Cost of Healthcare.gov Nearing $2 Billion

Ow. Ow. My head hurts. How is it possible for one website’s costs to come anywhere near $2 billion? But a recent report by the Department of Health and Human Resources (HHS) indicates that Healthcare.gov, the troubled online market for Obamacare, is going to end up costing the federal government about 1.7 billion dollars:

The 60 contracts related to the development and operation of the Federal Marketplace started between January 2009 and January 2014. The purpose of the 60 contracts ranged from health benefit data collection and consumer research to cloud computing and Web site development. The original estimated values of these contracts totaled $1.7 billion; the contract values ranged from $69,195 to over $200 million. Across the 60 contracts, nearly $800 million has been obligated for the development of the Federal Marketplace as of February 2014. As of that date, CMS had paid nearly $500 million for the development of the Federal Marketplace to the contractors awarded these contracts.

That means you and I are on the hook for that money. Just for some reference, I found a thread on Quora about the most expensive websites ever. The first answer had some insights on why .gov websites, which would include healthcare.gov obviously, were probably the most expensive:

  • It is time-consuming, expensive and bureaucratic to bid on government projects.
  • There is limited competition due to a smaller supply of firms qualified to work with the government.
  • Government requirements are often rigid and inflexible, precluding alternatives that can lead to cost savings.
  • The security requirements are exceptionally high and government projects involve jumping through a lot of IT hoops to do even the simplest things.
  • The contract was probably secured via an RFP with long lists of requirements that must be fulfilled and checkboxes that must be checked, most of which are ultimately irrelevant to the project’s goals, but serve to drive up the cost.
  • Government has no profit motive.

I think that last one is the best one. Without a profit motive, Healthcare.gov can continue to drink up resources and the civil government will just keep on feeding it in debt and taxes. Debt and taxes, not death and taxes. Those are the two inevitables in our day and age.