, but it’s a tune worth playing again: We are obsessed with the price of government contracts and the process of putting them out to bid, and we therefore ignore little things like the quality of the contractors, or getting things done in a timely fashion. In a system like this, where you’ve already set an unrealistic deadline that can’t really be changed, this is disastrous. We should trust our government agencies more, and then fire people who are caught hiring their brother-in-law at inflated prices.