We previously discussed the gross negligence exhibited in the Patient Protection and Affordable Care Act (or Obamacare) rollout and how there appeared little accountability for such failures even when they cost hundreds of millions.(For a column, click here). Now it turns out that, after costing the country a fortune due to this shoddy work, the IRS has reportedly awarded the company yet another contract to do work on . . . you guessed it, Obamacare.
So it was only in January 2014 that Administration insisted that it had dumped the company despite CGI Federal’s connections to fundraising for the Obama campaign and personal connection to the First Lady (Toni Townes-Whitley, a senior vice president at CGI Federal, was a Princeton classmate and friend of First Lady Michelle Obama). The IRS contract is worth $4.46 million and will expire in Aug. 15, 2015. At the time, Health and Human Services Secretary Kathleen Sebelius told Congress that the CGI-designed website a “debacle” and “I am as frustrated and angry as anyone with the flawed launch of HealthCare.gov.” As I stated earlier, I still am mystified how Sebelius was not fired. However, if CGI is any example, she can now hope to be made Vice President or better.
Now the Administration has awarded an IT contract for its new Obamacare tax program. Wouldn’t the greatest failure in a federal contract weighed slightly against the awarding of the contract?
That seemed to be an issue with Vermont and Massachusetts which dumped the company last year.
However, CGI’s 2014 annual report reportedly omits its role in the prior disastrous rollout.
There is no choice, no competition, and unfortunately no understanding of what is really going on. The only credible statement that can explain this is the “If it ain’t broke, why fix it?” one. That was the jingo used to support the US auto industry in the ’70s when instead of making better cars they just made more ‘choice’ of apcray. The misery of choice and a three year life span. Ah that new car smell. Ah that illusion of being taken care of, or simply taken.
Tom Nash
This is one study by an ‘actuary’ Milman
While it shows an approximate difference between private and public health insurance administration of 4 to 1, it does not take into consideration that Medicare and Medicaid programs are melded with the private sector. That is to say the system is paying twice for some parts of the coverage. A better comparison is one that compares a single payer system such as is found in the provinces of Canada, i.e. BCMED to that of the private sector in the US.
Table 1
Fiscal Year 2003 Administrative Cost
For Medicare and The Private Market (dollars in billions)
Medicare


i) Acquisition/Administration/Overhead Costs Reported

$5.168
ii) Acquisition/Administration/Overhead Costs Unreported

9.837
iii) Total of i, and ii
15.006
iv) Medicare Claims (benefits paid)
272.707
v) Sum of iii and iv
287.713
vi) Administrative Cost Percentage for Medicare
5.2%
Private Market
Expenses as a % of private market premiums (no commission, premium tax or profit)
8.9%
Total expenses including commission, premium tax and profit
16.7%
Table 2
Estimated Administrative Cost Under Medicare 1967-2025 Relative to Total Medicare Costs (dollars in billions)
1967
1985
2003
2010
2017
2025
i) Medicare estimated administration cost
$0.6
$5.4
$15.0
$18.2
$22.4
$28.4

ii) Total Medicare Payments

$3.2
$69.5
$272.7
$528.7
$911.9
$1,700.5
iv) Percentage (i)/i+ii)
17.0%
7.2%
5.2%
3.3%
2.4%
1.6%
Table 3
Estimated Private Market Expenses (percent of earned premium)


Market
(Profits)
Admin. without
Commission, Premium Tax and Profit
Commission
and Premium Tax
Total Admin



