Private shame, public blame

December 10, 2013

The glitches that have dogged the government’s universal healthcare site have cast a dark shadow over the presidency and over the Democratic Party as they enter an election year when they could easily lose the Senate. The failure of anyone within the Obama administration to notice in the three long years of preparation that something was seriously amiss is an abject failure of management that has led to a self-inflicted political catastrophe.

The inept rollout has allowed the president’s enemies to claim that that is what comes of allowing the government to interfere in the healthcare market. Obamacare’s troubled birth is cited as irrefutable evidence that the public sector is particularly ill-fitted to deal with something as important as healthcare. Had the process been left to the private sector, they argue, the website would have worked and Americans been better served.

But hold on. Obamacare may be a government-run enterprise, but the profound errors in building the site were overwhelmingly due to the incompetence of the private sector.

This is not just an example of a public enterprise failing, but the government investing too much faith in the efficiency of the private company that failed to build and deliver an operating site in good time. In the interest of political point scoring, private sector inadequacies are being passed off as inherent faults of the public sector.

The Department of Health and Human Services was in the position familiar to any hapless client when faced with buying software or devising a website. Public servants provided a specification to established web designers, only to find themselves adrift on a sea of incomprehensible technical jargon, mendacity, foolhardiness and obfuscation.

The officials charged with keeping the wayward site on track may be excused for swallowing the reassurances of a fatally flawed firm that took the money but did not do the work. The company paid to construct was CGI Federal — hardly a hole-in-the-wall operation. It boasted revenues for fiscal year 2013 at $9.8 billion.

Nor was it a stranger to federal government contracts. Among other politically sensitive jobs it has won are the U.S. Nuclear Regulatory Commission and the World Anti-Doping Agency. (Under the circumstances, its nuclear regulation contract is particularly worrisome.) CGI was founded and is run by a Canadian, Serge Godin, who awarded himself compensation of $6,089,507 in 2011 and $4,456,927 last year.

Short-changing the federal government is not proving a good idea for Godin or other shareholders at CGI. Their ineptitude has led to their company’s shares being shorted.

This is a textbook case of the market punishing a sinner. If a company so conspicuously sells a customer a bad product, it will soon find itself with a falling share price as it runs out of suckers to sting. The punishment the market is meting out to Godin and his feckless employees should be welcomed by anyone who believes in the virtues of the free market.

Of course, anyone who has worked with new technology knows that nothing ever goes according to plan. Customers of Time Warner’s paid email service Roadrunner were likely cursing last week that they did not transfer to free Gmail years ago. My own email was not fixed even after I spent four hours over three days talking to 13 agents, mostly in broken Filipino-English, including three impotent supervisors. It took a plea to the Time Warner chairman to achieve that miracle. (I eventually discovered that the fault may have been due to either “migrating servers” or “latency issues” — or various other implausible and incomprehensible excuses.)

Anyone who has dealt with such an outage will recognize the Kafkaesque world into which Time Warner’s cable customers are drawn when anything goes wrong. It is the same when the TV disappears for no good reason. The victim is punished by waiting for hours on the line and obliged to listen to out-of-tune music until the foreign call-center agents — renamed with American names such as “Sharon” and “Hillary” to make them seem more American, but also given long identifying numbers like prisoners in a gulag — politely explain in fractured English that the problem is outside their ability to fix.

For many who live in apartment blocks, Time Warner is a monopoly utility supplier of cable TV and email. They, too, should be punished by the market for treating their customers with such cavalier abandon and contempt. Yet amid the Roadrunner fiasco no one is demanding the head on a platter of the chairman and chief executive officer Glenn A. Britt (compensation last year $17.4 million), nor the scalp of the head of Time Warner Jeff Bewkes (2012 compensation $25.89 million). The public sector, it seems, is held to a higher standard than the private sector, though we the people pay through the nose for both.

Such a spectacular failure to provide a humdrum service should cause politicians to shriek with rage that Americans are treated with such disdain.

But where are the Tea Party House members declaring that the failure of CGI to deliver a workable Obamacare website confirms their jaded view that the elites who run banks and big businesses are treated with kid gloves by the rest of Congress and the press? Where are the papers from conservative think-tank fellows arguing that when poorly run private companies go unpunished and leave their customers in the lurch, they are betraying the spirit of the market and undermining the belief that one of the wonders of capitalism is that it is self-correcting?

Instead, the failures of the Obamacare site have been blamed not on the company responsible but on the principle of universal healthcare. For now, those who think the 44 million Americans who cannot afford healthcare should be treated in the most expensive way possible — in hospital emergency rooms, while the rest of the nation picks up the tab — have had it all their own way. The site doesn’t work so Obamacare is evil.

If, as promised, the Affordable Care Act eventually does provide affordable care, that argument is going to seem like old news at election time in November. Like Benghazi and the president’s birth certificate, it is going to seem like re-warmed pizza.

Meanwhile, it would be good if those who trumpet the merits of commerce running everything show they are not mere shills by holding private companies to account when things go wrong and customers are short-changed. The Tea Party is on to something when charging that America is a corporatist state, which government and big business carve up for their own purposes and profit.

