Skip to main content

We paid over $500 million for the Obamacare sites and all we got was this lousy 404 [updated]

obamacare healthcare gov website cost sites 404
Image used with permission by copyright holder
It’s been one full week since the flagship technology portion of the Affordable Care Act (Obamacare) went live. And since that time, the befuddled beast that is Healthcare.gov has shutdown, crapped out, stalled, and mis-loaded so consistently that its track record for failure is challenged only by Congress.

The site itself, which apparently underwent major code renovations over the weekend, still rejects user logins, fails to load drop-down menus and other crucial components for users that successfully gain entrance, and otherwise prevents uninsured Americans in the 36 states it serves from purchasing healthcare at competitive rates – Healthcare.gov’s primary purpose. The site is so busted that, as of a couple days ago, the number of people that successfully purchased healthcare through it was in the “single digits,” according to the Washington Post.

We, the taxpayers, seem to have forked up more than $500 million of the federal purse to build the digital equivalent of a rock.

The reason for this nationwide headache apparently stems from poorly written code, which buckled under the heavy influx of traffic that its engineers and administrators should have seen coming. But the fact that Healthcare.gov can’t do the one job it was built to do isn’t the most infuriating part of this debacle – it’s that we, the taxpayers, seem to have forked up more than $500 million of the federal purse to build the digital equivalent of a rock.

The exact cost to build Healthcare.gov and its related systems is difficult to determine due to the expansive nature of the project and the murky details in federal budgets. But based on the figures and details available, here is my best estimate of what this flawed system has cost us: The most clear data comes from a U.S. Government Accountability Office (GAO) report from June (pdf), which states that the U.S. Center for Medicare and Medicaid Services (CMS) spent “almost $394 million from fiscal year 2010 through March 2013 through contracts” to build the “federally facilitated exchanges” (FFEs) – the complex system that includes Healthcare.gov as well as certain state-based exchanges – the data hub, and other expenditures related to the Obamacare exchange system. While GAO states that the “highest volume” of that $394 million was related to the development of “information technology systems,” a more detailed look at that cost shows that a portion that $394 million was spent on things like call centers and collection services. Take that out, and you’re left with roughly $363 million spent on technology-related costs to the healthcare exchanges – the bulk of which ($88 million) went to CGI Federal, the company awarded a $93.7 million contract to build Healthcare.gov and other technology portions of the FFEs.

That’s already a hell of a lot of money, but that does not account for all costs accrued for this project. As the GAO states, the $392 million figure does “not include CMS salaries and other administrative costs” associated with the Obamacare exchanges. In other words, the actual cost for the development and implementation of the total Obamacare exchange system is far higher. We’ve reached out to CMS for an exact figure, but thanks to the government shutdown, we have yet to hear from them on this matter. However, we do know, according to CMS’s 2014 budget request (pdf), that agency spent more than $150 million in 2012 and 2013 in relation to the Affordable Care Act – a lowball figure considering that, in its 2013 budget request (pdf), the agency asked for more than $1 billion in additional funds “needed to support operation infrastructure” and open-enrollment preparations of the FFEs.

At this point I can only speculate on the total cost to build out Healthcare.gov and the overall technology portion of the FFEs. Based on the available data, however, a conservative estimate puts the cost so far at over $500 million. Considering the GAO estimates it will cost approximately $2 billion to build-out and operate the FFEs in 2014, this is, if anything, likely far too low. Once we hear back from CMS on this matter, I’ll update this space with more detailed figures above the $363 million we know about for certain.

Given the complicated nature of federal contracts, it’s difficult to make a direct comparison between the cost to develop Healthcare.gov and the amount of money spent building private online businesses. But for the sake of putting the monstrous amount of money into perspective, here are a few figures to chew on: Facebook, which received its first investment in June 2004, operated for a full six years before surpassing the $500 million mark in June 2010. Twitter, created in 2006, managed to get by with only $360.17 million in total funding until a $400 million boost in 2011. Instagram ginned up just $57.5 million in funding before Facebook bought it for (a staggering) $1 billion last year. And LinkedIn and Spotify, meanwhile, have only raised, respectively, $200 million and $288 million.

Healthcare.gov errorGovernment has a long history of spending money unnecessarily. But in an age when the U.S is home to the world’s largest, most successful Internet companies, how is it possible that we can’t even manage to build a functional website without blowing through hundreds of millions of dollars?

The best answer I’ve found comes from the Department of Better Technology, a private company that builds software for governments – a competitor, in other words, to CGI Federal, which specializes in building software solutions for major industry sectors including defense, energy and environment, financial and, of course, healthcare. Still, biased though it may be, the argument makes a lot of sense.

As one of the company’s authors wrote in a recent blog post, the failure of Healthcare.gov isn’t because the people in our government are inept mouth-breathers who regard the work as a meaningless burden, but because the factors that play into which companies receive government contracts, a process called “procurement,” are fundamentally broken.

“Contracting officers – people inside of the government in charge of selecting who gets to do what work – are afraid of their buys being contested by people who didn’t get selected,” writes the author. “They’re also afraid of things going wrong down the line inside of a procurement, so they select vendors with a lot of ‘federal experience’ to do the work.”

When things still go wrong, they simply throw ‘more money at the same people who caused the problem to fix the problem.’

