Hidden Obamacare Website Costs Show Lack of Transparency

Dec. 10 (Bloomberg) -- Megan Hughes updates the latest news on the Affordable Care Act rollout. She speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

President Barack Obama’s health agency said it has spent $319 million building an online health-insurance marketplace through October.

More than three years after the passage of Obama’s signature health-care law in 2010, it’s almost impossible to verify and track that spending through public records.

What the estimates don’t include is the around-the-clock effort to repair the website, which hundreds of thousands of Americans found unusable after its Oct. 1 debut. The race to fix it brought in computer engineers from companies such as Google Inc., Red Hat Inc. and Oracle Corp. and is ongoing today.

The figures include what has been paid to contractors, according to Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, part of the health department. The spending details should be accessible on public websites intended to offer government transparency. Instead, the sites present incomplete and sometimes contradictory data, according to open government advocates.

“The administration hasn’t been transparent about enrollment figures, costs and other key metrics -- almost everything they release has a qualifying asterisk with a built-in spin,” U.S. Representative Darrell Issa, a California Republican and chairman of the House Oversight committee, said in an e-mailed statement. “‘The most transparent administration in history’ is as much of a punch line as ‘if you like your plan, you can keep it.’”

Photographer: AP Photo

What the estimates don’t include is the around-the-clock effort to repair the website, which hundreds of thousands of Americans found unusable after its Oct. 1 debut. Close

What the estimates don’t include is the around-the-clock effort to repair the website,... Read More

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Photographer: AP Photo

What the estimates don’t include is the around-the-clock effort to repair the website, which hundreds of thousands of Americans found unusable after its Oct. 1 debut.

‘Still Crawling’

Obama ordered federal officials to “usher in a new era of open government” during his first days of office in 2009. As a senator, he proposed legislation that would have let the public view copies of contracts online -- information that still isn’t available.

“We expected a lot more out of the Obama administration based on his platform, his use of social media and his desire to provide better access to government information,” said Scott Amey, general counsel for the Project on Government Oversight, a Washington-based nonprofit watchdog group. “We’re still crawling, and we really expected to be running at this point when it comes to transparency.”

The administration “is committed to transparency in federal spending and has taken unprecedented steps to increase the public’s ability to access accurate and timely information about how taxpayer dollars are being spent across the government,” Emily Cain, a spokeswoman for the Office of Management and Budget, said in an e-mail.

Watchdog Office

The Department of Health and Human Services will continue “to work diligently to accommodate the numerous and far-reaching congressional oversight requests regarding the Affordable Care Act,” Joanne Peters, an agency spokeswoman, said in an e-mail.

The U.S. Government Accountability Office, Congress’s investigative arm, is trying to estimate the costs of repairing the website, David Powner, director of information technology management issues, said in a phone interview.

It can be challenging to track federal spending on large, complex projects, Powner said. Even so, he has reviewed other major programs, such as weather satellites that cost as much as $10 billion, where the spending was much more clear.

“We knew the cost and we knew the breakdown for the spacecraft components, each individual vendor,” he said. “It’s not like that is not possible.”

‘In Limbo’

Healthcare.gov, where people can shop for private health plans with the help of government subsidies, serves residents in 36 states, while the 14 remaining states operate their own insurance exchanges. Powner said the costs to improve healthcare.gov are “probably in limbo.”

Health and Human Services Secretary Kathleen Sebelius told lawmakers during a House committee hearing on Oct. 30 that she wanted to “very quickly” provide a written estimate of how much the U.S. government has spent on all health insurance exchanges.

More than a month later, no number has been supplied.

Sebelius is scheduled to testify tomorrow before a panel of the House Energy and Commerce Committee. Larry Allen, president of the McLean, Virginia-based contracts consulting company Allen Federal Business Partners, said he’s skeptical that the department will provide a full accounting.

“I firmly believe those cost numbers, if dropped at all by the administration, will be dropped at 2 or 3 p.m. on Dec. 24,” Allen said in an interview. “What will the taxpayers discover under their Christmas tree?”

Track Spending

Healthcare.gov was designed to help uninsured Americans buy new health plans by March 31, as required under the Patient Protection and Affordable Care Act in 2010, known as Obamacare.

There is no conclusive way to track spending on the project, including what contractors CGI Group Inc., Verizon Communications Inc., Hewlett-Packard Co. and UnitedHealth Group Inc. have received from the Centers for Medicare and Medicaid Services, the federal office overseeing most of the work.

The health office has awarded a minimum of $19.4 million in orders to Verizon and UnitedHealth that are tied to the implementation of Obamacare since Oct. 1, according to data compiled by Bloomberg. The actual total, including the amount spent on fixing the website, is probably far higher, Allen said.

It’s difficult to unravel the spending because the orders are coming from several agencies and through dozens of contracts, some of which predate Obamacare. The work orders aren’t always given specific labels in federal spending websites, complicating efforts to determine funding connections.

Technology Dashboard

The government’s “IT Dashboard,” created to track expensive technology projects, shows figures for contract orders that don’t always match up with other government databases.

The information isn’t up to date, and it isn’t easy to peruse. The dashboard shows an estimated $618 million in technology funding for the Affordable Care Act in a March 2012 document. An August 2013 report on the same site shows a total of $318 million.

The disparity is due to whether or not the Internal Revenue Service’s exchange costs are included in the year that ended Sept. 30, 2013, according to the health office.

The GAO’s Powner based his $600 million-plus estimate for technology spending through September on information from the IT Dashboard. He said he believes the figure is accurate even though the dashboard’s data vary.

Contract Spending

The health department has provided some information on spending. It paid $174 million on contracts tied to Healthcare.gov and supporting technology through August, a sum that jumped to $319 million by the end of October, according to Albright of the Medicare agency.

The figures suggest a late surge in spending before the website’s opening. Only $18 million was spent in October, Albright said in an e-mail.

The Medicare and Medicaid agency owes $630 million for the work through September, Julie Bataille, a spokeswoman for the health office, has said. The agency didn’t provide updated information on the amount owed, or obligated, for work since the October debut of healthcare.gov.

The government in October selected Quality Software Services Inc., a unit of Minnetonka, Minnesota-based UnitedHealth, to serve as the systems integrator for healthcare.gov after the website buckled under heavy traffic and its software was found riddled with errors. CMS had been acting as systems integrator.

Cloud Computing

QSSI has received about $10 million in orders for testing tied to the Affordable Care Act since Oct. 1, according to federal data.

A unit of Verizon received a $9.37 million award last month for “cloud computing services” linked to the health-care law, according to government contracting records.

Other orders to QSSI and Montreal-based CGI, which federal officials have said failed to meet expectations outlined in its contract, aren’t specifically labeled though the timing suggests they may be connected to the website.

Spokesmen for Verizon and UnitedHealth declined to comment. A spokeswoman for CGI said she couldn’t verify whether a recent order was tied to Obamacare.

If the Obama administration had provided more transparency, it might have limited the number of concerns about the implementation of the Affordable Care Act, said Amey, of the Project on Government Oversight.

“Everybody acted as if this was going to go off without a hitch, and the government was fully aware and on notice there were many hiccups in the system,” he said.

To contact the reporters on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net; Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editors responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net; Romaine Bostick at rbostick@bloomberg.net

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