The failure of centralized palanning

HAYEK VINDICATED AGAIN

Way back on the Federal Page of today’s Washington Post is an article that ought to be on the front page above the fold, and its deep placement on the boutique page of the bureaucracy shows how the Post, like most everyone else, doesn’t understand what a big story it is. And it is a clinical study of Hayek’s “knowledge problem”—the impossibility of centralizing fundamentally dispersed knowledge in a timely and accurate way—that we’ve discussed at various times here over the past few months.

The headline is “Concern growing over deadlines for health care exchanges,” and it discusses the difficulties of one of the main pillars of Obamacare—the mandate that the states set up insurance “exchanges” where people and businesses can do one-stop shopping for their mandated health insurance policies. But this is no simple exchange; because of the mix of federal programs such as Medicaid and Medicare, and the various regulations pertaining to eligibility, guaranteed issue, and other features of Obamacare, the states are having a hard time figuring out how they are going to do it. And time is running out. As the Post explains, “the exchanges will need to incorporate state and federal data on income, employment and residency. Enrollment through the state and federal exchanges is scheduled to begin in the fall of 2013.”

Obamacare has a fallback position: if states can’t (or won’t) make the deadline, the federal government will step in and run the exchange out of Washington. I’ve heard rumors for months now that the Dept. of Health and Human Services is terrified of having to do this, and doubts it can be done by the deadline. The Post story would seem to lend some credence to these rumors:

It’s hard to know how far along the federal government is because the Obama administration has “been very reluctant to provide any updates on progress,” said Dan Schuyler, a director at the consulting firm Leavitt Partners in Salt Lake City, which is advising states on the exchanges.

The Department of Health and Human Services did not respond to requests for comment. Those designing a federal exchange face enormous technical, political and financial challenges.

Technically, data from a host of federal agencies need to be collected into one system, which then must be linked with computer systems in 50 states and the District of Columbia.

Matt Salo, executive director of the National Association of State Medicaid Directors, said computer systems in some states are old and may need substantial upgrading. There is some doubt, he said, about whether there is enough “physical capacity in the IT systems world” to get it all done in time.

Another Obama high-speed train wreck to nowhere.