Obamacare's Federal Exchange System Still Isn't Fully Finished, and the Feds Don't Know When It Will Be Complete



One of the many bombshells discovered in the hearings over the botched launch of Obamacare's exchanges in 2013 was that, at launch time, it remained roughly 40 percent incomplete.

The back end, including systems needed to automatically communicate enrollment and payment information between the administration and insurers, hadn't been built at all. The federal exchange built to administer the law was practically a façade—a shiny exterior with nothing inside.

When federal officials admitted this, they first promised that the work would be complete by early 2014. Then the deadline was pushed to the middle of the year. Eventually it was pushed into 2015. The shiny front end was made to work. The back end was left incomplete. 

These incomplete back-end systems were not minor add-ons. They were a critical part of the federal exchange. A government spec sheet from early 2014 warned that "failure to deliver" the payment functionality "by mid-March 2014 will result in financial harm to the Government. If this functionality is not complete by March 2014, the Government could make erroneous payments to providers and insurers." The fate of the health insurance industry, the document said, was on the line.

We're now two months into 2015. The second open enrollment period is, at least officially, over. And the systems still aren't complete.

Instead, insurers are handling calculations manually, sending spreadsheets to the administration, and transferring funds based on those calculations. As Politico, which has consistently provided the best reporting on the outstanding problems with the exchange, reported earlier this week, payments are still being handled via what is essentially a manual workaround, the same workaround that has been used from the beginning. And at this point, Politico reports, "there's no clear date for when the automatic process will replace it." That sounds suspiciously like a warning that it could be a long time, if it happens at all.

Politico's report focuses on the ways that the workaround is time consuming and expensive for insurers. No doubt it is. But it is also potentially quite expensive for the public. As that spec sheet warned, without an automated system in place to calculate the exact payments due to insurers under the labyrinthine rules regarding individual subsidies and broader insurer backstops, there's a significant risk that the federal government will pay more than it actually owes. Right now, in essence, the insurers are handing the administration bills that cannot easily be checked or verified, and the administration is simply paying the tab, whatever it is.

Indeed, according to Politico, the administration already believes that the insurers are incorrectly estimating some of the payments due under the law.

If an automatic system ever does go online, sorting this out could be quite messy. Or, just as likely, the insurers will protest that it wasn't their fault the back end wasn't finished, and the administration will shrug its shoulders and not worry much about reconciling the tab.

Obamacare's broken federal exchange system is yet another reminder of the remarkable, outrageously expensive mismanagement that went into the project.   

All together, building the website cost in excess of $2.1 billion, according to a September 2014 Bloomberg News analysis. This is a $2 billion website—and not only does it still not fully work, almost a year and a half after it was supposed to have been complete, its failures are likely still costing us money.

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  1. But 8% of the victims love it!


    2. I’m sure a few people like having subsidized health insurance now. But the fact is that no one likes this law. Republicans hate it because it was passed by the Democrats. Democrats hate it because it’s not single payer. Everyone else hates it because it is obviously a very bad, very expensive program. No one likes it, and yet it is what got passed. Thank you two-party system + uninformed electorate.

  2. sending spreadsheets to the administration

    Good God.

    1. What’s a .xlsx?

      1. Some form of sexual harassment?

      2. It’s attached to that email on the PST located in C:\temp

  3. What does the ‘back end’ cost at this point? $2bn+ for a website that, behind its shiny buttons and electronic forms that imply some underlying system…. is basically being processed by hand by legions of overpaid federal paper-pushers?

    …because no one thought far enough ahead to ask “how do we link IRS data to confirm income claims” OR “how do we actually provide quotes that directly integrate changing provider-rates and fluctuating subsidy-levels?” You know, the basic stuff every fucking business manages to deal with in electronic-commerce, but which the government can spend 200X more on, and still not make it work?

    1. Plenty of people asked those questions. No one in a position to do so cares enough to answer them.

  4. Free market!

    1. Disclaimer: May only include 8% of the characteristics of an actual market.

    2. …with the nationalization of a market of equal or greater size.

      1. Act NOW!

  5. But it is also potentially quite expensive for the public

    And customers, because insurance companies will be passing the extra costs on to them. So many taxpayers will get hit twice.

