How Tech Giants Botched Obamacare

Service disruptions in the final hours before the March 31 deadline for health insurance enrollment generated fresh public-relations troubles for the Obama administration. Once again, healthcare.gov and some state exchanges’ websites failed to work properly. Yet as Obamacare’s supporters and opponents sniped at each other, one group stayed above the fray: the tech companies that actually built the dysfunctional health-exchange websites.

Glitches, delays, and spiraling costs have plagued state-level insurance websites developed by companies including Maximus and IBM in Minnesota, Oracle in Oregon, and Xerox in Nevada. While a number of the websites have improved since their October debuts, some still struggle with verifying applicants’ eligibility for insurance. Some sites don’t provide e-mail receipts or other notifications, so applicants can’t be certain the systems received their information. In 2010 the consulting firm Deltek projected that states would have to pay contractors roughly $600 million to set up exchanges; the states have already been granted $4.7 billion and have awarded $2.6 billion to contractors to account for extra work. “Everyone is sort of floundering about,” says Robert Booz, an analyst at researcher Gartner. Barely a quarter of the exchanges are fully functional, he says; some of the most poorly performing sites likely won’t be fixed until closer to the next insurance enrollment period, in November.