And when things still go wrong, they simply throw “more money at the same people who caused the problem to fix the problem.”

Considering the frustrating bunch we have in Congress at the moment, this assessment seems particularly believable.

Unlike some Americans, I actually want the Obamacare exchanges to succeed. I’ve given the state-specific options a try (there are 15 of them, including Washington D.C.’s) and they seem to greatly simplify the process of buying healthcare. And the rates do appear to come in far lower than what many people without health insurance from an employer have had to bear until now. It’s not government-run healthcare. There are no death panels. And, from what I can tell, the world will not end if more people have health insurance – quite the opposite, in fact.

What I cannot stand is a nation that has vast technological resources in its citizenry spending $500 million of our collective money to slap together a product that, thus far, has only managed to waste people’s precious minutes. So the next time our government comes up with any bright idea that relies upon a massive website, let’s all be sure to ask how they plan to build it. Because the standard operating procedure at the moment is just plain sick.

Correction: We miscalculated the expenditures related to the healthcare exchanges established under the Affordable Care Act, and incorrectly attributed the total cost of these expenditures. We have recalculated the cost to build Healthcare.gov and integral backend systems, and updated the article below to reflect the new information.

Andrew Couts
Former Digital Trends Contributor
Features Editor for Digital Trends, Andrew Couts covers a wide swath of consumer technology topics, with particular focus on…
JPEG vs. PNG: When and why to use one format over the other
A person using Adobe Lightroom CC on an iMac.

In digital imaging, two image formats prevail above all else: JPEG (or JPG) and PNG.

At first glance, a single image shown in both formats might seem identical, but if you look closely enough and dig into the data, there is quite a difference between them. One format isn't always better than the other, as each is designed to be used in specific circumstances based on your needs for image quality, file size, and more. Here's what you need to know about both formats to make the most of their strengths and weaknesses.
What is the JPEG format?
Short for Joint Photographic Experts Group -- the team that developed the format -- JPEG has become the standard compressed format in digital photography and online image sharing due to its careful balance of file size and image quality.

Read more
Is there a Walmart Plus free trial? Get a month of free delivery
Walmart logo.

Take a moment and think about how often you shop at your local Walmart. Is it weekly? Daily? If either of those is the case, it might be time to upgrade your shopping experience. The Walmart Plus free trial is your chance to check out what the retail giant has to offer. Walmart Plus is basically Amazon Prime for Walmart. You get free shipping on most orders, early access to deals and new product drops (like PS5 restocks), the best grocery delivery, and more. If Walmart is your go-to option for the best smart home devices or the best tech products in general, you should get a membership. If you want to test out the service, you can sign up for a free trial. We have all the information you need right here.
Is there a Walmart Plus free trial?
There is a Walmart Plus free trial available, and it’s one of the best free trials we’ve seen in terms of how many great features and conveniences you’re able to access. This is really a reflection of how great the Walmart Plus service is, as the Walmart Plus free trial is essentially a 30-day experience of what it would be like to be a paid Walmart Plus subscriber. A Walmart Plus membership can help you save over $1,300 per year, so taking advantage of the 30-day free trial is a great way to get in there and see what those savings will look like. And if grocery delivery is what you're really after, an alternative you might consider is the Instacart free trial -- they have more than one program to try!

As part of a Walmart Plus free trial, you’ll get free shipping with no minimum order, so even small orders will qualify for free shipping. You’ll get fresh groceries and more with no delivery fees, and all at the same low in-store prices Walmart shoppers are used to. Walmart Plus members, and Walmart Plus free trial members, get exclusive access to special promotions and events, as well as a savings of up to 10 cents per gallon on fuel. A new addition to the perks of being a Walmart Plus member is free access to Paramount Plus, a top-notch streaming service with more than 40,000 TV episodes and movies. All of this is accessible for 30 days through a Walmart Plus free trial, and once those 30 days are up, Walmart Plus is just $12.95 per month or $98 annually.

Read more
The 13 best early Black Friday deals you can shop this weekend
Digital Trends Best Black Friday Deals

Even though Black Friday is still a couple of weeks away, we're already starting to see a lot of great deals on several different types of products. So, if you can't wait for the upcoming Black Friday and need to grab a few things now, we've collected some of our favorite deals across products and budget ranges to make your life a little bit easier. Below, you'll find deals on cordless vacuums, laptops, TVs, headphones, and phones, so it's a great collection of stuff that we think you'll find useful and want to grab. That said, if you can't find what you want, be sure to check our main Black Friday deals page for even more great offers.
Wyze Cordless Stick Vacuum -- $98, was $150

While budget cordless vacuum cleaners can sometimes not be that great, we found the Wyze Cordless Stick Vacuum to be surprisingly good for its price point. At just 2.8 pounds of weight, it's light enough that you won't feel like you're doing a workout every time you use it, and it is great for those who might have issues with arm weakness. Just because it's light doesn't mean it's not powerful, though, with two motors providing 24,000 pascals of suction, which is quite a lot at this price. It also has a HEPA filter to keep the air you breathe clean while vacuuming, which is impressive, but sadly, it does have a big downside in that it only lasts for about 50 minutes of vacuuming. That's not necessarily a dealbreaker, and you can buy a backup battery, but it's an important thing to note.

Read more