  6. ” insurers are incorrectly estimating some of the payments due under the law.”


    When you passed that law saying, “We’ll only let you have 5% profit margins, but since our system is broken, you can claim your costs on the ‘honor system’ for now’, did you really think it was all going to work out swell in the end?

  7. CBO: Obamacare To Cost $50,000 Per Person

    Does that include the website cost overruns? MISSION ACCOMPLISHED! FREE MARKET!

    1. Don’t forget the Bent Cost Curve!

      1. We bent over and got the curve right up our costs.

        1. But only 8% of it, right?


      1. How will it control costs?


        1. Duh, when you subsidize prices and force everyone to buy the same product (with lots of expensive options that most people don’t want or need), and Force Doctors to Accept Less in Payment, well that’s just *the market at work*! Magically, prices will fall and we can all ride unicorns to the Free Money store and never have to work again.

      2. I’m pretty sure that the Risk corridor program guarantees the insurance companies a profit.

    3. I forget now how much they said it would cost when they were hawking this tyrannical POS, but I do remember it would save 2500/yr per household. At least we have that.

    4. I wish it actually did cost that much per person. It seems like that is spread out over ~10 years. If everyone in America experienced a $5,000/yr tax increase, this monstrosity would die quickly.

      Of course, what will actually happen is that most of the cost will be shoveled onto future taxpayers via deficit spending, and whatever is paid in real time will get picked up by higher income brackets.

  8. Words fail to describe just how incompetent and corrupt this administration is. On top of that even their stated goals are undesirable. It is the ultimate cluster-fuck.

    Perhaps peak derp can be reached. We just didn’t realize that it is a plateau instead of a pointy mountain. We have been wandering around on it for a while now admiring all of its features.

    1. Sorry – we’re closing down the Scenic Lookout over Derpville – sequester, doncha know.

      Damned obstructionist Congress!!

      *shoos away tourists – hangs white, plastic chain across entrance*

      1. *leads angry collection of elderly veterans of the Derp Wars to the chain, lifts it aside and lets them look over scenic Derpville*

  9. I was told very few people would be affected by this. So it shouldn’t be a problem for them to track those 100-200 people using spreadsheets.

  10. Regulations so bisanthian that no computer program can be designed to run it yet they claim they can tell us what the weather will be like in a 100 years.

    1. WHY DO YOU HATE POLAR BEARS!!?!?!?!?!

      1. No one hates them – the coats of their cute cubs make very warm coats.

      2. I hate panda bears.

        No really, I do.

        1. “Oh, I have giant claws and teeth but I only want to eat bamboo and not reproduce with any fertile member of my species.”

          Red Pandas are so much cooler than giant ones.

          1. I believe in evolution, therefore giant pandas must be a case of “intelligent” design.

          2. And if they do manage to reproduce and have two cubs, then one is SOL because it turns out celery is not a good diet for supporting a second life form.

            And this is the animal that conservationists decided would be a good symbol for the cause.

    2. With 3 distinct hits, today’s winner of the fewest references among the billions of pages on the Internet from a one-word search is…


      1. I wondered that too but I think he/she meant to type Byzantine?

  11. April 15th isn’t set in stone, right? I can file when I’m ready?

    1. Yes, you can file when you are ready, as long as that’s not later than April 15.

    2. I was ready to file, and then my hard drive crashed. I don’t think I have any of my records backed up, so… sorry!

    3. You can do whatever you want so long as you’re willing to face the consequences.

      1. * Consequences subject to change at our discretion.

  12. payments are still being handled via what is essentially a manual workaround

    So the ACA is a make-work project.

    the administration is simply paying the tab, whatever it is.

    Without any semblance of a budget, where is this money coming from?

  13. And at this point, Politico reports, “there’s no clear date for when the automatic process will replace it.” That sounds suspiciously like a warning that it could be a long time, if it happens at all.

    If it hasn’t happened by now, it won’t happen at all. They are way past the point of no return for a software development program. They’re probably doing lots of work everyday, but none of it is moving them any close to completion. At this point they should just scrap everything they have and start from scratch, hoping lessons learned will allow them to do it right this time. But they can’t do that for political reasons. Instead, the stop-gap manual method has become the standard and it will remain that way until the next Healthcare Reform Act is passed.

