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Obamacare: Mismanagement, But Messed Up Politics Too

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There is no question that the roll-out of healthcare.gov, the Affordable Care Act (ACA) enrollment website, has been a management disaster. The president agrees. The Administration had three-and-a-half years to get it right, and they got it wrong.

To some this is evidence that the federal government just can't manage big projects - this, and some of the ACA's unanticipated (at least to most) side effects, like canceling policies people liked and thought they could keep. Some critics go even further, arguing that mismanagement of the ACA demonstrates that liberalism has had its day at the national level and failed. Is it time to acknowledge that complex problems just cannot be handled by the federal government?

This seems hasty. After all, the federal government has managed complex programs well and continues to do so. Social Security and Medicare are two examples, but we need not stop there. From national defense to food safety, from air traffic control to biomedical research, from disaster response to contagious disease control and prevention, from cleaning up the water and air to space exploration, the federal government manages a wide range of very complex undertakings - and does so pretty well.

Sure, you can find mistakes, but that is also true for large private organizations. Just ask the auto industry and big banks. Sure you can find cases of fraud, though many if not most of those are the acts of criminals not civil servants. But if Americans were convinced that the federal government could not manage complex programs, they wouldn't howl at the thought of losing them and would have cared a lot less when the government shut down.

To be sure, complexity brings its problems, and the ACA is complex. Yet we should keep in mind that this complexity emerged to some degree from politics. It was designed in not so much to make the ACA work well as to get it passed. Members of Congress and a "Who's Who" of interest groups and lobbyists demanded accommodations. Simplicity (e.g. a national program with a single-payer system) was lost in the process.

Politics also resulted in provisions that seem to fly in the face of what we know of human nature. For example, the assumption that each state would set up a health care exchange, even though red state governors and legislatures strongly objected, proved wildly optimistic. That certainly magnified the number of states (and people) that healthcare.gov had to serve. Consider also the assumption that uninsured, young, and healthy individuals will buy insurance. We'll see on that one. Since the penalty for not doing so is only one percent of household income (rising to 2.5 percent by 2016) or $95 (whichever is larger), we may find many young people waiting until they get sick because they cannot, at that point, be denied insurance. Or consider what a small business owner will do about hiring more than fifty workers, since that is the magic number after which health care must be provided to workers. We are already seeing businesses capping part-time work at 29 hours since at 30, they have to provide health care coverage.

Laws which fudge the human nature factor for the sake of gaining political support will usually extract a later price. When the Framers adopted the Constitution, they were, to the contrary, quite clear about human nature and designed a system that took the self-interested nature of people into account. The part of human nature they ignored, when they condoned enslaving others, did come back to extract its very heavy price.

The ACA may turn out to work reasonably well. It is too early to tell. There are clearly positive features that will have long-term benefits (e.g. preventive care, coverage of pre-existing conditions, electronic medical records, incentives to pay for quality not just quantity of care). But it will be plagued in the near future with "mismanagement." We should remember, however, that much of that cannot be laid solely at the feet of the Executive Branch.

An analogy may also be useful. Imagine you are the CEO of a large global company and your Board of Directors approved - but just narrowly and after heated argument - a new product line you proposed. Now imagine that the Board members who lost the fight take every opportunity to speak against it, even encouraging regional sites of the company to ignore directions from you on the product rollout. Imagine even further that some shareholders, encouraged by opponents on the Board, file multiple lawsuits challenging your actions and that some regional managers, who side with the Board opponents, refuse to sell the new product or, even worse, tell potential customers that it's shoddy and not worth their money. Finally, imagine that you can't fire any of these people. In such a circumstance, effective management becomes a lot harder.

There are many lessons to be learned from the passage and implementation of the ACA. At least one is that fractured politics makes for fuzzy lawmaking and frustrating implementation. We should also remember that laws that ignore what we know about human nature set themselves up for problems. The Obama Administration is no doubt learning such lessons. But Republicans, who are gleefully calling attention to every fault of the ACA, should pay attention too. With a turn of the wheel, they will have their own chance at the helm - and their own chance to manage in the federal government.