My brother the software designer was the first one to tell me this truism from the programming world: If you computerize a mess, all you get is a faster mess. That sounds like what happened with Indiana's attempt to outsource its FSSA claims, as described in this spanking of the state in The Wall Street Journal:
Processing of welfare, food-stamp and Medicaid claims in Indiana was plagued with difficulties when the state outsourced the system to International Business Machines Corp. and Affiliated Computer Services Inc. two years ago.
The problem hasn't been resolved since then.
"There's a myriad of problems," said Anne Murphy, secretary of the state's Family and Social Services Administration. "Error rates are too high. We're not processing claims within federal guidelines."
[. . .]
Defenders of the outsourcing say the programs were clogged with paperwork and riddled with inefficiencies before the changes. Republican Gov. Mitch Daniels, an outsourcing advocate, blasted the old system as a "monstrous bureaucracy."
If the much-touted privatization plan is a bungled-up mess, it's really not a defense to say the old system was a "monstrous bureaucracy." That's basically an admission that the contractor (and the state bureaucrats who were supposed to be paying attention) did not exercise due diligence in correcting problems in the old system before converting to a new system.
This is also a good point:
Other Indiana privatization efforts "have been very positive," said state Sen. Vaneta Becker, an Evansville Republican. "But with human lives, it's far different," she said.
Whenever a "new and improved" system is introduced, even when it's not a privatization effort, there are always bugs and frustrations from things that don't go as planned. But when that happens with, say, the Bureau of Motor Vehciles, the worst that happens is a bunch of angry drivers have to wait longer than they should. It's a little more serious when a 59-year-old woman and her husband (mentioned in the story) lose their house and life savings on medical bills because the state took 15 months to recognize her eligibility for health benefits.