Individual
3.0%
12.5%
14.5%
30.0%


Small Group
2.0%
10.5%
10.5%
23.0%


Large Group
2.5%
8.0%
2.0%
12.5%


Composite Private
2.5%
8.9%
5.3%
16.7%
Pro Con founded 2004
I. Summary Chart of Administrative Costs: Medicare vs. Non-Government (Private) Health Insurance
Administrative costs as % of total expenses
Source of Information (in alphabetical order)
by Year Studied Medicare Non-Government Health Insurance
1. American Medical Association, 2005 3.1% 14.1%
2. California Medical Association, 2003-2004
a. Blue Cross of California (for-profit) 20.1%
b. PacifiCare of California (for-profit) 16.2%
c. Aetna Health Care of California (for-profit) 19.1%
d. Blue Shield of California (non-profit) 18.5%
e. Kaiser Foundation Health Plan (non-profit) 7.2%
3. Council for Affordable Health Insurance, 2006 5.2% 16.7%
4. Heritage Foundation, 2000 6.0% 11.4%
Heritage Foundation, 2005 5.8% 13.2%
5. New England Journal of Medicine, 2003 3.6% 11.7%
Total Average 4.7% 14.8%
Pro Con also has a graph that shows the per capita administrative cost in the US to be $412 per year and in Canada $77 per year. This is within the conservative 5 times to the liberal 8 times the difference.
However you cut it, the private insurance system in the US costs Americans billions of dollars each year that go to unnecessary jobs, CEO salaries, and shareholder profit, and of course to pay off the politicians that defend the private insurance industry.
You can google until the cows come home but the result will be more or less the same. We are getting screwed and paying for it.
Nick
So you prefer someone who eats an unhealthy diet to someone who eats a healthy diet? I am reminded of the SNL skits of the obese sports fans sitting around drinking beer and eating endless plates of meats. ‘Da Bears’ ‘Da Bulls’
‘Da Blackhawks’.
It also reminds me of Bob Dylan’s song where the candidate’s ‘eatin, bagels, he’s eatin chitlins, he’s eatin pizza, he’s eatin hot dogs. woah.’
I encourage interested readers to google “administrative costs of Medicare v. private insurance. There is an ongoing debate as to the true administrative costs.
Contrary to what was previously stated in a comment, there is not a unanimous consensus that Medicare administrative costs are lower than private insurance companies.
IF it is true that universal national health care has lower administrative costs, then there should be an attempt to estimate potential savings.
A comparison of the incomes of U.S. MDs v. Canadian, British, Australian,German , French, etc. MDs strongly suggests to me their lower per capita health care costs are not primarily the result of administrative savings.
There may indeed be potential savings from tort reform, lower administration costs, “re-importing” prescription drugs, etc. But government-set charges/reimbursement, at far lower amounts than in the U.S., seem to be the primary reason that the gvt. -run systems are less costly than ours.
Typifies the problem with government generally. You could say about butterfly ballot in 2000 election. Bottom line the problem is that it’s not the government’s money and they just don’t care and it shows all the time.
Bailers…naw, you clarified a gray area very concisely. One I failed to cite. Wish I would do so as well. My view, from my side of the table within DoD and federal acquisition generally, is that there are way to many agencies with integral contracting capabilities. FEMA (part of DHS) being the most recent egregious nonsense of creating a contracting authority, when both GSA and DLA, as well as USACE, have all the requisite authority and are not subject to pressure from within any given agency. Don’t get me started how DLA & GSA were ignored, in defiance of 48 CFR part 8, during recent administrations. For the record, my acquisition role, working outside of the Contracting Division, was as Technical Representative, even when not sponsoring a particular RFP/RFQ request. As I’ve said, I was very lucky to have a very rational and rule pedantic Chief of Contracting Division to deal with…a female executive I respected more than most of the men in similar positions. She forced me to abide the all of 48 CFR requirements….last thing I ever wanted was to have her raise an eyebrow at some suggestion of mine. She knew and I knew we had to both comply with 48 CFR. In effect, she forced me and the Operations people I represented to comply.
Aridog,
Thanks, I was on my phone and couldn’t type a long post. This type of thing will continue however until acquisition is given its proper attention and contracting staffs and technical representatives aren’t short shifted in manpower, training, and independence from other parts of the agency that have their own agenda.
Bailers .. your research reveals a feature most regular citizens are not aware of usually. The issue of ID/IQ contracts are based upon RFP’s and essentially procure nothing but the option to purchase something later. A release against an ID/IQ contract is not a new purchase, but as you’ve said, the exercising of an option. If you are right that no CPARS (Contractor Performance Assessment Reports) entry was made vis a vis CGI, that would explain how some official could ignore the reputation, intentionally would be my guess. These contractors with successive high level orders are part of the institutionalized structure of DC….back scratching is endemic.
