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Standing Up the ACA Insurance Exchanges: Why a UK Firm?

07/16/2013 11:22 am ET | Updated Sep 15, 2013

Please don't revoke my globalization card nor do I mean to sound too jingoistic...nor is it that big a deal. But can't we pay a U.S. firm $1.2 billion to set up the insurance exchanges for the Affordable Care Act instead of a UK firm?

Certainly there are U.S. contractors who specialize in the kind of intake and evaluation that will be required to determine eligibility, subsidies, and so on of the folks who shop for coverage in the exchanges. In fact, a number of these companies are already working with the feds to get the exchanges up and running. And that apparently is the hitch:

In the last six months, federal health officials expressed concern that companies already working with exchanges could have an unfair competitive advantage because they had access to nonpublic information about how the government was setting up its eligibility and enrollment system.

I don't get it. Why is that a big deal? In fact, I think I'd want to architects of the exchanges to have such "inside" information; this isn't the stock market. Moreover, while the British firm that got the contract, Serco, has lots of experience with U.S. government contracts in defense, intelligence, and air traffic control, they lack experience in running insurance marketplaces.

Like I said, not a big deal that they're Brits -- Serco has an established American unit and of course they'll be hiring subcontractors here to do the work. But this took me back to my days of being a White House economist helping to implement the Recovery Act. Folks couldn't understand why under certain programs the U.S. government would buy materials like wind turbines from abroad, when we had such weak labor demand here, which of course was the target of the stimulus. And those folks had a point.

Again, this is different, since the work will be done by folks on our shores. Oh, and note that they're going to need to hire 1,500 workers to staff the project-so tell me again how the ACA is a job killer...

But I still think the administration should have given this contract to a U.S. firm.

This post originally appeared at Jared Bernstein's On The Economy blog.