In our last update on Obamacare, we questioned whether Day One mistakes were just the technological tip of the iceberg.  The verdict is now in; Day One was just the tip of the iceberg, and now the question is only how big is the iceberg?  The simplest part of Obamacare–the website that provides the initial interface for customer service–is basically non-operational.  Consumer Reports advises Americans to stay away.  Mr. Obama, after making repeated protestations that these were “glitches” akin to the introduction of a new iPhone operating system software, has now been forced to call in the cavalry.  USA Today is reporting that Mr. Obama’s team is calling Verizon to help fix the mess of the website.  I can’t help but pause with the delicious irony of this.  We are supposed to entrust 1/7th of our economy to the government because it is fully capable of running it efficiently and better than the private sector.  Yet, on step 1 we are forced to call in the private sector?  AS the WSJ opines,

In an era where Google is making self-driving cars and Amazon offers next-day delivery for just about anything, the White House plunged ahead with a system it knew to be defective and is relying on the technology of the 19th century as the fall-back. Five days before the exchanges launched, the Health and Human Services Department increased the Virginia information technology company Serco’s $114 million contract by $87 million—to help process paper applications. Are contingency plans in place to sign up via telegraph?

Republicans are no doubt inwardly smiling, and who can blame them?  Does not the initial implementation validate their view of how Obamacare was going to work as contrasted with Mr. Obama’s? Of course access to the website will be fixed, despite the incredibly bad technology initially used; we’ve already spent hundreds of millions of dollars for this website–we can certainly have Mr. Bernanke purchase some more T-bills to get this going.  But don’t expect Verizon to save this system.  Mr. Obama’s team suggested:

“Our team is bringing in some of the best and brightest from both inside and outside government to scrub in with the team and help improve HealthCare.gov,” an HHS blog post said on Sunday.

The problem is NOT that the people that did all the work thus far are not smart enough, but rather the product that we see is a reflection of the institutional processes of government acquisition run through a political process.  As a former acquisition certified officer in the U.S. Air Force, I can tell you that “Acquisition Reform” in the DoD is a perpetual issue, as indeed it is across government.  Why would we ever expect that processes executed by well meaning Americans resulting in $600 toilets 30 years ago would now suddenly lead to world-class health care?  Unless they give Verizon a true blank check, they will be forced to use the same processes that got us here in the first place.  Yes it will get better.  But it will never be just like a release of a new Apple mobile operating system.

In most of our economic public policy choices, we are forced to do a comparative institutional analysis–we compare theory vs. theory or reality vs. reality; we never compare theory against reality.  In that comparison we know that theory will always win because a fallen world full of limitations of sinful man necessarily falls short of utopian theory.  So we really can’t compare the real world health care system before Obamacare with a hypothetical utopian vision of what Obamacare might do.  Unfortunately, the political system resulted in theory beating reality (no surprise), but Mr. Obama now is in the situation of “be careful what you wish for.”  He has his health care bill, and we’re now getting a comparison of reality vs. reality.  It should be no surprise that up close it doesn’t look so good.