Real, LOL! So, Obama is cutter? No, he is just an eloquent two bit Chicago corrupt politician in real nice suits who doesn’t eat Chicago hot dogs or pizza, but watercress and salmon.
This would be incredibly funny, if it wasn’t a constant pattern displayed almost daily by this Administration. At this point, I have a very difficult time taking anyone seriously that still tries to defend it. The cycle of destructive behavior constantly being defended could be compared to self harming, and I believe that is medically considered a mental disorder.
RFB
Paul,
The daily caller link isn’t working for me, but I only found one award to cgi federal on August 11,2014. It’s to exercise an option. If this is indeed the order they are taking about, it was awarded in 2013. TIRNO11D000120004 is the search term I used.
There may be another award, but this one is nothing.
For the record I took a quick look at FPDS, which is where all federal contracts are reported. Nite I do mean quick, but all I saw leads me to believe this was a large, multiple award IDIQ type contract with multiple vendors and each task is competed.
Not quite the scandal if my 30 second look is correct.
Bailers – scandals are not found by quick looks. 😉
There was likely never a CPARS (past performance reference) put in to the system. And if the HHS contract was terminated for convenience, there is no negative information that could prevent an award. Not to say there wasn’t done underhanded dealings, but this could be a feature rather than a big of the federal procurement process.
The continued problem is the centralization of procurement. DC is a revolving door for acquisition workforce professionals. There are GS-13/14’s with 5 years experience. Those with more leave for Booz-Allen or some similar company. This means you don’t have the best and brightest and most honest everywhere. You can usually tell who is looking for their next promotion and who is trying to do their job the best they can.
Aridog
Each country that has arrived at what appears to be a simple solution to this problem has gone through enormous struggle first. I would think that it is apparent by now that the first step is to mandate health insurance for all. Then expose the opportunistic actions of the private sector. Even with subsidies from the feds, the private sector has upped premiums. They are making tons of money.
Once the problem is identified alternatives can be surfaced. Perhaps Clinton will be able to propose and instal the next step. The feds can create a basic health care plan and offer it as an extension of medicare, while leaving the private sector intact. While the government refines their system the private sector can rant and rave about how this creates a lumpy playing field. This is the sort of dialogue that needs to happen. The industry will not go down without a fight, to the Supreme Court, media, Republicans, paid and pocketed elected officials, etc. However, if medicare was extended to all, it would create something to which all this so called competition can be compared.
A basic insurance tier depends on all citizens participating. The next step is to design the simplest and most efficient system of administering it. For example in the early days of HUD which was created to administer over 40,000 buildings that the federal government either subsidizes or owns and which provide homes for people not financially able to live in areas of high costs, the corruption and incompetence cost the government an estimated $60billion a year in waste. The Congress threatened to do away with it if it weren’t cleaned up. HUD created a real estate division REAC to inspect, monitor, and scrutinize the properties. This is done through the private sector using REAC protocol. Inspectors bid individually for the work. This uncovered abuse and fraud that has since been eliminated. In one case the government was paying for a building that wasn’t even there. The system can be made to work. However, just because it doesn’t at first, doesn’t mean it can’t eventually. Obama’s first move is simply that, a first move, the first of many. I don’t think he could have accomplished more given the circumstances.
Issac…thank you for the response to my questions. I am still doubtful about how we’d do this in the USA…but if working from scratch it could be possible. A huge amount, a giant huge amount, of institutionalized behavior in government would have to be excised. First step would be a normal annual budget, then appropriations that demand ranks be cut, from the top down, not the way it is done today. Then, sans clutter, we might find the creative genius to accomplish what you suggest….even with our far larger population and demographics. Your description sounds fairly flexible and that is a plus.
xyz … thanks for re-activating my migraine. Some things never seem to really change. Even under President Hope & Change…all blather, obviously.
List is long and Im sure even longer after 2 more years.
http://www.whiteoutpress.com/articles/q42012/list-of-goldman-sachs-employees-in-the-white-house/
December 4, 2012
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List of Goldman Sachs employees in the White House
Aridog
The systems in place throughout Canada and around the world vary from province to province and from country to country.
