Consumers Abandoning

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Stephen Lendman
Activist Post

Can you blame them? According to Digital Trends (DT), “more than $500 million” was spent creating “the digital equivalent of a rock.”

DT’s source is the General Accounting Office (GAO). Most spending went for contracts, saying:

CMS (Centers for Medicare and Medicaid Services) data indicated that the agency spent almost $394 million from fiscal year 2010 through March 31, 2013, through contracts to complete activities to establish the FFEs and the data hub and carry out certain other exchange-related activities.

FFE’s are federally administrative exchanges. They include and Washington run state exchanges.

Other costs went for salaries and administrative expense. CGI Federal is’s lead contractor. It got $93.7 million for failure. It’s done lots of previous government work.

Former employee/whistleblower Benjamin Ashmore sued. He alleged millions of dollars in fraud. He was fired for refusing to go along with a rigged bidding process.

The GAO says $392 million doesn’t “include CMS salaries and other administrative costs” associated with Obamacare exchanges. In other words, total costs are far higher. It’s unclear how much was spent.

According to DT, CMS’ 2013 budget request was more than $1 billion in additional funds “needed to support operation infrastructure” and open enrollment preparations.

GAO estimates about $2 billion to build and operate FFEs in 2014. DT believes it’s a low-ball figure. Federal contracts are complicated.

It’s hard “mak(ing) a direct comparison between the cost to develop and the amount of money spent building private online businesses,” said DT.

Government waste is widespread. It’s notorious. Enormous amounts are misspent. Successful Internet companies built functionally well-operating web sites. They did it without wasting hundreds of millions of dollars.

America split the atom, went to the moon, conducts space travel, invented the computer and Internet, and has some of the world’s top tech experts.

It didn’t help.’s launch was a bust. DT calls it a “befuddled beast.”

It “shutdown, crapped out, stalled, and mis-loaded so consistently that its track record for failure is challenged only by Congress.”

Days after opening, it underwent major code revisions. It still rejects logins. It’s in poorly written code.

It “buckled under heavy influx of traffic.” It never should have happened. Google, Facebook and other heavily trafficked sites easily handle far more daily volume.

Department of Better Technology competes with CGI. It develops software for governments. On October 7, it headlined “The Fiasco.”

“The contractors who made this website were at best sloppy, and at worst unqualified for the job,” it said.

“So why? How did this happen to arguably the most important and lasting website of this president’s administration?”

Systems in place had to “integrate into various legacy systems, and that system could only be tested so much, and that building a highly scalable FISMA (Federal Information Security Management Act) certified web service was impossible from the get-go.”

When things go wrong, they throw “more money at the same people who caused the problem to fix” it.

Consumers have until December 15 to be eligible for coverage on January 1. They initially had until February 15 to avoid being assessed penalties. Open enrollment at first ran through March 15.

On October 22, the Obama administration announced a six week extension before penalties are incurred. Consumers will have until March 31 to enroll. Those doing so by then won’t be penalized.

Fines thereafter will be assessed for not having coverage three straight months. Extra time is gotten to get it. Consumers needing it now have to muddle through best they can.

An October 26 Wall Street Journal op-ed calls Obamacare’s rollout a Titanic taking on water. It’s more than a huge embarrassment. It’s a major disaster. It’s a political one.

Despite about three and a half years to be ready, it crashed and burned. It’s Obama’s “brand.” It “informally carries his name.”

“It was unveiled with great fanfare.” It doesn’t work. It features “crashed systems, frozen screens, (and) phone registrations that prompt you back to the site that sent you to the 800 number.”

It’s a disaster with no solution so far. It’s unclear when or if things will be properly fixed.

Former Obama chief of staff Bill Daley was asked if Housing and Human Services (HHS) Secretary Kathleen Sebelius should be fired.

“To me that’s kind of like firing Captain Smith on the Titanic after it hit the iceberg,” he said.

October 1 was Obamacare rollout day. Everything should have gone smoothly. Problems should have been found and corrected in time. Consumers needing to enroll in healthcare exchanges can’t do so.

Consumer Reports advised its readers to avoid for another month. It’s “barely operational,” it said.

According to the Washington Post, traffic from October 1 to October 13 plummeted 88%.

On October 26, London’s Guardian headlined “Responsibility for’s IT problems lie with dot gov,” saying:

This was a management not a technology failure. Obama’s error was not to empower technologists to tell him the truth.

He bears full responsibility. It’s his signature program. It bears his name.

Merici Vinton was one of Consumer Financial Protection Board’s (CFPB) first digital lead employees. She assisted its chief technology official, Eugene Huang, in developing its technology and digital strategy.

She oversaw its successful launch. She said making digital and tech work in government requires:

(1) Never build a website that’s too big to fail; instead start small. 

(2) Let’s do open source when possible (preferably always). 

(3) Let’s have in house strategy, design, and tech.

