How you end up spending $800 million on HealthCare.gov


A man looks over the Affordable Care Act signup page on the HealthCare.gov Web site in New York in this photo illustration. (Reuters/Mike Segar)

Signed into law by President Obama on March 23, 2010, the Affordable Care Act has proven to be its own kind of jobs act, especially when it comes to the Washington-area IT community.

When, in several places, the bill called for the creation of an "Internet website" to allow Americans to find and sign up for new health insurance coverage, it opened the tap on hundreds of millions of dollars that would eventually go to creating HealthCare.gov's front end and back end, as well as a small universe of accompanying digital sites. On Wednesday, the office of Daniel Levinson, the inspector general of the Department of Health and Human Services, put out a report detailing the dozens of contracts that went into building out the Federal Marketplace project. And a look at each in the disaggregate paints a picture of an effort far more sweeping than even that suggested by the half-billion dollars the federal government has already paid out to implement the digital side of the health insurance law.

So, how do you spend that much money building HealthCare.gov and its companion sites? A few million here, a few hundred thousand there, and eventually it adds up.

There were the big ticket items. The long-time government technology vendor CGI Federal picked up a handful of the contracts: $176 million "to build the technical solution and support the operations of the Federal Exchange," $16 million for "Web site development and support services," $11 million for setting up "the information system to support data collection," and nearly $7 million to build and populate the part of the site that allows users to find a health care plan. And $73 million went to fellow major vendor QSSI for setting up the "Data Services Hub," which identifies whether people qualify for coverage.

Another $8.1 million was paid to Booz Allen Hamilton for "standing up the Exchange datacenter." Some $19 million went to HP Enterprise Services to set up the "Virtual Data Center Environment" the sites would run in, which in turn triggered a $9 million contract to Creative Computing Solutions for securing the cloud-computing aspects of the project, protection that included "near-real time global threat intelligence."

Near the other end of the scale was the $160,000 paid to a company called Blast Design Studio "to purchase online marketing consulting services" for HealthCare.gov, and another $198,000 for Blast to integrate those online marketing efforts with the Centers for Medicare & Medicaid Services' existing Google Analytics deployment.

But that's just a sampler. There were, the report finds, some 50 other contracts signed for the Federal Marketplace, for a total of 60 in all. CMS, the IG report notes, "relied -- and continues to rely extensively -- on contractors to operate the Federal Marketplace."

While there have been calls to open up federal contracting to wider range of IT firms than those that have traditionally competed for government technology contracts, the report hints at why that didn't happen to any real degree in this case. In short, the creation of the digital Federal Marketplace, including HealthCare.gov, was the spidering out of existing federal contracting practice rather than something brand new.

See footnote 8: "Of the 60 contracts identified by CMS, 55 were actually orders places on previously awarded contracts." The front-end design of HealthCare.gov was, for example, piggybacked onto an existing $73 million contract for the design of the sites Medicare.gov, CMS.HHS.gov and MyMedicare.gov that had previously been awarded to CGI Federal.

Levinson's report also reveals that we're not done paying for the Federal Marketplace yet. Bills totaling some $500 million have already been paid, and the federal government has committed to pay some $800 million in total for the project. But add up all the base contracts and option years -- that is, possible extensions of existing contracts that might be necessary to keep the project operational -- and the total shakes out to some $1.7 billion.

Of course, that figure has to be put in perspective. The amount spent on health care in the United States is in the neighborhood of $3 trillion a year, so any efficiencies in how that is spent can have an enormous impact -- no only in the economic sense, but in the flesh-and-blood lives of millions of Americans. But it's still a lot of money, especially for a project so deeply flawed in its execution.

 

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Nancy Scola is a reporter who covers the intersections of technology and public policy, politics, and governance.
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