Saving Connect for Health Colorado

Coloradoans are at an observation point in the development of Connect for Health Colorado, the state’s health exchange. Some hard decisions have to be made.

Colorado’s health exchange was breathed into existence by enabling legislation from the Colorado Legislature and almost unlimited federal funding. It was not an entrepreneurial adventure like Apple, Microsoft, Facebook or Google. The intent was to establish a nonprofit, Internet-based marketplace where individuals, families and small businesses could compare health insurance products and qualify for subsidies provided by the Affordable Care Act.

 It is an understatement to say that the past three years have been a roller-coaster ride. Partisan bickering resulted in the exchange being created with a one-vote margin. It remains a target for partisans who want Obamacare repealed.

At least one manager hired to start up the exchange was asked to leave because of wrong-doing with regards to spending federal funds. The organization was slammed by a performance audit that suggests senior management lacked discipline and control. All-in-all, the top tier of managers recently headed for greener pastures.

 The computer systems funded by the exchange have cost tens of millions of dollars but barely function.They are bug-ridden and even after a major rewrite this past year, are unstable and dysfunctional. The interface between  Colorado’s Medicaid PEAK System is problematic and lacks good design.

More troubling, Connect for Health appears to be in a co-dependent relationship with its vendor, CGI, which has it by the short hairs with regards to licensing and maintenance. This mirrors the relationship Colorado Medicaid has had with Deloitte for many years. Design-build consultants have taken out millions of dollars in fees and left a debris field.

 With hindsight, all of this could have been predicted. If you put hundreds of millions of dollars on the table, it is no surprise when pirates show up to steal the loot. Colorado Medicaid and Connect for Health have been so abused by those who should have been their loyal agents that now they cannot function on their own. It would be Greek tragedy if it was not such a comedic farce.

 Connect for Health’s board holds the organization’s fate in its hands. It needs a new CEO, but it is unclear whether the board has the wherewithal to bring in someone with the deep skills to get the job done. The first time around they hired a celebrity glam who lacked a track record of systems development and acted like a purchasing agent doling out federal dollars. Irrespective of the previous CEO’s skills, she was obviously not morally or ethically committed to Connect for Health’s long-term vision.

It is now time to shake the Etch-A-Sketch and start afresh at Connect for Health Colorado. We need to view the departure of Fontneau’s Possee as a blessing in disguise. The clean-sweep now allows the board to put in place a stage 2 management team to advance the organization’s cause. We shouldn’t let the door hit the old gang on the butt as they take their potted plants out to their BMWs.

I caution everyone that, if the board bungles the hiring of a new team, all will be lost. Colorado will be denied the ability to use affordable health care as a magnet to attract the next generation of start-ups. An immense amount is at stake. The organization is destined to be the lengthened shadow of this new group of managers. 

The second major step to be taken in turning around the organization is the technology platform. When you look at organizations such as UPS, Federal Express, Hertz and Amazon, you see organizations that have developed technology to a high level over several years to a point where it is truly a force-multiplier in their competitive efforts.

I am reminded of how Steve Jobs was obsessed with the smallest details of how a product was designed. He knew that success required beautiful design and perfect function. This cannot be done using outside contractors. It must be done in-house. Only then can it be farmed out to contractors willing to meet specifications. Firms like CGI and Deloitte use their clients as a farm club to groom their staff. They have a food chain of partners who arbitrage labor so they can pay their country club dues.

The imperative for Connect for Health is to do two really big, difficult things. First, it must bring essential design functions in-house and insure that people with the requisite skills will get the job done. Second, it needs to smash, break and shatter the co-dependent relationships that have been groomed with outside third parties.

 I would suggest making the software open-systems using a creative commons approach. Connect for Health needs to move rapidly to form a consortium among other states, all of whom have the same problem.They simply must remove the software from the clutches of vendors who are shaking them down.

We are on the cusp of a major movement toward private exchanges and eventually other states will want to establish exchanges.This calls for open systems. 

