When Better Numbers Are the Enemy of Good Numbers

Nov 30, 2013

One of the major causes of the healthcare.com fiasco of the last two months is the Obama administration’s decision to require site visitors to fully enroll in Obamacare before they could receive a price quotation for health insurance. The administration’s logic was that since a significant percentage of the applicants were eligible to receive a government subsidy on their premium, they wanted to make sure that the subsidy was properly calculated. However, that process meant there had to be a complex calculation – the ACA is, after all, 2,500 pages long – as well as links to other government systems, like the IRS system. The result was total systems gridlock.

This approach was clearly a disastrous choice, but also an unnecessary one, reflecting a perspective devoid of sound business logic and a failure to grasp how people process quantitative information.

The administration could have avoided the horror by accepting the applicants’ income and other personal information as input, and simply estimating the subsidy, with the final pricing subject to verification on formal enrollment. Applicants could then have gotten most of the pricing information they needed on their insurance alternatives, rather than being completely stonewalled.

Excessive precision is not a harmless requirement. All too often, especially in highly regulated situations, the emphasis on getting the numbers excruciatingly correct inflicts unnecessary pain on all involved.

“Painting with Numbers” is my effort to get people talking about financial statements and other numbers in ways that we can all understand. I welcome your interest and your feedback.

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