Report: Final Cost of Obamacare Website Tops $1 Billion

Image: Report: Final Cost of Obamacare Website Tops $1 Billion

Thursday, 24 Oct 2013 03:36 PM

By Newsmax Wires

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The principal contractors responsible for the federal government's troubled health insurance website say the Obama administration shares much of the responsibility for snags that have crippled the system.

Executives of CGI Federal, which built the federal HealthCare.gov website serving 36 states, and QSSI, which designed the part that verifies applicants' income and other personal details, testified Thursday before the House Energy and Commerce Committee.

Meanwhile, figures released Thursday say the total cost of the deeply flawed website and healthcare exchange has topped $1 billion, according to a devastating new report by a widely respected government analyst.

Editor's Note: 22 Hidden Taxes and Fees Set to Hit You With Obamacare. Read the Guide to Protect Yourself.

How? A surge in government spending on the Obamacare exchanges before they went live pushed the price paid to top government contractors over the $1 billion mark, The Hill reported, quoting the new study.

The report released Thursday by Bloomberg Government analyst Peter Gosselin says that federal spending ramped up in the months leading up to Oct. 1, with $352 million of the $1 billion in federal contracts to the top 10 Obamacare contractors awarded during this time.

"In a typical IT project, spending ramps up to a peak, then trails off during the final phase," Gosselin wrote.

This is a huge increase from the price tag usually associated the Affordable Care Act rollout: $394 million. That came from a Government Accountability Office report.

But Gosselin argues that the GAO study was too narrowly focused. He expanded his search of a federal contractor databases to include all awards where the acronym "ACA" or other related words and phrases appeared.

"In looking at the full range of ACA-related contracts for just 10 firms, the BGOV analysis found more than $1 billion worth of contract awards," he wrote.

And the so-called "tech surge" cited by the administration to fix the myriad problems that plague the Obamacare website likely will result in subsequent rounds of spending.

"Given the seriousness of the IT problems and the fact that most of the contracts are on a cost-plus basis, the companies almost certainly are in line for another burst of spending aimed at quickly making repairs," he said.

The contractors said they each tested their own components independently but that the Health and Human Services department was responsible for testing the whole system from end to end. That kind of testing didn't happen until the last couple of weeks before the system's Oct. 1 launch.

It quickly crashed once consumers tried to use it.

Representing QSSI, Andrew Slavitt told the committee that ideally, end-to-end testing should have occurred well before the launch, with enough time to correct flaws.

How much time?

"Months would be nice," said Slavitt.

"We would have loved to have months," agreed CGI vice president Cheryl Campbell.

The administration's determination to go live on Oct. 1 despite qualms about testing quickly became a focus of the hearing, which turned sharply partisan at times.

Republicans, still committed to repealing Obama's health care law, approached the questioning with a prosecutorial tone, leading New Jersey Democrat Frank Pallone to call the whole exercise a "monkey court."

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The contractors did say the problems can and are being fixed on a daily basis, and they expressed confidence that uninsured Americans would have coverage by Jan. 1, when the law's benefits take effect, though they would not be held to a timetable.

The hearing comes as President Barack Obama's allies are starting to fret about the political fallout. Democrats had hoped to run for re-election next year on the benefits of the health care law for millions of uninsured Americans. Instead, computer problems are keeping many consumers from signing up through new online markets.

One House Democrat says the president needs to "man up" and fire somebody, while others are calling for sign-up deadlines to be extended and a reconsideration of the penalties individuals will face next year if they remain uninsured.

Rep. Richard Nolan, D-Minn., told The Associated Press the computer fiasco has "damaged the brand" of the healthcare law.

"The president needs to man up, find out who was responsible, and fire them," Nolan said. He did not name anyone.

The focus on the contractors is a first step for GOP investigators. After the failure of their drive to defund "Obamacare by shutting down the government, Republicans have suddenly been handed a new line of attack by the administration itself. Administration officials, including Health and Human Services Secretary Kathleen Sebelius, are to testify next week.

Slavitt, representing QSSI's parent company, said the operation's virtual back room, known as the federal data hub, is working well despite some bugs.

But his company was also involved with another part of the system, a balky component for registering individual consumer accounts that became an online bottleneck.

Slavitt acknowledged the registration system had problems but said they've largely been cleared away.

And he also laid blame on the administration, saying that a late decision to require consumers to create accounts before they could browse health plans contributed to the overload.

"This may have driven higher simultaneous usage of the registration system that wouldn't have occurred if consumers could window-shop anonymously," he said.

Another line of questioning dealt with the potential for privacy violations.

Rep. Joe Barton, R-Tex., asked about a warning on the website that information visitors entered into the system would be subject to greater disclosure than the medical forms Americans typically fill out. That information is protected under the Health Insurance Portability and Accountability Act, or HIPAA, a privacy law, the Washington Post reported.

"Are you aware this was in the source code? Do you think that's HIPAA-compliant? How can that be?" Barton asked. "You know that's not HIPPA-compliant! Admit it! You're under oath."

"Sir, that is CMS' decision to make," Campbell, the CGI vice president, replied, referring to the Centers for Medicare and Medicaid Services, the agency within the HHS that is overseeing implementation of Obamacare.

"We're telling every American if you sign up for this, or you even attempt to sign up, you have no reasonable expectation of privacy," Barton said. "That is a direct contradiction of HIPAA, and you know it."

"That is a CMS call," Campbell said. "That is not a contractor call."

Rep. Joe Pitts, R-Pa., chairman of the panel's health subcommittee, said he wants to focus on the administration's decision not to allow browsing, or window-shopping. That's a standard feature of e-commerce sites, including Medicare.gov for seniors.

Lack of a browsing capability forced all users to first go through the laborious process of creating accounts, overloading that part of the site.

"Who made that decision? When was it made? Why was it made?" Pitts asked.

Without proof, some Republicans are suggesting it was done for political reasons, so shoppers could first see tax credits that work like a discount on their premiums.

Acknowledging what's been obvious to many outside experts, the administration now says the system didn't get enough testing, especially at a high user volume. It blamed a compressed time frame for meeting the Oct. 1 deadline to open the insurance markets. Basic "alpha and user testing" are now completed, but that's supposed to happen before a launch, not after.

Meanwhile, House Democrats are starting to worry aloud about persistent problems with the rollout.

Former White House chief of staff Bill Daley, interviewed Thursday on "CBS This Morning," said Obama "can't just get stuck on this for the next several weeks." As for calls that Sebelius be fired, Daley said that would be like firing the captain of the Titanic "after the ship hit the iceberg."

Obama says he's as frustrated as anyone and has promised a "tech surge" to fix the uncooperative website. White House spokesman Jay Carney said the administration will be more transparent about the problems. After more than 20 days without briefing the media, HHS will start regular sessions on Thursday, he said.

Editor's Note: 22 Hidden Taxes and Fees Set to Hit You With Obamacare. Read the Guide to Protect Yourself.

In light of the computer problems, some Democrats are saying Obama should consider extending open enrollment season beyond March 31 and revisit the penalties for individuals who don't sign up and remain uninsured. Under the law, virtually all Americans must carry health insurance starting next year or face fines.

On that point, a change in the time line for signing up for coverage is underway, the White House said. Consumers have until Dec. 15 to apply for coverage that's effective Jan. 1.

Even though open enrollment lasts until March 31, people would face a penalty if they postpone buying coverage beyond mid-February. Calling that a "disconnect," the White House said officials will soon issue policy guidance allowing consumers to sign up by the end of March without penalty.


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