Sunday, November 4, 2012

Rent-seeking in ObamaCare...


... a bug or a feature?

In channelling Nancy Pelosi, we are finding that the more we know about ObamaCare the more we are finding the massive public-private nature and complexity of the law makes it look less like an entity that will improve the healthcare delivery to the individual and more like a publicly-funded trough around which large corporations, lobbyists and the politically-connected will slop.

From The Hill's Healthwatch:

The Obama administration is relying heavily on outside contractors to implement a core component of healthcare reform as it races to set up a federal health insurance marketplace before 2014.

The fast-approaching deadline gives the administration little time to scrutinize private-sector partners for conflicts of interest.

The purchase of one of these contractors, Quality Software Services, Inc. (QSSI), by UnitedHealth Group, a major healthcare conglomerate, has sparked concerns about a potentially uneven playing field.
QSSI, a Maryland-based contractor, in January won a large contract to build a federal data services hub to help run the complex federal health insurance exchange.

It will be working with several other contractors, including CGI Federal, Inc., to create the technological architecture for the exchange.

The quiet nature of the transaction, which was not disclosed to the Securities and Exchange Commission (SEC), has fueled suspicion among industry insiders that UnitedHealth Group may be gaining an advantage for its subsidiary, UnitedHealthcare.

Naturally, Secretary of Health and Human Services, Kathleen Sebelius, who will oversea the set-up of these exchanges, has blown off formal requests from Congress to explain this apparent conflict of interest.

And being a little more than a year away from full implementation of ObamaCare, there is still no real clarity as to the requirements for health insurers wishing to enter the exchanges.

For insurance plans to reach millions of potential customers who will purchase insurance through a federal exchange, companies must meet federal requirements to be listed though the exchange. Billions of dollars in business will hinge on plans meeting those standards, but the process for deciding what plans pass muster is not clear.

HHS claims the final regulations will present a bright-line test for health plans, leaving contractors no room to judge them.

And what of potential conflicts of interest and unlevel playing fields:

If an insurance company had influence over the information technology architecture used to run the exchange, it could interpret federal standards in a way to exclude competitors or make it more difficult for them to win approval, say some insurance experts. Or it could have an inside track on knowing how to design plans that meet the standards.

Industry insiders, including sources not affiliated with competitors of United Healthcare, say the purchase of the contractor tasked with setting up the information technology architecture poses the appearance of conflicting interests. The officials would only talk on background because of the sensitivity of the issue so close to the presidential election.

One critic familiar with the business rivalries of the insurance industry compared UnitedHealth Group’s purchase of QSSI to the New York Yankees hiring the American League’s umpires.

The article is a lengthy one and we'll break off our analysis here but you can read the rest of it at the link.

Again, what we are seeing out of ObamaCare before it is even fully implemented is more and more rent-seeking that will serve to line the pockets of the largest health insurance providers who will be able to game the system and the cronies and politically-connected who will be contracted to administer and oversee the ObamaCare exchanges.



Anonymous said...

That's why we needed to pass we can see what's in it!


Doo Doo Econ said...

Knowledge is power. No, power is power. ObamaCare is all about power.