    1. Yeah. It is pretty clear they have no idea how to do this. The technical barriers are too large. If it was ever going to be built, it would have been built by now.

      1. Their codebase is probably huge now and mostly useless. No one knows what all of it does because no one has been there from the beginning. It probably takes months to get new people up to speed. Then the competent ones realize just how hopeless the situation is and leave. They have almost certainly achieved a critical mass of useless people and useless code. The only way out is to scrap it all, but that is the only path that is politically impossible.

        1. The task was impossible to begin with. The IRS databases have been constructed over decades and they are built to do specific things. When you think about it, they are pretty impressive. They cross reference the W2s and other income documents of tens of millions of taxpayers and allow probably a hundred million or more taxpayers to file their taxes electronically every year.

          The IRS owns them and isn’t going to let anyone fuck with them. And you can’t blame them. The HHS databases are the same, though probably not as impressive. You tell me how you build a system that will cross reference different databases when you have no ability to change any of the code in the two databases to make them more compatible. I don’t think it can be done without going in and changing the source code of the IRS, HHS and insurance company databases to make them more compatible. And that is never going to happen.

  14. Only someone who knows nothing about data bases and government data basis in particular could have thought this system would work. You don’t have to be a technical person to understand that connecting data bases and cross referencing them is not as easy as it sounds and that doing so when the various data bases are owned by different people such that you don’t own the source code to each database is pretty much impossible. The first idiot that went before Congress in 2009 and said they were going to build a website that linked to insurance company, IRS and HHS databases and cross referenced all three should have been laughed out of the room. The people who created and voted for this bill are delusional morons who think words have magic powers to make things occur in the real world by merely saying them. I mean the bill says to create a website and exchange, why isn’t it happening?

    1. You don’t have to be a technical person to understand that connecting data bases and cross referencing them is not as easy as it sounds

      Actually, I think you do. The guy on the street is used to technology pretty much just working.

      So if someone even sees a database structure mapped out pictorially, they probably think it really is no more complicated than some of the arrows having different colors.

      1. I am not a technical person and I laughed out loud when I first heard what they were trying to do. I do, however, have some technical knowledge of how these things work and first hand experience in how difficult getting databases to talk to each other is.

        More than even technical knowledge, I think you need to understand how government works. I have no doubt they brought in a bunch of smart people from Google and other places who thought this would work like building a website for a corporation. They had no idea that the federal government is made up of tons of entities who do not cooperate or answer to each other. Just because you are some swinging dick Google guy doing the Chocolate Nixon’s bidding creating the exchanges doesn’t mean the IRS gives a fuck or will let you lay a finger on their databases.

        1. “doesn’t mean the IRS gives a fuck or will let you lay a finger on their databases.”

          and even if they did = they stupidly didn’t even *budget for that* in the law, or create the legal authority to even start that kind of massive-systems-& process overhaul. They just assumed that TOP MEN would make it happen.

          1. They are primitive morons. They thought words would magically make it happen.

      2. Actually, I think you do. The guy on the street is used to technology pretty much just working.

        Like how Millennials think Twitter has always existed…

    2. These are the same people that just assume business will somehow stay in business and keep making money no matter how many regulations you throw at them. That’s how the recovery was supposed to work. They’d spend a lot of money on cronies, pass a bunch of regulations, and businesses would just keep doing their thing and fuel the recovery.

      1. “You’ll do something, Mr. Rearden!”

      2. So what you’re saying is that they are shitty Rand villains?

    3. Theoretically it shouldn’t be that bad. You just need to have good I/O documentation from each stakeholder AND confidence that each stakeholder will properly implement its database as documented.

      The main problem is what you said below. None of the stakeholders have any incentive to play nice. And many of them probably don’t have the ability to play nice, even if they wanted to. “Documentation? What’s that? Oh, I knew we forgot to add something to the contract…”

      1. Theoretically I guess. The other problem is that the stakeholders have every incentive not to play nice. If I am the IRS and I play nice and let you into my databases, what is the upside for me? If it works, you get all of the credit. If you fuck up and screw up my database and people’s taxes get screwed up, I am SOL. No one is going to care or probably even know the databases were screwed up trying to implement Obamacare. They are just going to blame me.

