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Late to the Game: Not exactly a shocker: HC.gov less expensive per enrollee than state exchanges

Hat Tip To: 

OK, due to my unexpectedly-far-longer-lasting bout of shingles, I've gotten a bit backed up with my ACA news the past few weeks, but I did want to address the "cost per enrollee" story which popped up a week or so ago:

Sometimes there really are economies of scale. And the nation’s health insurance exchanges may be a case in point.

As rocky as its rollout was, it cost the federal exchange, healthcare.gov, an average of $647 of federal tax dollars to sign up each enrollee, according to a new report.  It cost an average of $1,503 – well over twice as much – to sign up each person in the 15 exchanges run by individual states and Washington, D.C.

The article (and others like it) goes on to break out the individual state exchange costs. Some do better than others, of course, and Hawaii comes in dead last (in part simply because their uninsured population is so small to begin with). While it's certainly interesting to see which ones were the most efficient and which were the least, there's a big part of me which keeps asking "why is anyone surprised by this?"

On the one hand, obviously HC.gov had a bigger challenge than any of the individual state-run exchanges; not only does it have to handle a lot more traffic than they do, but it also had to be designed to interact with the databases & platforms of 36 different DMVs and other agencies, etc etc.

However, as a website developer for almost 15 years now, the reality is that there are certain time and cost factors which are pretty much identical regardless of whether you're developing a simple "brochure"-style informational website for a sole proprietor or a full-scale ecommerce extravaganza with all the trimmings. You still have to set up the hosting account, domain name and email accounts. The graphic design may, conceivably, be more involved for the smaller site if they want their logo or other graphic elements to be fancier than the ecommerce site, which might want to keep the visuals pretty basic. Assuming your'e using the same software for each, you still have to set up the database, install and configure the main CMS settings and so forth whether the final site is going to have a dozen pages of content or a thousand.

Now, once you get beyond the basics, of course, the cost factor can vary radically. So, you might have the smaller site cost $1,000 even, while the more elaborate site costs, say, $5,000. Yes, that's 5x as much, but the site's content and functionality could be 100x as elaborate/sophisticated.

So, yes, "economy of scale" certainly applies here. Of course, one of the reasons why the ACA was written to allow individual states to operate their own exchanges in the first place was to try and appease Republicans who are always screaming about "states rights" and the evils of the Federal Government being in charge of everything. Ironically, most of the red states (which you'd normally expect to insist on doing things themselves so as not to fall into "Big Brother's" clutches) chose to allow the Federal Government to run their exchanges for them, while many blue states (which you'd normally expect to leave things to the Feds) chose to run their own--and in doing so, the red states actually added quite a bit of evidence that the feds actually can do large-scale projects like the ACA exchanges more efficiently than the individual states can!

This isn't to belittle states like Connecticut, California, New York or (the red state exception) Kentucky, which actually did an excellent job with their exchanges, but it does raise an interesting point. From the same article:

What was not expected, said Angoff in an interview, is that the five states whose governors and/or legislatures were among the most adamant about resisting the Affordable Care Act — Florida, Texas, Georgia, Virginia, and Michigan — ended up with the lowest per-person enrollee costs. Florida’s cost per enrollee was just $76; Texas’ was $102, and Michigan’s $427.

“The states that fought the ACA the hardest ended up with exchanges that have been very efficient,” he said.

Actually , that last statement is a misstatement. Those states didn't have "exchanges" which were efficient...they all operated off of the same federal exchange. Think about this for a minute.

Imagine what things would be like in states like Texas, Florida and Georgia (where the state insurance commissioner actually openly bragged and laughted about obstructing the ACAif they had decided to "operate" their own exchanges under administrations which were not just neutral but openly hostile towards the law in the first place?

The only reason why these states were so "efficient" with their final enrollment tallies was because of the federal exchange and outreach/education efforts by people who did their jobs properly such as the Navigators and 3rd-party organizations helping get people signed up. This success was in spite of those states' efforts to block people from receiving decent healthcare coverage, not because of it.

I'm surprised that I even had to type that last sentence, but apparently that fact is lost on some people.