The systems in Canada are administered by each provence. That means one government agency administering the paperwork, payments, etc. That does not mean whether or not the system costs this or that much or with or without copays. The people of BC vote in governments who sometimes add on copays to balance the books. Sometimes they vote in a government that robs peter to pay for paul and do away with copays. This is the same in any country.
The only point I am making is that study after study shows that administrative costs in the US are many times higher due to the insurance end of the equation being privately run, for profit, and duplicated many, many times.
The particulars of the system will always be peculiar to the people who vote in the government that runs the system. For example, instead of 1,200 different insurance companies, 50, one for each state incorporating the administrative activities and cost into the state government, thus reducing the administrative costs. Or, groups of states such as the South East: Georgia, Florida, Alabama, etc could develop an administrative center. The hospitals and the rest of the actual medical equation would remain the same.
Each state or group would have to conform to a national oversight policy as do the provinces in Canada. For example, in 1982 a new government in BC wanted to raise the then existing copay from $5 to $35 to cover losses. By the way there are always losses, that are made up and then come back. This is because there is no profit. The federal gov in Ottawa, where the money comes from as it is added as a tax, did not go along and a compromise of $15 a visit was agreed. By the way money by taxes is no different than money paid to private insurance companies, only less.
A certain degree of ideology unique to the people can be expressed in how the system will work. In 1960 when first Saskatchewan and then the rest of the provinces established their health insurance systems, all the people on the right yelled communism and the end of private enterprise, horrible things to come, etc. The fact of the matter is that the system has been evolving along with the country and will continue to evolve. In times of social governments and fat budgets the medical insurance system paid out for everything from a two week stay to detox in a residence to no copays and visits to the doctor for stubbed toes. With rising costs and a more conservative government the budgets were tightened.
Right now in BC there is a conservative government that would make the Koch brothers squeal with joy. When they got in they tore up the teacher’s contracts, the nurse’s contracts and started negotiating all the gains made under the previous government. The Supreme Court ruled against the government but they did it anyway. However, no one worries about getting sick. No one pays a luxury car payment each month for medical insurance. It does not figure in the day to day worries of the average person. Should it?
Early on there was only the provincial system and no private clinics as an alternative. People voted out that idea and voted in a two tier system and private clinics. Now, if you wish, you can get, what is found in the US, the Cadillac system or you can stick with the basic. However, the basic is enough for most and vastly less costly. If you don’t want to wait you can go to a private clinic and pay their price and BCMED will reimburse their cost for the operation. For example, cataracts cost $2500 from a private clinic and can be done immediately. The cost is $1300 through BCMED so they will pay that much. You might have to wait through BCMED. Supplementary insurance means right away. You can deduct the difference $1200 which on a 33% tax rate means the end cost is $800 for a private clinic the next day. The $800 is typically the difference between like insurance policies in BC as compared to the US over less than three months.
The degree of choice in the provinces will probably change as the system is fine tuned. As in the US, polls are taken and politicians listen or they don’t get elected. Or, should I say as it is supposed to be in the US with its insurance lobby. There is no health insurance lobby in Canada as there is not private system of parasites.
Hopefully this dog’s breakfast of a system now in the US will evolve into what the people want after they have been given a choice and after they understand the possibilities.
Issac…you have referred to what I perceive as US Medicare cradle to grave…and THAT system has egregious co-payment requirements. A supplement is a necessity, not a luxury. If I misunderstand you, tell me. I am not talking about BCMED, only what I know and experience here in Detroit….with US Medicare. If your proposal is different, please explain it. The part about no co-pays that you’ve cited is interesting. Somehow I suspect the different populations and demographics of Canada may be critical, but I don’t know that. Here, with 300+ million folks and nearly half paying no taxes, I don’t see how we could manage what you suggest. If we could do better with a “socially based” system, tell me how. I am always interested in performance, with accomplishment, and the ACA is the opposite of that…all the negatives and few positives…positives that were and are available under an alternative system….that no one wants to discuss. So, I’ll listen….if what is proposed has a prayer of implementation in the USA. For the past 6 years we’ve not managed a single formal budget…so it beggars my mind how we’d step up from that to nirvana.