  15. The back end, including systems needed to automatically communicate enrollment and payment information between the administration and insurers, hadn’t been built at all.

    Remember back when I suggested “runners” to take printouts to data entry people working the back-end systems? Remember how everyone scoffed?

    1. And see my post below about what not having a “back end” actually means. Normally I would never condone stealing. These people are so fucking stupid and have made stealing from the treasury so easy that they almost deserve to have it happen. Indeed, if everyone followed my plan and signed up for the subsidy, the entire system would crash and Obamacare collapse.

    2. So these “runners” physically take the information from the customer?

      No? Their secretary does that… or they’re faxed?

      So then they must physically bring them to the software people?

      1. They’re people persons!

      2. Used to call that “sneaker net.”

    3. One of my clients has access to a ton of databases. They literally pay people to sit at a desk and run manual inquiries on each of the databases because there is no way to connect them to allow for a single inquiry to search all of them.

      1. A lot of organically built IT organizations are run that way.

        1. And every different government agency has their own organically built IT system. There isn’t one big government IT system that runs everything. They all were built separately and organically.

          1. By “organically built” I mean it grew in a pile of manure.

            1. LOL. I mean that every agency buys its own IT equipment and has its own system. All of the systems were built to serve whatever function the agency that built them wanted fulfilled and with no regard to interoperability.

              There are a few common things. They all use microsoft outlook and sharepoint I think. But anything beyond that, forget it.

              1. Having consulted in IT for a few years, that’s pretty much the way most businesses run, just on a MUCH larger scale. Honestly, most of the country runs on Excel spreadsheets manually managed by people that spend *way* too much time doing just that.

                The level of technical hell that would have to be waded through to connect the various government systems all but guarantees that only the deluded or charlatans would ever promise to be able to do it in any sane time frame – those who are competent and honest would look at it and run screaming from the room.

  16. Here is the other thing about this. There is no way that the IRS is going to be able to confirm that anyone has insurance. Given that fact, I see no reason why anyone would ever pay the penaltax. If you don’t have insurance, just mark the block on your taxes that says you do and don’t worry about it. There is a snow balls’ chance in hell the IRS is going to figure out you don’t have insurance.

    And lets not forget they have no way of cross referencing income and insurance stats. So if you are feeling really dishonest, go sign up for Obamacare, lie about your income so you can get the subsidies, then just pocket the subsidies and cancel the insurance. You can do this even if you already have insurance. Just sign up anyway and pocket the subsidies. I see no way for these idiots to ever catch you.

    1. I came to this realization when I filed my taxes this year, and the only reference to health insurance was one question: “Do you have health insurance?” There was no proof required. So if the system is not communicating with all the databases, how are they going to know the difference?

      1. They won’t. The penaltax is nothing but a tax on the gullible or the stupid. There is no reason not to just check the box yes and forget it.

      2. Yep. They will send a bill to everyone who checked “no”, then the ones who lied MIGHT get caught in an audit a few years down the road.

        1. Has anyone looked into the law to see what ‘qualifies’ as health insurance?

          For instance, if I tape a label that reads “Health Insurance” to a Mason jar, and put a dollar in every week, do I have health insurance?

          1. Seems legit. Use the cardboard from a box of lids as your insurance card. “I’m on the Ball plan.”

            1. Hey, my Mason Jar covers everything at 100%. Pediatric dentistry, birth control, menopause treatments. Everything.

              1. OHH, one of those “Cadillac” Mason jars!

          2. Obama:Mason jars::Hoover:tarpaper

    2. That’s risky business, John. You first.

      1. I have insurance so I can’t. And as much as I think they deserve to have people steal, I am not and never will be a thief. I can assure you though, I would totally lie and mark yes on the penaltax. Fuck them. Marking yes is an act of civil disobedience anyone should be proud to do.

  17. Obama is a better coder than his coders.

  18. Given what appears to be the leadership of this program, it’s completion may well be NEVER

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