None of this is revolutionary, she said. It’s common private sector practice. “(M)any government agencies outsource their technical capabilities to the point where the vision and strategy is out of house.”

“Not only that, fixing a typo on a website can take 24 hours.” It shouldn’t be that way. “Start small, have a vision, fix federal hiring and procurement. And stop putting website requirements in legislation.”

CFPB does it right “and continues to,” she said. “We launched a pretty basic, consumer facing public website in six to eight weeks.”

Building a complaint intake system followed. It took six months. Mortgages, credit scores, bank accounts, and other products were added.

The system now integrates with over 100 financial institutions, government agencies and 50 states.

Everything wasn’t done at once. Rollouts proceeded incrementally. Knowledge gained along the way helped things go smoothly. The end product works as intended.

On October 25, Reuters headlined “Frustrated by some consumers buy off exchange.”

They’re avoiding an inoperable web site. They’re contacting insurers directly. They’re enrolling on their own. Perhaps things should have been set up this way in the first place.

Some insurers report up to double the amount of normal traffic. If callers don’t qualify for government subsidies, they sign them up directly.

Off-exchange purchases may jeopardize the administration’s plan to enroll millions of Americans by March 31. January 1 eligibility requires doing so by December 15.

Many young healthy people may opt out altogether. A higher risk pool means higher costs.

On October 25, Reuters headlined “White House says ‘Obamacare’ website will be fixed by end of November.”

Administration official Jeffrey Zients heads efforts to fix things. He said Quality Software Services (QSSI) is overseeing repairs.

A year ago, lawmakers questioned it about earlier work. At issue is being owned by the nation’s largest health insurer, UnitedHealth Group.

QSSI helped helped set up It’s the site’s second most important contractor after CGI. It worked on three areas:

  • building a data hub to permit information transfers between different groups;
  • designing a tool to help users register; and
  • testing how technology it designed worked.

UnitedHealth Group’s ownership suggests a conflict of interest. Current web site problems indicate faulty QSSI design. Choosing it to oversee fixing its own flawed technology denotes poor selection.

Technology consultant Stanley Nachimson expressed surprise about QSSI’s involvement, saying:

They certainly want to make sure the whole process is fixed and is operating correctly as quickly as possible. (S)ometimes it’s hard to review your own work.

Will it fix what it botched in the first place? Is another firm more qualified to do it?

Until now, a technology company didn’t supervise the entire project. HHS’ Centers for Medicare and Medicaid Services (CMS) served as system integrator.

Problems will be fixed in weeks, claims Zients. It remains to be seen if his optimism matches reality.

QSSI’s executive vice president, Andrew Slavitt, said the administration waited until days before launch to fully test

A simulation failed. The site crashed. Launch proceeded as planned. It proved disastrous. No one knows for sure when things will be resolved.

What wasn’t made right in three and half years may take months to do properly now. In the meantime, millions can’t sign up. Others haven’t done so. Perhaps many more aren’t sure what to do.

Washington runs web sites for 36 states. They’re troubled like Another 14 states built their own exchanges. They have fewer problems to resolve.

QSSI’s parent company UnitedHealth spokesman Matt Stearns said:

There are a number of other components to the registration system, all of which must work together seamlessly to ensure (glitch-free) registration.

Since October 1, nearly 20 million attempts to access succeeded only about 500,000 times. A small subset of applicants actually got coverage.

The bottom line to date is a testimony to failure. It’s not the first time Washington botched things. On October 21, Computer World headlined “ website ‘didn’t have a chance in hell.’ “

Most US IT projects fall short. They miss deadlines. They cost more than budgeted. They don’t satisfy users. “Such is the case with”

According to research firm Standish Group, about 94% of federal technology projects in the last decade fell short. Over 41% failed completely.

The most likely failure is a “big bang” release like Other problems involve too many changes along the way and too much bureaucracy fouling up things.

Large projects require slow, incremental rollouts. Testing and feedback are needed. Glitches found need fixing before introducing more parts of the whole package.

Cast software analysis and measurement firm senior vice president Lev Lesokhin said isn’t just a web site. It has lots of moving parts.

It has many interactions and interdependencies with other government agencies and private sector firms. It has hundreds of thousands of lines of code. It’s a very complex design.

It won’t be easy fixing what’s wrong. It remains to be seen if doing it in weeks is possible. Poor design may require enormous amounts of time, effort and cost to fix.

In the meantime, uninsured Americans needing coverage can’t easily get it. Poor ones qualifying for subsidies may end up waiting longest.

Obama bears full responsibility. It’s his signature program. It bears his name. Its failure reflects another stain on his legacy.

It’s fitting for a program that never should have been introduced in the first place. Its worst problems are yet to come. They’re unrelated to web site glitches.

Stephen Lendman lives in Chicago and can be reached at [email protected] His new book is titled How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War. Also visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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