Correction: We miscalculated the expenditures related to the healthcare exchanges established under the Affordable Care Act, and incorrectly attributed the total cost of these expenditures. We have recalculated the cost to build Healthcare.gov and integral backend systems, and updated the article below to reflect the new information.
It’s been one full week since the flagship technology portion of the Affordable Care Act (Obamacare) went live. And since that time, the befuddled beast that is Healthcare.gov has shutdown, crapped out, stalled, and mis-loaded so consistently that its track record for failure is challenged only by Congress.
The site itself, which apparently underwent major code renovations over the weekend, still rejects user logins, fails to load drop-down menus and other crucial components for users that successfully gain entrance, and otherwise prevents uninsured Americans in the 36 states it serves from purchasing healthcare at competitive rates – Healthcare.gov’s primary purpose. The site is so busted that, as of a couple days ago, the number of people that successfully purchased healthcare through it was in the “single digits,” according to the Washington Post.
The reason for this nationwide headache apparently stems from poorly written code, which buckled under the heavy influx of traffic that its engineers and administrators should have seen coming. But the fact that Healthcare.gov can’t do the one job it was built to do isn’t the most infuriating part of this debacle – it’s that we, the taxpayers, seem to have forked up more than $500 million of the federal purse to build the digital equivalent of a rock.
The exact cost to build Healthcare.gov and its related systems is difficult to determine due to the expansive nature of the project and the murky details in federal budgets. But based on the figures and details available, here is my best estimate of what this flawed system has cost us: The most clear data comes from a U.S. Government Accountability Office (GAO) report from June (pdf), which states that the U.S. Center for Medicare and Medicaid Services (CMS) spent “almost $394 million from fiscal year 2010 through March 2013 through contracts” to build the “federally facilitated exchanges” (FFEs) – the complex system that includes Healthcare.gov as well as certain state-based exchanges – the data hub, and other expenditures related to the Obamacare exchange system. While GAO states that the “highest volume” of that $394 million was related to the development of “information technology systems,” a more detailed look at that cost shows that a portion that $394 million was spent on things like call centers and collection services. Take that out, and you’re left with roughly $363 million spent on technology-related costs to the healthcare exchanges – the bulk of which ($88 million) went to CGI Federal, the company awarded a $93.7 million contract to build Healthcare.gov and other technology portions of the FFEs.
That’s already a hell of a lot of money, but that does not account for all costs accrued for this project. As the GAO states, the $392 million figure does “not include CMS salaries and other administrative costs” associated with the Obamacare exchanges. In other words, the actual cost for the development and implementation of the total Obamacare exchange system is far higher. We’ve reached out to CMS for an exact figure, but thanks to the government shutdown, we have yet to hear from them on this matter. However, we do know, according to CMS’s 2014 budget request (pdf), that agency spent more than $150 million in 2012 and 2013 in relation to the Affordable Care Act – a lowball figure considering that, in its 2013 budget request (pdf), the agency asked for more than $1 billion in additional funds “needed to support operation infrastructure” and open-enrollment preparations of the FFEs.
At this point I can only speculate on the total cost to build out Healthcare.gov and the overall technology portion of the FFEs. Based on the available data, however, a conservative estimate puts the cost so far at over $500 million. Considering the GAO estimates it will cost approximately $2 billion to build-out and operate the FFEs in 2014, this is, if anything, likely far too low. Once we hear back from CMS on this matter, I’ll update this space with more detailed figures above the $363 million we know about for certain.
Given the complicated nature of federal contracts, it’s difficult to make a direct comparison between the cost to develop Healthcare.gov and the amount of money spent building private online businesses. But for the sake of putting the monstrous amount of money into perspective, here are …