Shutting Down the Exchange Might Be the Administration's Best Move

Yesterday I highlighted something Avik Roy pointed out about the design of the Obamacare exchange. Simply put, the decision to force people to create an account in order to shop for plans was made for political reasons not a concern for useability. The result has been a train wreck.

Today  Robert Laszewski, president of Health Policy and Strategy Associates, made the same point in an interview with Ezra Klein:

They were paranoid because Obamacare was under siege. I understand
that. If they were open with their partners there would’ve been
criticism, but it would’ve been constructive criticism. None of us had
any idea that the government Web site would require security sign-ins
before browsing. Why did that have to be a secret? No one will read a
newspaper article about that. If it had been transparent I think most of
this would’ve been caught upfront. That really hurt them.

One thing the Obama administration has been really paranoid about is
rate shock. When someone like me says there’ll be rate shock they say
you have to net out the subsidies. That is a fair point. But I think
what happened was when they designed their system they were so paranoid
about that that they wanted to make sure people browsing got the lowest
price. That required signing in so you could see subsidies. And my
theory is that’s why they went to the architecture they did even though
the IT systems people wanted to go another way.

Laszewski says the system has not improved much since launch. He thinks the correct course now is to shut it down and bring it back up once it is working as intended. In fact, he recommends people avoid the site until the problems are resolved:

I think the feds have to really solve their problems. I wouldn’t go on those sites now. People are just wasting their time. I think Mark Bertolini from Aetna made the comment this morning, and I agree with it that the smart move on the part of the Obama administration would’ve been to suspend the Web system, shut it down, go back, and fixed the problems. They would’ve taken a big political hit from Republicans for, like, two news cycles. But if they could bring it back in a month working smoothly, no one would remember five years from now.

The problem with the Obama administration keeping this open is its five times harder to fix something like this on the run. If it would’ve taken a month to fix it during the shutdown, it’ll take three or four or five months to fix it while it was running.

This brings me to the two reasons Laszewski might be right. First, as he pointed out, fixing the IT problems can only go faster with the website offline. Leaving the site up means trying to diagnose the problem using some kind of development server which may or may not be able to replicate the problem. It also could mean rolling out software patches which temporarily make the situation worse for real people in unexpected ways.

Second, it is harder to convince people a product is new and improved if there is no clear transition point. The White House is surely worried about the PR hit it would take for shutting down the exchange, but at least there would be the potential for a clean 2nd bite at the apple. If they could restart the system in 2 weeks and it worked they would have a neat comeback story. However, if there is no shutdown then there is no restart and no moment to separate present failure from what comes next.

So far, the administration has made a number of mistakes in the exchange roll out, all of which seem to involve not looking weak. At this point everyone knows the site is a train wreck. The smart move would be to start over but so far the administration hasn’t made many smart moves when it comes to the exchanges.