If one of the Republican presidential hopefuls tapped into this rich vein of truth, they would separate themselves from the pack — and arm themselves with an argument that would ring true with voters across the political spectrum.

Nicholas Wapshott is the author of Keynes Hayek: The Clash That Defined Modern Economics. Read extracts here. Follow Wapshott on Twitter @nwapshott.


PHOTO (TOP): A busy screen on the laptop of a Certified Application Counselor as he attempted to enroll an interested person for Affordable Care Act insurance, known as Obamacare, at the Borinquen Medical Center in Miami, Florida, October 2, 2013. REUTERS/Joe Skipper

PHOTO (INSERT 1): Health and Human Services Secretary Kathleen Sebelius takes her seat to testify before a House Energy and Commerce Committee hearing about complications with the Affordable Care Act enrollment website, on Capitol Hill in Washington, October 30, 2013. REUTERS/Jonathan Ernst

PHOTO (INSERT 2): (L-R) Cheryl Campbell, senior vice president of CGI Federal, Andrew Slavitt, executive vice president for Optum/QSSI, Lynn Spellecy, corporate counsel for Equifax Workforce Solutions and John Lau, program director for Serco, testifying at a House Energy and Commerce Committee hearing on the Affordable Care Act website on Capitol Hill in Washington, October 24, 2013. REUTERS/Jason Reed


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Private IT contractors are an enormous black hole of spending and waste. It’s a luxurious welfare program of hundred-million dollar ‘contract modifications’ and the products often don’t work right for years. And often, they don’t work at all, but the contractors always get paid anyway. “We’re very close. Just give us more money.”

Ask anyone who has hired outside IT consultants what their experience has been. Meetings, hand-holding and milk jobs.

Posted by AlkalineState | Report as abusive

The Obamacare debacle is due, in part, to the abysmal process of selection for private sector contractors. Certainly, if one looks as far as Canada, one can find a bumbling company with a history of screw ups, but one would do that only if one wanted to increase the odds of failure so that one could further champion a single-payer system. If that’s too conspiratorial, then just chalk up CGI’s selection as straight governmental idiocy.

Posted by dweedle | Report as abusive

You sir are a blithering idiot. The developers only do what they are told to do by the owners of the applications. This is a classic case of the “owners” either not knowing what they want or abdication on their part. Like most people, you believe the developer is responsible for all the decision making process. This is blatantly false. The owner of the application, in this case Sebelius, or Obama, failed miserably in defining the requirements for the application. This is a shabby attempt on the part of the media to absolve this miserable administration of all blame. Shame on you.

Posted by scratchgolfer | Report as abusive

this is merely an extension of John Lloyds article on corruption. “ and the implications of it says it all.

Posted by rikfre | Report as abusive

Mr. Wapshott should be a NASCAR driver; left, left, left, left, left….

Posted by tmc | Report as abusive

“But hold on. Obamacare may be a government-run enterprise, but the profound errors in building the site were overwhelmingly due to the incompetence of the private sector.”

This is a fundamentally dishonest assessment of what happened. The public sector companies were, in this case, not subject to a competitive bidding process. Worse, there’s the appearance of cronyism at work, as one of the board members of the company was a classmate and friend of Michelle Obama in college. After all, the company in question has a poor track record of success prior to being awarded this contract, which proper vetting would have revealed.

The selection process is the responsibility of the government, and as so-called failure of the private sector is ultimately the fault of the administration too, no matter how you spin it.

To go on and describe the HHS as ‘hapless’ as much as admits that its director deserves to lose her job. She failed to conduct even a minimal level of due diligence, instead probably operating on directives from the executive office.

Posted by Yashmak | Report as abusive

Single payer would have obviated the monstrosity that has been unleashed by Obamacare.

May the death spiral begin and collapse the private health insurance industry. Rent-seeking tapeworms, just like CGI and the like.

Posted by upstater | Report as abusive

I agree. Time for single payer. Just make the offer available: Medicare coverage for people under 65, now available for $300 per month. $50 co-pay.

If you can find a better deal somewhere else, take it. No one is forcing you to do this one.

Posted by AlkalineState | Report as abusive

CGI, a $9+ billion dollar private company screwed up the website, not the government. Saying the government didn’t go through the proper selection process doesn’t change that. American corporations have become notorious for their incompetence these days. It’s becoming the American corporate way.

I signed up on the website a few days ago. I waited until I heard the website was functioning – it was – so I had no problem at all. I’m thrilled to participate in the early rounds of the biggest change in America since Social Security. Single payer would have been better, but now I’m insured. I have the best of all worlds – a job I love and healthcare insurance. But I’m not tethered to the job. I’m free to make career choices without fear that I’ll lose my healthcare coverage. I have a family member who hates her job but can’t leave because she carries everyone on her insurance. Maybe now she can pursue a better job without compromising her family’s medical care. Hmmm, but she’s a Tea Party Republican. I’ll wager she’ll “convert”, maybe kicking and screaming, but she’ll convert.