One dimension of Connect for Health’s problem is political. I would remind everyone that the reason the federal government had to intervene in the Colorado health care marketplace was because state government failed to act. The last time any meaningful health policy initiatives took place was back in the 1980s when Richard Lamm was governor. Neither Roy Romer, Bill Owens, Bill Ritter or Gov. Hickenlooper did anything more than study the problem using blue ribbon committees. The legislature has treated Medicaid’s federal matching monies as a perverse form of economic development. The insurance companies have co-opted the political process. It has been an insult to representative democracy.

The Colorado Legislature can now act by moving briskly to force the insurance commissioner to allow association health plans, cooperatives and multi-employer health plans to form with reasonable regulations in place. Federal ERISA law and the ACA already provide for such entities. But, it is the legislature that must provide a level playing field in defiance of the vested interests of the large insurance company oligopolies. Right now the seven largest insurance companies represent a franchised oligopoly. While there are hundreds of small insurance companies licensed to sell health insurance, there is no real competition because of the dominance of a few large insurers.

 At present Connect for Health does not have a viable business model to sustain itself. It is not funded beyond this year; it is effectively the indentured servant of the insurance industry. The legislature is the only entity that can come up with a funding formula. Some sort of value-added fee along with a benefits guarantee fund should be created. It is simply outrageous to require start-up competitors to provide reserves on a par with established insurers when reserve requirements are not based on real risk. Self-insured employers require no reserves, they simply use reinsurance. Government’s job is to invigorate competition and innovation, not conspire with well-heeled oligopolies to choke the market.

 Much work needs to be done within and outside Connect for Health Colorado to achieve the original intention of bringing more affordable health care to the 750,000 uninsured Coloradoans and the 400,000 small businesses in the state.

So far, Connect for Health has satisfied about 20 percent of the need, which is not bad for the first year of its operation. But, 80 percent is yet to be accomplished and the hard slog through the swamp lies ahead.

All of us will benefit by putting our shoulder to the wheel and assisting Connect for Health Colorado in their efforts to survive and thrive.

