Obamacare Insurance Exchanges Are Corporatism Disguised as “Competition”

by Whitney Pitcher

Earlier this week, I noted how Cook County board president and Obama mentor Toni Preckwinkle secured a $100 million Obamacare waiver to implement Medicaid expansion in the county a year early and cover a gap in the county budget. The conflicts of interest in Obamacare adds yet another layer as insurance exchanges are in the process of being implemented before the 2014 deadline. The Hill Healtwatch reports:

The fast-approaching deadline gives the administration little time to scrutinize private-sector partners for conflicts of interest.

The purchase of one of these contractors, Quality Software Services, Inc. (QSSI), by UnitedHealth Group, a major healthcare conglomerate, has sparked concerns about a potentially uneven playing field.

QSSI, a Maryland-based contractor, in January won a large contract to build a federal data services hub to help run the complex federal health insurance exchange.

It will be working with several other contractors, including CGI Federal, Inc., to create the technological architecture for the exchange.

The quiet nature of the transaction, which was not disclosed to the Securities and Exchange Commission (SEC), has fueled suspicion among industry insiders that UnitedHealth Group may be gaining an advantage for its subsidiary, UnitedHealthcare.

The article aptly compares these health insurance exchanges to websites like Travelocity or Expedia where consumers can pick and choose the best deals for airline tickets or hotels. With the potential conflict of interest in the health care exchange, it would be akin to Travelocity or Expedia owning American Airlines or Marriot Hotels and thus potentially driving consumers to purchase their product based upon how that company portrays the available options.  As the article goes on to note:

If an insurance company had influence over the information technology architecture used to run the exchange, it could interpret federal standards in a way to exclude competitors or make it more difficult for them to win approval, say some insurance experts. Or it could have an inside track on knowing how to design plans that meet the standards.

The contractors working on the exchange will also have responsibility over payment calculation for risk adjustment.

This program is intended to redistribute funding from plans that attract younger and healthier participants, and thus have lower costs, to plans that attract people with more chronic diseases.

The draft statement of work for the contract shows QSSI will also work on technical requirements to deliver financial management services, such as payment calculation for risk adjustment.

The prospect that a subsidiary of UnitedHealth Group could have a role in calculating the reallocation of federal funds among rival health plans has unnerved some industry insiders.

In mid October, Senator Orrin Hatch sent a letter to DHHS Secretary Kathleen Sebelius asking for a full accounting of who received federal Obamacare contracts and what government officials signed off on those contracts. Sebelius has not responded. Hatch has also asked if Steve Larsen, a former official at HHS played a role in this contract:

Larsen left the Center for Consumer Information and Insurance Oversight, the office tasked with crafting rules for the national exchange, in July to take a job with Optum. It is not clear how long Optum was in consultation with QSSI prior to purchasing it.

Shields Britt, the spokeswoman for HHS, said Larsen would have to comply with stringent rules.

“Former HHS employees are subject to the strict ethics policies put in place at the start of this administration, which are some of the toughest ethics rules ever imposed on executive branch appointees, and those standards certainly apply here,” she said.

Optum, whom Larsen currently works for, is the subsidiary of UnitedHealth Group that bought QSSI, the company who would provide the information infrastructure for the exchanges.How’s that for a revolving door between government and industry? What are those strict “ethical” standards? Those words ring hollow from an administration whose first choice for HHS Secretary, Tom Daschle, was a “policy adviser” (newspeak for lobbyist) at the firm that lobbied for United Health.

The rhetoric behind the Obamacare insurance exchanges is one of competition and consumer choice, but the truth behind it is nothing more than continued corporatism and conflicts of interest.