Crony Capitalism at HHS

Combine the tight schedule for the Obamacare insurance exchanges with billions of taxpayer dollars, little Congressional oversight, and enormous political pressure to reelect the president, and curious events ensue.

With at least twenty states declining to build Obamacare insurance exchanges, the federal Department of Health and Human Services (HHS) faces increasing pressure and complexity to complete the federal exchanges, with all the bugs worked out, in time for the rollout date of January 1, 2014, and now faces a significant conflict of interest as well.

Jeffrey H. Anderson writes in the Weekly Standard, citing an anonymous source as well as previous accounts in The Hill, that Quality Software Services, Inc. (QSSI), contracted by HHS last January to build the federal exchange, was purchased last summer by UnitedHealth Group, one of the country's leading healthcare conglomerates, and that HHS not only tried to hide the resulting "unseemly" conflict of interest, but also "encouraged" the company to hide the transaction from the Securities and Exchange Commission.

Already "too far behind in setting up the federal exchanges," HHS chose to avoid the delay of finding another contractor:

Unwilling to void the contract, HHS instead went to work on setting up a firewall designed to block UnitedHealth Group from gaining access to QSSI's data, presumably out of a desire to keep UnitedHealth Group from gaining an unfair advantage. Then, likely in concert with the White House -- and to the chagrin of many HHS employees -- Sebelius and other senior HHS officials decided that word could too easily get out about the firewall project. If it did, it would alert people to UnitedHealth Group's having gained a potentially huge competitive advantage -- a political concern for the White House on the cusp of the election, especially in light of the crony capitalism charges that have plagued this administration. Therefore, HHS, under Sebelius's leadership, suspended work on the firewall and told UnitedHealth Group not to alert the SEC to the purchase -- as UnitedHealth Group was legally required to do within four days of the transaction -- until after the election.

Senator Orin Hatch (R-Utah), the ranking member of the Senate Finance Committee, asked HHS Secretary Kathleen Sebelius back in October for information on the exchange contract, as The Hill reported, expressing "alarm over what he calls a lack of transparency in setting up a national insurance marketplace covering more than 30 states."

Senator Hatch's October 26 deadline was not met.

And on November 13, House Energy and Commerce Committee Chairman Fred Upton (R-Mich) sent a letter to Secretary Sebelius requesting information and documents regarding the QSSI contract and the potential conflict of interest, with a response deadline of November 27.

Further clouding the issue is the fact that Steve Larsen, the first director of "Obamacare's newly established Center for Consumer Information and Insurance Oversight (CCIIO)," left HHS last June for a "highly paid" position with a UnitedHealth Group subsidiary. According to the Hill's account, Senator Hatch's information request is also "aimed at shedding light" on the role of Mr. Larsen in awarding the QSSI contract.

As The Hill observes,

One critic familiar with the business rivalries of the insurance industry compared UnitedHealth Group's purchase of QSSI to the New York Yankees hiring the American League's umpires

This sort of crony capitalism is all the more disturbing because the Obamacare exchanges will house all manner of private information on millions of Americans, from their tax returns to their most intimate medical records, with The Hill further observing that

The technology will wield massive flows of socio-economic and health information for populations around the country that an insurance company, if privy to, could use as valuable business intelligence to determine what markets to play in.

As the President said on passage of his health care legislation, "this is what change looks like."

Combine the tight schedule for the Obamacare insurance exchanges with billions of taxpayer dollars, little Congressional oversight, and enormous political pressure to reelect the president, and curious events ensue.

With at least twenty states declining to build Obamacare insurance exchanges, the federal Department of Health and Human Services (HHS) faces increasing pressure and complexity to complete the federal exchanges, with all the bugs worked out, in time for the rollout date of January 1, 2014, and now faces a significant conflict of interest as well.

Jeffrey H. Anderson writes in the Weekly Standard, citing an anonymous source as well as previous accounts in The Hill, that Quality Software Services, Inc. (QSSI), contracted by HHS last January to build the federal exchange, was purchased last summer by UnitedHealth Group, one of the country's leading healthcare conglomerates, and that HHS not only tried to hide the resulting "unseemly" conflict of interest, but also "encouraged" the company to hide the transaction from the Securities and Exchange Commission.

Already "too far behind in setting up the federal exchanges," HHS chose to avoid the delay of finding another contractor:

Unwilling to void the contract, HHS instead went to work on setting up a firewall designed to block UnitedHealth Group from gaining access to QSSI's data, presumably out of a desire to keep UnitedHealth Group from gaining an unfair advantage. Then, likely in concert with the White House -- and to the chagrin of many HHS employees -- Sebelius and other senior HHS officials decided that word could too easily get out about the firewall project. If it did, it would alert people to UnitedHealth Group's having gained a potentially huge competitive advantage -- a political concern for the White House on the cusp of the election, especially in light of the crony capitalism charges that have plagued this administration. Therefore, HHS, under Sebelius's leadership, suspended work on the firewall and told UnitedHealth Group not to alert the SEC to the purchase -- as UnitedHealth Group was legally required to do within four days of the transaction -- until after the election.

Senator Orin Hatch (R-Utah), the ranking member of the Senate Finance Committee, asked HHS Secretary Kathleen Sebelius back in October for information on the exchange contract, as The Hill reported, expressing "alarm over what he calls a lack of transparency in setting up a national insurance marketplace covering more than 30 states."

Senator Hatch's October 26 deadline was not met.

And on November 13, House Energy and Commerce Committee Chairman Fred Upton (R-Mich) sent a letter to Secretary Sebelius requesting information and documents regarding the QSSI contract and the potential conflict of interest, with a response deadline of November 27.

Further clouding the issue is the fact that Steve Larsen, the first director of "Obamacare's newly established Center for Consumer Information and Insurance Oversight (CCIIO)," left HHS last June for a "highly paid" position with a UnitedHealth Group subsidiary. According to the Hill's account, Senator Hatch's information request is also "aimed at shedding light" on the role of Mr. Larsen in awarding the QSSI contract.

As The Hill observes,

One critic familiar with the business rivalries of the insurance industry compared UnitedHealth Group's purchase of QSSI to the New York Yankees hiring the American League's umpires

This sort of crony capitalism is all the more disturbing because the Obamacare exchanges will house all manner of private information on millions of Americans, from their tax returns to their most intimate medical records, with The Hill further observing that

The technology will wield massive flows of socio-economic and health information for populations around the country that an insurance company, if privy to, could use as valuable business intelligence to determine what markets to play in.

As the President said on passage of his health care legislation, "this is what change looks like."

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