Turning point in health care

Between the end of World War II and the enactment of Medicare in 1965, the U.S. was focused on building its hospital infrastructure under the Hill-Burton Act of 1946.  The year 1965 is almost an A.D./B.C. divide because after that year, the focus shifted to providing access to specific population groups. These groups included the elderly(Medicare), the poor(Medicaid) and trade union membership and corporate employees(ERISA). The Affordable Care Act is merely an encore presentation to include uninsured individuals and small groups.
During the 1970s the U.S. began experiencing a round of severe hyper-inflation. After Ronald Regan was elected president in 1980 two key health policy strategies were devised to introduce prospective fee schedules and institutionalize the health maintenance organization as an ideal model. As a result, the American health care system has experienced a cascade of unintended consequences.
During the past 70 years we have witnessed health care grow from less than 4% of our GDP to nearly 20%. Early in the period only 3% of our workforce was employed  in health care. Today, nearly 17% of our labor force are health care workers. Because health care is largely societal overhead and non-exportable we are horrified as the health sector threatens to destroy our nation’s wealth creating ability and dispossess us all before we die.
      In spite of public policies which encouraged managed care, who has emerged as the truly outstanding health care system in terms of total value? There is little doubt that on the quality side, the Mao Clinic and Cleveland Clinic are renowned for their high quality. Kaiser Permanente consistently gets cited for its high quality in California for the Medicare population. Despite the appearance of quality almost no American health delivery system has proven to be cost efficient.
A crude examination of Kaiser Permanente, for example, illustrates my point. Nearly 20% of its employees are doctors and nurses. These are the primary hands-on providers of care. Most of the rest of Kaiser’s 100,000 plus employees are staff, clerical and support. Kaiser’s premiums are competitive with its peers, but no quality health care organization has been able to experiencing positive cost curves that you would expect from organizations achieving year in-and-out efficiencies.
During the industrial age virtually all products have had positive cost curves during their life cycles. Costs invariably start out high but as these organizations scale up the per unit cost of the product declines. Henry Ford’s first automobile was over $800, but by 1927 he had driven the cost down to a little over $200 a car. Ditto for household appliances, computers, cell phones, production homes and every aspect of our life. This is due to “learning curve phenomena” whereby producers figure out how to become more efficient over time but still manage to produce high quality. So, why is it that health care costs have defied economic laws of gravity?
      The answer is actually quite simple. Health care policy initiatives designed to increase access removed most of the disciplining forces of the marketplace through an over-reliance on subsidy and tax preferences. The consumer became insulated from the realities of the market. This coupled with the prevalence of insurance ignited round-after-round of inflation.
Hospitals, doctors and other providers have not been forced to achieve optimal micro-economics within their firms. Health providers rarely go out of business. By and large they have a franchised monopoly in their service area and continue to be specialized and labor intensive with high level of fixed costs. They have responded not by competing using marginal cost strategies; instead, they respond by increasing their intensity of clinical services to increase revenues. Administrative costs for every participant in the food chain have continued to grow as a percentage of total costs.
      As a result, the American health care system is now more expensive than any of the Western European socialized systems. Over the past few years U.S. quality has rightly been called into question. HMO’s and managed care,which were supposed to be our salvation have been a bitter disappointment. Why?
You can analyze the root causes of our current dilemma without much difficulty. A descriptive analysis of the past is not the important question to be asking. We need prescriptions for future success.
What Americans must come to grips with “…what is the role and future importance of health care in our economy and society?” To answer that question I suggest you take a look at a globe of the earth.
Every country on the planet needs a certain set of abilities to develop and prosper. Good education, water, sewer and roads are obviously basic. But, health care is a key foundation cornerstone in that edifice.
Now, in a perfect world, the U.S. would have an efficient, high quality health care system to share with the developing peoples of our planet.  They would obtain the dollars necessary to acquire our abilities by producing goods and services that we wished to buy from them. It would be a virtuous trading cycle.
If health care were a wealth-creating export industry it could be encouraged to grow to dominate our GDP. Ideally, however, only 7% to 10% of our GDP should be necessary to satisfy our own internal needs. The current excess capacity should be exported. This builds the case for imposing harsh disciplining forces on our health care system. It is necessary to achieve the means to an end. Maybe it could be achieved through socialized regulation. But, history has shown us that every nation eventually had to deregulate and reintroduce market forces to achieve both high quality and efficiency.
      The current practice of turning to large insurance companies to achieve competition and discipline in the health care marketplace is flat-out destined to fail. If General Motors and Ford were not producing high quality cars you would not complain to GM Acceptance or Ford Credit corporations, their financing arms. Asking the financial intermediaries to do the dirty work of disciplining buyers and sellers is Forrest Gump stupid.
Health insurance by its very nature creates dead weight loss and insulates the consumer from the bitterness of the environment. By its nature it encourages over-production and over-consumption. We need less insurance, not more. If you do not buy this proposition, you need to buy Paul Samuelson’s basic text for Economics 101.
I believe there are things in this World which are rocket science. Putting a man on the moon or sending a lander to Mars truly mystifies me. We build planes that defy the laws of gravity and huge ships which float.
But, health care economics is not anywhere near this complex. We have made a mess of things by putting it in the hands of the wrong people. When we wanted the Nazi code broken we brought in Alan Turing, not Winston
Churchill. When we wanted an Atomic Bomb built we created the Manhattan Project. We didn’t turn it over to a confederancy of dunces.
I remain optimistic that we will eventually see the light. Our old manufacturing industries are not coming back. They are gone forever. Americans will continue to try everything until the right thing is the only avenue left. Then, we will get on with making health care an economic engine for the 21st Century.

Working hand to mouth


Paraphrased from Linda Tirado’s book Hand to Mouth and David Shipler’s recent review in the NY Sunday Times.

The manager of the call center where I work recently told me that he was concerned about the high turnover amongst the workers. I suggested he hold exit interviews and re-contact some of the previous employees. The answers surprised him. It was not the low pay, the noise, or the impact of calls continuously coming in. Most ex-employees complained that they did not feel needed, necessary or wanted. They felt they were treated like just another body.