Posted by JL4 | Report as abusive

For all of those hoping for failure so that we will get a single-payer system, you are delusional. If Obamacare fails or is de-funded, we will not see universal health care in the U.S. again for decades, if ever.

For tmc and Yashmak, the eternal nay-sayers at this site: yeah, let’s blame it on Michele, or Sibelius instead of the private sector. Anything to divert attention away from Free Market failures. And does tmc ever add any intellectual content to these discussions beyond senseless sh1t slinging and name calling?

Posted by Andvari | Report as abusive

Actually @Andvari, I blame both. The government employees try to manage something they don’t understand and have no skin in the game. Nothing matters to them. As you can see, no one can possible be fired. The private sector is also to blame as they understand how to play that game. They can easily manage the employees to gross levels of profits without having to actually deliver anything. Saving their resources for private sector work. So to me it’s 50-50.
But Mr. Wappshot? left, left, left, left…

Posted by tmc | Report as abusive

Yes, as a former IT systems analyst, it is and always has been the responsibility of the IT professional to be sure that he has clear specs and then develop and test to those requirements.

And, if anything interferes with his ability to deliver a quality product, it is his responsibility to put in writing to the client — and then work out a way forward.

None of that happened with CGI…

They just took the money and blamed the client for their ineptitude.

Posted by GeorgeBMac | Report as abusive

@GeorgeBMac, unless you are somehow privy to all project documentation, you don’t know that they didn’t in fact document it. I’m betting they did. But that will only come out in the full investigation that just started and will take a long, long time. If they did document it, the government investigators will still not blame the government employees unless it is a political investigation. If they did not document it, they still will likely not actually blame anyone. Why?
Because blame accomplishes nothing.

Posted by tmc | Report as abusive

I hesitate to call this bill Obamacare. It should be called DEMOCRAT care. It was rushed through with back door deals on a strictly partisan basis, by democrats with no republican participation. No one read it, and as Nancy Pelosi said – we had to pass the bill to find out what was in it. There will be no cost savings, the inadequate website is a harbinger of what is to come in actual healthcare. I hope the voters remember in 2014.

Posted by zotdoc | Report as abusive

The people in charge still have their jobs. Apparently people who little about producing and running a high volume website was put in charge of the department. They handed out bits and pieces of work but without main contractor responsible for whole and they did not take on that job. No coordination little over-site and no acceptance testing of each phase of the work. Acceptance tests of each phase planed at the beginning would have exposed problems even to non-expert.

They where bums as far as managering large projects and you know who appointed them and did not fire them.

Posted by Samrch | Report as abusive

Its all about leadership. Obamacare will be a diabacle cause of obama. What has he done? He has no accomplishments, nor experince in bringing it to the finish line. Only thing i see he has experince in is being a con man. Someone who does alot of talking and produces nothing.

As for the website. Why outsource this, we have the best and brightest working over in NSA. If they can subvert all the computers, im sure building a website would be child play. They are already on the payroll too.

Its all in the leadership, and obamas trademarks is chaos and confusion, thats the best place to lose accountablity and responsiblity.

Posted by ccharles | Report as abusive

Who vetted and hired these private contractors? The GOVERNMENT! Who was responsible for checking the progress of the website? The GOVERNMENT! Who dropped the ball? The GOVERNMENT!

No more excuses, please. We are really tired of hearing that it is always someone else’s fault.

Posted by AZreb | Report as abusive

The single greatest difference between Brother Wapshott’s hours of torture at the hands of Time Warner (and it sounds like Bridge on the River Kwai–without the good music)and the compulsory incompetence of Obamacare is that he chose his email service provider. If he wanted to handle his emails differently he could have contracted with a different provider. A sadder and wiser man, he can even now make other arrangements.

If Wappshott were required by law to use Time Warner and if he failed to so, the Internal Revenue Service would make him pay a fine,that’s the Obamacare model. The American people, unfortunately have no meaningful choice. As in Monte Python, all healthcare is spam.

If your ability to get medication or see a doctor was limited by regulations written by “Hilary” and “Sharon” speaking their broken “Filipino-English” that would be Obamacare–except the regulations would not yet be finished.

“Hilary” and “Sharon” probably earn a lot less than Kathleen Sebelius (and Nicholas Wapshott, for that matter!)and they apparently were a lot more honest with Nicholas about their inability to fix his problem than President Obama and Secretary Sebelius have been about fixing their healthcare computer system.

As a matter of fact, Nicholas sounds a bit like the ghost of old Col. Blimp when he derides the brown-skinned ladies who couldn’t meet his IT needs. If a “Tea Party Republican” had described his or her computer service problems with such negative stereotypes of women, Asians, low income, foreign born people with limited English, Nicholas Wapshott would be first in print with a biting column demanding an apology and observing that all “Tea Party Republicans” are natural racists.

It is the nature of Leftists to give all credit for good news to the political class and to scapegoat the Kulaks who don’t work in politics, government or media. And to overlook their own implicit prejudices on race, class, politics and culture.

I don’t think Nicholas is really a racist. But the more things change the more talking points don’t.

Posted by lordbaltimore | Report as abusive