Exchange this

Charles Cooke mercilessly collects quotes documenting the high expectations raised by the Obama administration and its fanboys on the left for the rollout of Obamacare this month. Yet reports of the technical failures bedeviling the federal Obamacare exchange portal that has opened for business in 36 states are easy to find. Michelle Malkin has one here. Michael Astrue addresses a panoply of issues here. Steve posted Jan Crawford’s CBS News report in an update here. Bethany Mandel rounds up reports on the technical issues here.

The money spent on the creation of the exchanges (state and federal) is more difficult to figure and has received less attention. Andrew Couts has been at work figuring the costs for Digital Trends, which has posted his corrected/updated account here. Couts reports 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.” Couts elaborates:

The exact cost to build 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 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 and other technology portions of the FFEs.

Couts adds that based on the available data “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.” He promises further updates when he hears back from CMS with more detailed figures above the $363 million we know about for certain.

Couts puts the “monstrous amount of money” expended so far into context with “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.”

Couts’s piece is full of links and makes for an interesting report by a professed supporter of Obamacare.


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