So there’s obviously a big battle shaping up in Washington (Politico’s readership base) over what is now a pending appeal of the contract award, which one of the news articles on the TriWest Healthcare Alliance website says is “hotly contested” because it is “so lucrative.” Which side is right about United Healthcare’s record? How did it win the contract away after TriWest had it for 16 years?
More generally, what are the rules and strategies behind these big-money contract fights? Who’s the go-to lawyer, or lobbyist? Is this more about procurement law or political lobbying, or is it a combination of both? The rules for such contract awards seem to require that appeals go to the U.S. Government Accountability Office or the Pentagon, and that the appeal can only be about the process followed in evaluating the competing contract proposals. Indeed, there are squadrons of lawyers in Washington who specialize in the contract bid process and write reams of articles about the arcana surrounding it. But if both sides are advertising to Politico’s readership of politicians, there must be more to it than that. Twenty billion dollars - or 4 billion dollars a year just to process health insurance claims, not pay them - is more than half of the FBI’s entire annual budget. It would be nice to know how the decision to spend it is made.
Which brings to mind the ultimate question raised by those dueling Politico ad campaigns: What are the economics of this contract? My math indicates that the winner is going to be paid about $175 a year per beneficiary - again, just to administer the claims, not provide any care. That seems pretty high. What do big private-sector companies pay for the same services? This is one of those classic inside-the-Beltway stories that need sunlight.