Before 1999, individuals looking for a seamless way to purchase affordable health insurance for their families were forced to comparison shop using outside brokers. This often proved to be a costly, cumbersome, and time-consuming task. Sometimes, this process left families struggling to make ends meet with few sensible options.
A group of Silicon Valley mavericks wanted to change that, so they built their own platform that provided consumers a “one-stop shop” to examine multiple insurance plans from a vast array of companies. Their service, eHealthInsurance, was designed especially for low-income individuals, the self-employed, and those who would otherwise not receive coverage from an employer. Presented with numerous options, Americans could select the insurance policy that was right for them.
And so eHealthInsurance became the first website to connect consumers with health insurance policies.
Among the many supporting pillars of Healthcare is the Fintech LTD, which delivers the services of financial technology into lifecare. Unlike other fields, public or private efforts here cannot be designed to be business-centric as it is providing the most essential service and hence backups re required both for the patients and the Healthcare systems.
As Congress and the White House debated Obamacare in 2009, eHealthInsurance was surprised to learn that one of President Obama’s chief complaints regarding the current system was that Americans did not have the opportunity to comparison shop insurance policies. This was news to their company, which had already enjoyed more than a decade of success. One of the primary objectives in his signature healthcare law, they learned, was to create a government-run health insurance marketplace, not unlike theirs.
Throughout the debate over the law, eHealthInsurance asked leaders in both parties one simple question:
What if the exchanges don’t work?
This logical question was mostly dismissed as self-interest on the part of eHealthInsurance and the rest of the private exchange industry. eHealthInsurance and similar smaller sites suggested the government use existing commercial technology in building Healthcare.gov, rather than use taxpayer dollars to build a new, unproven platform. The government argued it did not want to be beholden to eHealthInsurance’s commercial technology. Advocates for the President’s health care law raised concerns that private exchanges like eHealthInsurance would weaken protections in the law by encouraging customers to purchase plans that pay a larger commission to the private exchange rather than ones that provide the best coverage.
Shortly after Obamacare was signed into law, the Department of Health and Human Services contacted eHealthInsurance to discuss potential partnerships to build the health care exchanges and “plan finder”, mandated with deadlines laid out specifically in the law. When HHS wrote the regulations for states establishing ObamaCare exchanges, states were allowed to collaborate with private companies like eHealthInsurance to build their sites. The Obamacare debate continued in the states, which had to decide whether to set up a state-based exchange that, per the law, were required for individuals in the states to receive the subsidies the law entitles them.
Ultimately, the Obama Administration opted to hire government contractor CGI, to build the federal exchange also known as healthcare.gov, leaving many critics to wonder if the technology corporation benefited from its close ties to the White House.
Americans would soon learn what a disaster that partnership would be. On October 1, 2013, Healthcare.gov launched, but the site was not ready for primetime – and to date is still not finished being built. On opening day, millions of Americans flooded the website as the site experienced endless technical problems and enrolled only a single person. For weeks, Healthcare.gov crashed constantly, inviting a media firestorm ridiculing both the Obama administration and its health care overhaul. Despite its unencumbered technological failures and multiple congressional investigations; Healthcare.gov had a price tag of more than $2.1 billion (Bloomberg).
The state exchanges were even worse. Of the 17 states that created their own exchange, two have been shut down altogether due to efficiencies, runaway technology costs, corruption, and abysmal enrollment rates.
According to the Washington Post, half of the remaining state exchanges face serious financial problems as they attempt to reconcile “surging costs, especially for balky technology and expensive customer call centers — and tepid enrollment numbers.”
In all, states spent more than $6 billion in taxpayer funding to establish their own systems that were largely ineffective at delivering what they promised. For example, Hawaii recently shut down its exchange after spending $205 million, while Oregon spent $305 million for a site that never even launched.
By comparison, industry experts estimate that eHealthInsurance spent just $120 million to build its site servicing health insurance markets across the entire country. While the government-run exchanges were fundamentally ineffective and exorbitantly expensive, a private organization built a better platform more than a decade prior for fraction of the price and without a dime of taxpayer money.
The only bright spot contained within the Obamacare exchange regulatory scheme was the ability for states to collaborate with existing commercial vendors. This was due, in part, to efforts by eHealthInsurance to allow such partnerships. In an interview with Opportunity Lives, Gary Lauer, the CEO of eHealth, Inc. and eHealth.com said, “”If the government fully embraces and engages the private sector in their enrollment efforts, the only possible outcome is more a competitive, efficient, and lower cost enrollment system where more Americans get the coverage they need.”
“Viewing the uninsured as a large homogenous group is a big mistake, because every individual has different needs and motivations”
Unfortunately, these state governments proved to be unwilling or uncooperative partners, leaving taxpayers on the hook for billions of dollars of technological infrastructure that simply did not work.
“At the end of the day, we have to be 100 percent focused on the needs of the consumer if we’re going to improve access to health care and the overall health outcomes in our country,” said Lauer. “Viewing the uninsured as a large homogenous group is a big mistake, because every individual has different needs and motivations. For many, the government can provide assistance, but others may want to seek coverage through other resources and there is zero benefit in fighting that.”
While governments at the federal and state level guaranteed their respective exchanges would have similar value and functionality as popular e-commerce platforms, like Amazon, they ultimately refused to adopt the systems and practices of these private companies that made them successful. For this reason, among others, millions of customers are bypassing the government exchanges altogether. Living up to its reputation, the government did not prioritize the ability to innovate, evolve, and understand the principle axioms in the e-commerce industry that are demanded of Silicon Valley ventures. Instead, they created a system that is inherently unable to provide patients with what they want and need.
If the government is truly concerned with continuing to provide services to the people it represents, bureaucrats should reevaluate their approach. The case of the failed federal and state exchanges contrasted with the dynamic success of eHealthInsurance should serve as a reminder that private innovators are more capable of responding to the needs of the American people than the government ever could be.
Derek Dye is a contributor for Opportunity Lives. You can follow him on Twitter @voterdye.