Obamacare's Management Failure

On October 23rd I posted a link to my USNews blog on the management failures of the Republican House majority and the roll out of Obamacare.  The link is here: http://shulmaven.blogspot.com/2013/10/my-latest-usnews-blog-us-needs-some-new.html Today the New York Times published a front page story on the complete management breakdown by the Centers for Medicare and Medicaid Services that were responsible for developing the HealthCare.gov website. This article is an eye-opener for all of my friends who believe that the government is a solution to many of the problems that vex society. As the late sportscaster Howard Cosell would say, "Never have I seen such continuing ineptitude.."  The link to the full article is here: http://www.nytimes.com/2013/11/23/us/politics/tension-and-woes-before-health-website-crash.html?_r=0&hp=&adxnnl=1&adxnnlx=1385232033-Jfvr4hYVfepHCVF3B6xo7Q It is a must read.

Now read what I wrote a month ago:

"If this weren't enough, we have had a failure to launch healthcare.gov, the entry website for purchasing health insurance under the Affordable Care Act, more commonly known as Obamacare. The administration has had two and a half years to develop a website and all of the necessary back-end systems to enable Americans to purchase health insurance on a government run exchange. After all of that time and hundreds of millions of dollars, the system crashed on its first day, and it continues to fail. Not only is the front-end failing, the back-end is failing as the participating insurance companies are receiving the wrong information with respect to applicants and qualified dependents. This is not a mere glitch, it is a system failure.

Even more striking, Health and Human Services Secretary Kathleen Sebelius noted on CNN yesterday that President Obama wasn't aware of the problem until after the website was launched. Hello! President Obama is not a chief executive. He is now learning that there is a real difference between making policy and implementing policy. The real work is in implementation.

Now, I do not expect the president to be sitting in the Oval Office writing computer code, but I do expect him to be briefed at least monthly on the status of his signature program. He should have been familiar with all of the "deliverables" and "milestones" associated with the law. It is not even clear there was a senior White House staffer in charge of monitoring the program. Only yesterday we found out that former Acting OMB Director Jeffrey Zients will be in charge of the "tech surge" in the Department of Health and Human Services. All I can say is that if we had a real chief executive, Kathleen Sebelius would be fired.

Given what has happened in the past month, it is no wonder a majority of Americans want to replace the entire Congress and it is no wonder that the usually administration-friendly Jon Stewart's "Daily Show" has been offering the most biting criticism of the roll out of the health insurance exchanges. The government is not working and most Americans know it."

 

All I have to say is that before we embark on another expansive government program we better think long and hard about whether our government has the capability to manage it.

My Amazon Review of Max Hastings', "Catastrophe 1914: Europe Goes to War"

This is a first rate history of the year Europe fell into an abyss that it has still yet to recover from. Hastings, a gifted writer, takes us from the politico-military decision making that sets stage for the Great War. He is definitely in the Fischer school which pins most of the blame for the war on Germany and as a result, he downplays the roles of France and Russia in starting the war. For a more nuanced view I would recommend Chistopher Clark's "Sleepwalkers....." From there he goes on to the battles of the early months of the war. He not only focuses on the western front, but he is very detailed with respect to the eastern front from carnage in Serbia to the German victory at Tannenberg. He is at his best when he discusses the failure of the generals on both sides, whose blunders amplfy the carnage.

Where I disagree with Hastings is his assertion that that Britain's intervention which saved France at the Battle of the Marne in September 1914 was worth all of the carnage that was to come. He views that had Germany won a quick victory 1914 Europe would have been enslaved under the boot of German authoritarianism. This is a tough swallow for me. Although there are no proofs in counter-factual history, I could just as easily visualize a post Wilhelmine Germany evolving into a version of what it is today.

Yellen, Yellen You Got Tapering on Your Mind*

I think the conventional wisdom that a Janet Yellen Fed will be super dovish and that it won't begin to taper until April 2014 at the earliest is wrong. Why? First I think she realizes that if she is going to be an effective Fed Chair, she will have to establish her credibility early in the game. She can do that by aggressively tapering with a commitment to a very low rate forward guidance program. This will give her instant credibility with respect to both inflation and employment. For those who argue that a weak economy early next year will delay tapering, they will have to answer the question if the large scale asset purchase program is so necessary, why isn't it working? And they won't have the benefit of the government shutdown excuse. Beside most of the econometric evidence suggest that forward guidance is far more effective than large scale asset purchases for the real, as opposed to the financial, economy. Sorry Wall Street.

Second, the more bonds the Fed buys the more difficult it will be to raise interest rates in the future. To be sure it is economically correct for the Fed to use increases in the interest rate it pays on reserves as a substitute for selling securities, but it will be very politically incorrect. Remember when the Fed starts raising interest rates on reserves the proceeds will go to Wells Fargo, JP Morgan Chase and Citicorp. Populists on the left and right will scream as Fed remittances to the treasury drop from an estimated $84 billion in 2015 to $17 billion in 2018.(See a recent Fed paper at http://www.federalreserve.gov/pubs/feds/2013/201301/revision/201301pap.pdf)

*- With apologies to Gary Puckett and the Union Gap http://www.youtube.com/watch?v=OStqA1ggso0