The craving for personal dignity is sought by everyone, no matter their position in the hierarchy. But, in low wage jobs, bosses seldom ask subordinates what they think. Humiliation and a perverse form of petty tyranny is the golden rule. Low wage workers are routinely dehumanized by higher ups. From their lofty positions these doo-dahs wield contempt, hyper-critical moral judgments and derision. Our society is bipolar, with a chasm between the highly paid and those living at the subsistence level.

You might think this an age-old caricature, but you should follow my line of reasoning to learn about life at the bottom of the totem pole. Only then will you understand why the working classes harbor a consistent anger and fear.

When you are the working poor, you cannot indulge in the luxury of indignation. Ground down by swing shifts, cash shortfalls and too little sleep, workers are badgered by an American creed that anyone who works hard will eventually prosper. Those who fail to succeed eventually internalize a belief that their shortcomings are their own fault. They take on the identity of “self-sabotaging-perpetrator”.

It might be more constructive to acknowledge common faults of the human condition, yet still feel justified in our infuriation and rage. A constructive resentment cuts through one’s chronic depression. Sharpen your wit and focus your x-ray vision toward the disparities of power and money. We need to map the chain reaction and cascade of events that leads families and individuals from one setback to another.

The poor seldom are given the opportunity to speak. Their voices are at best filtered through authors and social activists who serve as their proxies. Raw and direct clarity can be startling. Denying dignity corrodes attitudes toward work and authority. Professionals and financial intermediaries are condescending and preachy. Coaches are imperious and cruel from the intoxication of low grade power, like cheap wine. Systems within the workplace are Kafkaesque and the workplace is nothing more than a downward spiral that is defeating at best.

The degradations in the work place wouldn’t be so hard to take if the privileged were honest about things. Instead, we are admonished to work harder and be ever so grateful we have jobs, food and a roof over our heads. Of course we are. But in exchange for all the work we do in a context of miserable conditions and systematic dysfunction you would think there is one thing we could ask in return. A sense of accomplishment? No! Respect from those above? No! Job security? Surely you jest? We are expected not to seek any of these things. A licensed insurance agent in a call center is no better than a seasonal illegal picking apples at harvest time.

Some workers have to wait for a break or ask permission to go to the bathroom. Workers are monitored by cameras or told they cannot smoke or use a tablet computer in their car in the parking lot. They have to change shifts on short notice and be left wondering by workforce bulls who ignore them when they request a few hours off to go to the doctor.

The result of all this is workers simply quit caring. They have no energy; work has no joy; they are unwilling participants. Yes, they will perform as directed, but no more than that. They no longer expect a boss who gives any indication that he values them more highly than the dress-for-success outfit that must be worn to give the “client” the appearance of professionalism. Workers are interchangeable and they don’t go out of their way for management. It is more than being undervalued; it’s that persistent feeling that supervisors are flat out going out of their way to make a person understand what a useless piece of shit they really are.

Mental engagement and creativity are unwelcome by management. Nobody is interested in your thoughts, your opinions or the contributions you might be able to make if conditions were different. They want predictable responses. You are there to make up for the deficiencies of the computer system; it is not a tool to empower you in your job.

Stress over money and the exhaustion of working multiple jobs to make ends meet are not great for higher level thinking. Most of us lack intellectual stimulation and we long ago stopped thinking in higher concepts. It happened gradually. We have become stupid after realizing how long it’s been since we thought about anything beyond just keeping all the parts of our life moving. There is no philosophy, no music, and no literature. Just treading water in this job keeps us at capacity; it rankles.

There are coping mechanisms to be sure. We look forward to eating, drinking caffeine, booze, smoking and sex. It’s a way to forget about problems even if just for a little while. As for the self-righteous overseers who lord over us day in and out, they abuse the same substances but they make enough money for periodic rehab.


“Thank you for all your hard work!”—>Rings hollow like a cracked liberty bell.