By Sally C. Pipes
What was the worst product launch in history? New Coke, perhaps? How about Colgate’s Dinner Entrees, the frozen food packages with a label mimicking that company’s brand of toothpaste? The Santa Dreidel? They’re all marketing masterpieces compared to the rollout of ObamaCare’s health insurance exchanges—particularly those accessible through HealthCare.gov, the portal operated by the federal government that “serves” 36 states. Though these online marketplaces officially opened October 1, they’ve thus far proven abject failures in their stated mission of expanding the availability of health insurance.
As of October 19, federal officials claimed that 476,000 people had applied online for health coverage. But there’s a big difference between the number of folks who have begun applications—and the number of people who have actually enrolled. According to insurance industry consultant Robert Laszewski, that enrollment figure could be less than five figures. Through its first week, the federal system, which was supposed to work for millions of Americans, had reportedly enrolled about 5,000 people in the 36 states it covers.
Insurers estimate that just one percent of applications submitted through the federal exchange contain sufficient information to actually enroll a person in a health plan. It’s no wonder that the Obama Administration has been mum about official enrollment figures. Visitors have often found that they can’t even log in. A CNN reporter, for instance, couldn’t do so for a whole week. A New York Times researcher failed to log in over 40 separate attempts covering 12 days.
The disastrous rollout of the federal exchange has caused even champions of ObamaCare to train their fire on the president’s team. Washington Post columnist Ezra Klein has said that the Affordable Care Act’s launch this fall has been not been “troubled” or “glitchy” but a “failure.” Robert Gibbs, President Obama’s former press secretary, wants heads to roll, saying, “I hope they fire some people that were in charge of making sure that this thing was supposed to work.”
The Administration has asked the contractors hired to build the system to perform necessary repairs in hopes of re-launching the exchange November 1. But that’s unrealistic, according to the contractors as well as outside experts. One told the New York Times that as many as five million lines of code may need to be rewritten.
Fourteen states and the District of Columbia have set up their own online exchanges. They’re faring little better than the federal exchange. Take Vermont. In the Green Mountain State, 4,300 residents created state insurance accounts. But only 700 were able to apply for insurance—and just 115 of these folks were able to enroll. In Maryland just 1,121 of the 25,781 people who created accounts were able to finish their online applications and get enrolled. That’s less than 5 percent. And the exchanges in Vermont and Maryland are among the better-working ones.
Nine of the 14 states and Washington, D.C. won’t release enrollment data. Oregon admits that its system isn’t fully operational. Hawaii’s exchange launched October 1 but couldn’t enroll anyone for two weeks. Idaho’s and New Mexico’s systems were so hopeless that the states had to turn operations over to the troubled federal system.
Meanwhile, a wide range of experts say that ObamaCare’s online systems are lacking in cyber-security measures and thus invite identity theft. The site’s designers appear not to have included ordinary protections against automated attempts by rogue hackers to falsely log into the system. So cyber criminals can potentially see a user’s social security number, where he lives, how much he makes, and so forth. According to the founder of the McAfee cyber-security company, the exchanges have “no safeguards” and their lack of protection is “outrageous.”
Then there’s the possibility of fraud. The Department of Health and Human Services will not verify the self-reported incomes of all applicants—just those of a sample. Consequently, the federal government could end up doling out millions in unmerited subsidies.
The cause of this mess is not a lack of money. The federal government has spent $634 million on its system—more than the combined cost to design and build LinkedIn and Spotify. That’s nearly seven times the original projected cost. The Obama Administration should have seen this debacle coming. A principal designer of the system, CGI Federal, was fired by the provincial government of Ontario in Canada in September 2012 for botching the province’s online medical registry. The contractor had missed three years of deadlines.
But CGI may have had an impossible task. According to the New York Times, the firm did not begin writing code for the exchange website until the spring of 2013—because the government had been so slow to issue specifications.
One month in, it’s clear that ObamaCare’s exchanges were not ready for primetime, even though Health and Human Services Secretary Kathleen Sebelius repeatedly assured the American public that the marketplaces would launch—and work—as planned. These online marketplaces must function properly if the law is to expand coverage as it promises—and if Americans are to be able to comply with its requirement that they obtain insurance. With each passing day, both are looking less likely.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.