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 It remains a target for partisans who want Obamacare repealed.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.

Leave a Reply

Your email address will not be published. Required fields are marked *