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Between '30-40%' Of Obamacare's Exchange Software Has Not Yet Been Built

November 19, 2013

By Avik Roy

If you’ve been following these pages, you’ve come to know a bit about Henry Chao, deputy chief information officer at the Centers for Medicare and Medicaid Services. Chao has played a key role in overseeing the construction of Obamacare’s federal insurance exchange. In March, Chao expressed concern that the launch of the exchanges would be a "third-world experience." On November 1, he learned that he hadn’t been apprised of memos detailing "limitless" privacy risks to Today, at a hearing of the House Energy and Commerce Committee, Chao stated that "30 to 40 percent" of the federal exchange had not yet been built—despite the fact that the site was launched seven weeks ago.

Chao: System for paying insurers not yet built

The revelation came out of questioning of Mr. Chao by Rep. Cory Gardner (R., Colo.). Gardner was trying to figure out how much of the IT infrastructure around the federal insurance exchange had been completed. "Well, how much do we have to build today, still? What do we need to build? 50 percent? 40 percent? 30 percent?" Chao replied, "I think it’s just an approximation—we’re probably sitting between 60 and 70 percent because we still have to build…"

Gardner replied, incredulously, "Wait, 60 or 70 percent that needs to be built, still?" Chao did not contradict Gardner, adding, "because we still have to build the payment systems to make payments to insurers in January."

Gardner asked a third time: "Let me get this correct. 60 to 70 percent of still needs to be built?" Chao: "It’s not really about; it’s the federally-faciliated marketplace…the on-line application, verification, determination, plan [comparison shopping], getting enrolled, generating the enrollment transaction—that’s 100 percent there."

Gardner, a fourth time: "But the entire system is 60 to 70 percent away from being complete." Chao: "There’s the back office systems, the accounting systems, the payment systems…they still need to be done."

Gardner asked a fifth time: "Of those 60 to 70 percent of systems that are still being built, how are they going to be tested?"

This time, Chao said: "You mean the remaining 30 to 40 percent? How are they going to be tested? In the same exact manner we tested everything else."

How many people have actually enrolled on the federal exchange?

So it’s not clear whether Chao meant to say "60 to 70 percent" hasn’t been built, and then backtracked to "30 to 40 percent," or whether he meant to say all along that 30-40 percent of the exchange has yet to be built. Either way, it’s an astounding percentage. Apparently, the accounting systems and payment systems that protect taxpayers against waste, fraud, and abuse—systems that also ensure that insurers get paid, and that premium subsidies are accurately doled out—have not yet been built.

It’s worth noting that, technically, you haven’t enrolled in a health insurance policy until the insurer has collected the first premium from the beneficiary. If the payment systems have not yet been built, it’s not clear how many people, then, have actually enrolled on the exchanges. Last week, the Obama administration claimed that 26,794 people had enrolled on the federal exchange, though HHS did not specify whether or not insurers had been paid.

How is this possible on November 19, when the Obamacare exchange was ostensibly launched on October 1?

Original Source:



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