The new health-care exchanges created by the Patient Protection and Affordable Care Act, popularly known as Obamacare, have been in the news lately. And not in a good way. The system has been overwhelmed with traffic and plagued by bugs. Who built the system? And why are they having so many problems? Read on to find out.

What do the Obamacare exchange websites do?

The exchanges are online marketplace where millions of Americans who don't receive health insurance from their employers will be able to purchase coverage. The system is designed to work like any other e-commerce site. Users can compare health insurance plans, choose the one that best meets their needs, and order it online.

How has it gone?

Not great. The system was overwhelmed with traffic on its first day. Since then, the site has become somewhat more responsive, but it is still plagued with problems.

Who is in charge of the system?

Responsibility for the system is shared between the federal government and some states. The Affordable Care Act gave states the option to run their own exchanges or to leave that job to the federal government. Only 14 states and the District of Columbia opted to operate their own exchange. The other 36 states opted to let the federal government do some or all of the work of setting up the exchange for their consumers.

That means the bulk of the Obamacare implementation has fallen to the Centers for Medicare and Medicaid Services, part of the Department of Health and Human Services. As its name suggests, this agency has traditionally administered key aspects of the Medicare and Medicaid programs. The Affordable Care Act gave it a new role administering the exchanges that form the heart of Obamacare.

Even in states that have opted to run their own exchanges, CMS has played an important role. CMS has supervised states' implementation of their exchanges and provided them with access to federal data needed to run the system.

Private companies sell things online all the time. Why is the government having such a hard time setting up an online health insurance marketplace?

If the exchanges were just insurance marketplaces, getting them to work might have been a lot easier. Much of the complexity comes from the fact that the exchanges are used to administer the complex system of subsidies the Affordable Care Act provides to low-income consumers. Figuring out whether a customer is eligible for a subsidy, and if so how much, requires data from a lot of federal and state agencies. Here's a chart from Xerox that illustrates the complexity of the system:

The amount of subsidy depends on a consumer's income. To ensure each consumer receives the correct subsidy, the exchanges must request income data from the Internal Revenue Service.

The exchanges are only open to American citizens and documented immigrants. To verify an applicant's citizenship and immigration status, an exchange must first verify a customer's identity with the Social Security Administration, and then check her immigration status with the Department of Homeland Security.

The exchanges must also check to make sure applicants are not already enrolled in another government health insurance program, which would make them ineligible for Obamacare. That means retrieving data from the Veterans Health Administration, the Department of Defense, the Office of Personnel Management, and the Peace Corps. It also means checking with a state's Medicaid and Children's Health Insurance Program agencies to see if an applicant is already enrolled in one of those programs.

Finally, once a customer purchases health insurance, the exchange must provide her information to the insurance company she has chosen. Insurance companies across the country have been scrambling to integrate their own computer systems with the exchanges.

OK, that sounds pretty complicated. Who's building the system and how much did it cost?

The primary Obamacare exchange contract went to the CGI Group, a Canadian consulting company that has also played a role in administering Canada's single-payer health care system. CGI has been awarded at least $88 million by CMS to build the federal exchange and provide related technical support.

CMS provided another $55 million to Quality Software Services, a Maryland-based health care IT company, to build the data hub, software that serves as an intermediary between all those federal agencies and the Obamacare exchanges.

Several other federal contractors have also been awarded multi-million dollar contracts to assist with various aspects of building and operating the exchanges. A June report by the Government Accountability Office found that CMS had already committed to spend $394 million on the system.

What has it been like to use the site?

There are two phases to the application process. In the first phase, users register with the site to create login accounts. In the second phase, they select and purchase health insurance. The exact user interface varies from state to state, but here's what it looks like in Washington DC:

When the site first opened on Oct. 1, many users had difficulty even logging in. They were greeted with an error screen that looked something like this:

That problem has become less frequent in recent days; most people have been able to get through at least the first few steps of the registration process. But as recently as Tuesday, users of the federally-administered exchanges were still experiencing problems. The Obama administration has refused to say how many customers have successfully purchased health insurance through a federal exchange, which might be a sign that the number isn't very high.

Why are the exchange sites so busted?

Broadly speaking, the sites have suffered from two types of problems. In the first few days, the system was simply overwhelmed with traffic. Last week was probably one of the highest-traffic weeks the site will ever experience, and websites often discover unexpected problems during their first big traffic spikes. Early users of Twitter remember the "fail whales" that popped up regularly on the site as Twitter struggled to accommodate surging demand.

That initial traffic rush is now over and the Obama administration says it's buying more servers to cope with future traffic spikes. So in the long run, dealing with traffic volumes shouldn't be a serious problem.

But the exchange may have deeper design flaws. As discussed above, the site needs to interact with a large number of databases operated by various federal and state agencies. If these back-end systems are poorly designed, it could take months or even years to straighten out the mess.

The more fundamental problem is that the system is operating on a tight deadline and a limited budget—at least by the standards of federal agencies. Three years and hundreds of millions of dollars might seem generous, but federal agencies have wasted a lot more money with a lot less to show for it in the past.

What happens next?

The Obama administration says it is working around the clock to fix the problems with the system. "We won't stop until the doors to are wide open, and at the end of the six-month open enrollment, millions of Americans gain affordable coverage," Health and Human Services spokeswoman Joanne Peters said on Tuesday. If all goes according to plan, most of the bugs will be squashed before coverage starts on January 1.

The next big test will come when users who signed up for coverage will start trying to use it. If insurance companies have correctly interfaced with the exchanges, then millions of newly-ensured patient will be able to get medical care. But implementation problems could prevent some patients from using the health insurance they'd signed up for.

Alex Howard explains how long it might take for the administration to get working properly, and why the real test comes in December. (Natalie Jennings/(On Background))