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Failing Up

Saturday June 20th, 2015   •   Posted by Craig Eyermann at 4:35pm PDT   •  

Covered-California-logo-Best_200 First, the news from the Los Angeles Times: Peter Lee, the executive director of Calfornia’s Affordable Care Act exchange, after receiving a big raise this past February, is now getting a big bonus and another raise:

California’s Obamacre exchange awarded its executive director a $65,000 bonus Thursday four months after giving him a 24% raise.

Starting July 1, Peter Lee will have a base salary of $333,120 as head of Covered California. The exchange’s board granted him a 24% raise in February and it gave Lee another 2.5% increase Thursday.

Covered California’s board chairwoman, Diana Dooley, said Lee deserved the additional compensation for his work building the state-run marketplace and his continued commitment to serving customers statewide.

Doing some quick math, Peter Lee’s equivalent annual pay for running Covered California has risen by over $70,500 in the last four months. If the amount of that raise were just annual pay, that would put Peter Lee in the 85th percentile of all individual income earners in the U.S.

But that’s only the amount by which his actual pay has been increased. His new base annual salary of $333,120 puts him not just into the Top 1% of all individual income earners in the United States, it puts him into the top 0.1%.

So how is he actually doing at his job? Investor’s Business Daily summarizes how Covered California is doing:

As Californians are discovering to their dismay, their state’s ObamaCare program is a nightmare of technological glitches, bureaucratic ineptitude and overpriced plans that under-deliver care.

Despite spending more than $1 billion in federal taxpayer grants to build it, the “Covered California” exchange gets an average one-star rating on the popular review site, Yelp. Customers complain about extreme hold times, wrong information, the inability to cancel or update plans, and so on….

Meanwhile, a two-part series by former CBS News investigative reporter Sharyl Attkisson for the Daily Signal documents mismanagement, computer glitches, inflated enrollment numbers and attempts to silence whistleblowers. In one case, a family got 18 notices from Covered California in one day, 14 saying they were covered and four saying they weren’t.

Such hassles might be tolerable if the product Californians are trying to buy is outstanding. But that doesn’t seem to be the case, either.

Despite projections that California’s enrollment would grow by half a million this year — a 36% boost over last year — signups climbed only about 7,000 — or less than 0.5%. And the retention rate was just 65% of enrollees — far lower than the overall national average.

That poor performance is going to bite, as the Los Angeles Times reports a month ago that Covered California is going to slash its budget to try to stay solvent:

After using most of $1 billion in federal start-up money, California’s Obamacare exchange is preparing to go on a diet.

That financial reality is reflected in Covered California’s proposed budget, released Wednesday, as well as a reduced forecast calling for 2016 enrollment of fewer than 1.5 million people.

The recalibration comes after tepid enrollment growth for California during the second year of the Affordable Care Act. The state ended open enrollment in February with 1.4 million people signed up, far short of its goal of 1.7 million.

A number of factors contributed to the shortfall, but health policy experts said that some uninsured folks still find health insurance unaffordable despite the health law’s premium subsidies.

So of course, the executive board of Covered California, just after slashing its budget by 15%, is responding to its deteriorating fiscal situation in the time-honored tradition of bureaucrats behaving badly. By awarding big raises and bonuses to the bureaucrats who run it.

That’s called “failing up.” Who knew that it was the fastest path to the topmost income percentile in the United States.?

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June 2015