At this point, all that can be done is congressional oversight. Perhaps it can be stronger with both houses. More information about how money is spent. It means a lot of work, but smart for Republucans to find stupid spending. In 2016 more of the same, only easier with a White House.
Get rid of bonuses. Bonuses are used by marketing people as a way to reward hard working marketeers. Why a bonus for doing my jobl the government pays well, has good benefits year-round, so bonuses should be unnecessary. And again,,for what, doing your job? That’s called salary.
This is private sector philosophy. Why can’t government do that and save money?
Aridog
‘superflous facilities’ I used to live in the SF Bay area. I played squash on a regular basis with two guys, one a retired lawyer and ex Viet Nam Marine Colonel, the other a Psychiatrist. Both were on the boards of directors for three major hospitals in Oakland. We used to discuss this issue and they both agreed that a system as is found in Vancouver BC is no less caring but much less costly. Their input had to do with the duplication of potential. They had both recently been to Vancouver BC to study the BCMED system. One difference they noted was that the hospitals they dealt with in Oakland and the ones in Vancouver all had the same cutting edge equipment. However, the equipment in Vancouver was positioned to serve more than one hospital and was in use from 75 to 85 per cent of the time. The equipment in the three Oakland hospitals was typically in use 35 to 40 percent of the time. Each of the three Oakland hospitals were within sight of each other, each with different ownership, and each with sizable advertising budgets advertising on TV, Radio, and Paper to come to their hospital for the best treatment.
As for your dying under the system found in Vancouver BC, I think not. I am from BC originally and still maintain close connections there. I have never heard of the horror stories that circulate in the US. Here are two stories you might be interested in. My Dad, who is 95 and never came close to death due to BCMED, had a very mild stroke when he was in his late 80s. My Mom drove him to Victoria General and he was immediately taken into emergency and had all the necessary stuff attached to him and was stabilized and monitored. A specialist was there within a few minutes and when the tests came back told him that it was a very mild stroke, that very little damage if any had probably occurred, and that they would sort out what level of medication he would have to take and keep him in the hospital for observation. My Dad, who experienced WW2 in the North Atlantic, losing friends, blowing the sh*t out of Germans, etc was uncharacteristically a little shaken. After a week passed, I phoned the hospital and was patched in to the specialist. He said that it was nothing to worry about, but that my Dad was shook up. He said that when he started making a nuisance of himself they would throw him out. He was in for two weeks in a semi private room and made a lot of friends. When he had enough he left. Now, I have told this story to many Americans on every level of health policy. Most of them don’t believe me. They can’t believe that someone would get all that attention that long. These are doctors in the BC medical system making these decisions, not bean counters in a parasitical private for profit industry. He visits a doctor once a month to have his blood, among other things, monitored. He pays no copays, no extras, no hospital this or that, only his BCMED payments of a little over a hundred a month. He does have a little boost as he is a 35 year vet and had six years in theatre during WW2. Most of that stuff has nothing to do with medical, only retirement facilities.
Second story, my Mom, who passed at 89 contracted lymphoma at 84. She was treated as a queen for the three passes the cancer took at her. During her last few months she was slipping fast and it was coming up on Canadian Thanksgiving in October. She wanted to be at home for the day, so the system took her into hospital to build up her strength for ten/twelve days. She was brought home, passed Thanksgiving with family and friends and then shortly after went into hospice. I have never heard of this happening under private insurance.
All this is a combination of decades of fine tuning a socially based health care insurance industry that is not driven by profits. There may be a lot of waste in the government but there is no profit. The profit is given to the residents.
I have many more stories. There are a lot of stories about bad doctors etc as well. These stories are on both sides of the border. The bottom line is that health care does not have to be subject to a profit based paradigm. With its population, wealth, and money wasted in the present system, the US could only do better with a socially driven system.
In most of Canada and the rest of the countries there is a two tier system. I don’t know anyone who feels it necessary to purchase supplementary insurance although it does exist.
I have personal experience and as well understand the incentives that come from the private sector and the public sector. The medical professionals in Canada are private. They work much as they do in the US. The only difference is that the administrative part is less than a quarter the size and cost per capita.