H-P Said to Bump Verizon Unit as Obamacare Website Host

Photographer: Andrew Harrer/Bloomberg

The Centers for Medicare and Medicaid Services, which is overseeing the rollout of the online insurance exchange, is seeking to ensure a smooth transition between the two contractors, an official said. Close

The Centers for Medicare and Medicaid Services, which is overseeing the rollout of the... Read More

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Photographer: Andrew Harrer/Bloomberg

The Centers for Medicare and Medicaid Services, which is overseeing the rollout of the online insurance exchange, is seeking to ensure a smooth transition between the two contractors, an official said.

The U.S. government is replacing a Verizon Communications Inc. unit with Hewlett-Packard Co. as the provider of data-center services for the Obamacare website, a Health and Human Services Department official said.

The contract for hosting the federal online insurance exchange currently held by Verizon unit Terremark expires in March and won’t be renewed, said the official, who asked not to be identified because the move hasn’t been announced.

Hewlett-Packard was awarded the next data-center contract in July, before the Oct. 1 opening of the federal insurance exchange, the official said. The Centers for Medicare and Medicaid Services, which is overseeing the rollout of the online insurance exchange, is seeking to ensure a smooth transition between the two contractors, the official said.

The contracting change became public as President Barack Obama’s administration works to meet a self-imposed Nov. 30 deadline for repairing website troubles that have kept hundreds of thousands of Americans from enrolling in medical insurance under the 2010 Patient Protection and Affordable Care Act.

Small businesses won’t be able to use the federal government’s health-insurance website until November 2014 in most U.S. states, the Health and Human Services Department said on a conference call yesterday.

Businesses can use brokers or enroll directly with insurers in the meantime, the agency said. The change applies to 36 states where the federal government is running insurance exchanges.

‘Frustrating Roadblock’

The data center run by Terremark has suffered at least two outages in October that caused the website and a related service to fail. Earlier this month, HHS worked with Verizon and Terremark to upgrade infrastructure to improve system reliability, the agency official said.

Failures at the Terremark data center were a “frustrating roadblock” for technicians working to repair the website, Jeffrey Zients, an economic adviser to Obama who was appointed as a management consultant to the project, said in a Nov. 1 conference call.

Terremark, which was acquired by Verizon in 2011, has had more than $49 million in contract awards related to Obamacare since March 2010, according to a study by Bloomberg Government analyst Peter Gosselin.

Michael Thacker, a spokesman for Hewlett-Packard, declined to comment. A spokesman for Verizon, Kevin King, didn’t respond to an e-mail after hours asking for comment on the move.

Verizon’s replacement by Hewlett-Packard was first reported by the Wall Street Journal.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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