Government Watchdog Takes Harsh Look at Healthcare.gov Rollout, Warns of More Problems to Come



A representative from the Government Accountability Office (GAO) testified before Congress on the rollout of HealthCare.gov—the federal health exchange system created under Obamacare—this morning. Here's the short version: It didn't go very well.

"We found that CMS undertook the development of Healthcare.gov and its related systems without effective planning or oversight practices, despite facing a number of challenges that increased both the level of risk and the need for effective oversight," the GAO's prepared testimony says.

But you already knew that. Everyone paying any attention at all to the news last fall knows that. What the GAO testimony does is add some color and confirm a few details.

One of the big problems was that federal health bureaucrats kept changing their minds during the development process. The Centers for Medicaid and Medicare Services (CMS), which was charged with building the exchange system, "incurred significant cost increases, schedule slips, and delayed system functionality." These delays were largely due to "changing requirements that were exacerbated by inconsistent oversight." The dithering cost time, and it also cost money. Between September 2011 and February 2014, development cost estimates blew up, from about $56 million to $209 million for the federal marketplace. Costs for the data hub, another key part of the exchange, went from $30 million to $85 million.

It was a classic bureaucratic circus. No one knew who actually had the authority to tell contractors what to do, so contractors got jerked around and sent on fruitless tasks, or asked to do work that they shouldn't have been doing. The GAO report says that CMS improperly spent $30 million on bonus features that it didn't technically have the authority to order.

Delays and costs piled up, with some held off until weeks before launch, and when it came time to flip the switch, no one knew if it would work. "CMS launched Healthcare.gov without verification that it met performance requirements." We know how that worked out.

And thanks to this morning's testimony, which in addition to the GAO also included a representative from CMS, we know what's likely to happen next: more foul-ups when open enrollment begins for the second time this year.

CMS Deputy Administrator Andy Slavitt said this morning that "there will clearly be bumps" when the exchanges open for all business again in November, according to a report in Politico.

Slavitt also confirmed that the exchange still isn't built yet, with key backend payment systems that have already been delayed multiple times still incomplete. Slavitt said that the administration doesn't expect work to be finished on those systems until next year—after the second open enrollment period is over.

Slavitt seems to think that the situation is under better control than last time, thanks to an improved early warning system. The folks at GAO, however, aren't so sure. One of the watchdog's recommendations in the report is to "assess the causes of continued cost growth and delayed system functionality"—basically to figure out exactly why the system consistently costs more and takes longer to develop than expected, and what the real risks are of further delays and problems.

I don't expect this year's open enrollment period to be nearly the catastrophe that last year's was. Most likely, it will go more or less the way that the last few months of open enrollment did this year, with some ups and downs but basically acceptable performance for the front end of the system.

But I am not totally sure of this, in part because last summer, the GAO issued another early warning that that administration was not on track with work on the exchanges. In the wake of that report, worries about delays grew. 

This was the administration's response to that line of criticism: