17 of 18 health insurance marketplaces had successful rollouts & are working fine

By Marc Jampole

If 18 large organizations installed, customized and rolled out new complicated software systems, how many rollouts would be relatively glitch free?

Ask any experienced information technology (IT) consultant and they’ll likely answer, ”About 50%,” without blinking an eye. That’s based on facts.

At least half of all software installations fail miserably—over budget, past the deadline and missing key features. Take enterprise resource planning software (ERP)—software that runs an entire enterprise: about 60% of companies installing ERP report receiving less than half the benefits they thought they would get from the software. And customer resource management (CRM) software, which makes it easier to track sales and customer contact—shows a 50% failure rate.

Isn’t it amazing then that 18 government entities have just launched websites using sophisticated software and 17 of them have few if any glitches? I’m talking of course about the new health insurance marketplaces set up by 16 states, the District of Columbia and the federal government.

Unfortunately for millions of Americans, it’s the largest one that has experienced the snafus. The fault lies with the Obama Administration. If it had begun developing the federal electronic health insurance marketplace earlier, it would have had time to do proper testing and removed the bugs before the legal date for opening.  Instead, the Administration pussy-footed around waiting to make sure the law wasn’t reversed after the 2010 elections or declared unconstitutional.   Similar pussy-footing around is responsible for some, but certainly not all the numerous software failures in the private sector.

So what we have is 17-1 for governments, when the private sector only would have managed maybe 9-9. The real story of the rollout of Obamacare is that government can and often does do things better than the private sector.  In this case, what government seems to be doing better is implementing sophisticated software systems.

Idaho prisons show once again that privatization of government functions is not such a good idea

By Marc Jampole

We got another reminder of the failure of much privatization of government functions in a Wall Street Journal article detailing the woes that the state of Idaho has had since it privatized its state prisons in 2000. The current vendor is walking away from a new contract, leaving Idaho with several lawsuits alleging understaffing leading to gangs rampaging violently through Idaho’s private prisons.  The Journal article quotes one of the three board members of Idaho’s Department of Corrections: “Privatization is a failed concept in the state of Idaho.”

Privatization is also a failed concept when it comes to schools. For years studies have shown that charter schools—private schools run with public money—underperform public schools.  And a recent study showed that when all factors are considered, private schools also underperform public schools.

By the way, Idaho isn’t the only state having problems with privatized prisons.

• The Journal says that Michigan recently dropped plans to house 968 cons in a privately run prison after the bids by private companies exceeded by millions how much it would costs the state to do it. 
• Two years ago, a study showed that private prisons cost the state of Arizona more than a public system would have.
• When the State of Ohio gave its first inspection to one recently privatized prison, it found that since a private company had taken over the facility compliance to regulations fell from 97.3% to 66.7%, a stunning decline.
• Three years ago, the Lexington Herald-Ledger called the privatized prison system in Kentucky a failure and cited the many abuses at one notorious private-run correctional facility. 

I look at the privatization movement as nothing more than a government wealth transfer program. Since the decline of private sector incomes, government jobs now tend to pay more than private sector jobs at all levels except the top executives, who tend to make significantly more money in the private sector. By privatizing a school or prison facility, what the government is really doing is taking money from the many entry and midlevel jobs—union jobs to a large degree—and giving it to senior management and the investors. It’s a kind of reverse Robin Hood. 

The question remains unanswered as to why the government tends to do better than the private sector on such tasks as educating our children or housing our prisoners. Is it that these functions are inherently better served by government for some reason? Perhaps it’s because government is more stable and will always be around, whereas private institutions come and go as part of the “creative destruction of capitalism?” Or maybe public schools and prisons work best because government workers tend be unionized, since numerous studies show that union workers are more productive? Or maybe the service aspect of working for the government makes executives more dedicated to their customers and less willing to cut corners. Certainly when there is public scrutiny, it’s more likely an exec who cuts corners will be found out. I like to think that the fact that public schools and jails outperform private ones comes down to the simple fact that in America the most competent make the most money and public school teachers and correctional officers make more money than their confreres working for privatized concerns.

Whatever it is, we have gathered enough evidence now to recognize that the privatization movement has been a failure, except for the executives and investors of the companies who get the federal contracts and the factotums these rich folk send to state legislatures to vote to privatize yet more government functions.