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ACA Exchange Debacle Demands Government Reform Technology Procurement

It was a good thing that my coffee cup was resting on the counter when NBC’s Tom Costello reported that the Affordable Health Care Act’s (ACA) floundering web-site cost $450 million dollars. Otherwise the cup would have crashed to the floor – an expression of my shock.

The purpose of the ACA Exchange is simple. Help Americans shop for health insurance. Based on age, family size, and income – visitors are directed to a variety of qualified private insurance options or the appropriate state Medicaid agency.

It is unconscionable, incomprehensible – to spend $450 million dollars on an e-commerce application. It reaches the level of criminality when the website does not even work!

NBC News went on to compare the $450 million ACA development cost to the $150 million Apple invested to develop the iPhone which has delivered a Return-On-Investment (ROI) of 1000% and counting. I would argue that a more appropriate comparison might be software service providers Google or Amazon.

Google is a Verb

Google is not merely a technology company – it’s become a verb. We don’t search the internet, we Google. Google “went public” in 2004. At IPO the total capital investment from the founders and their venture capital partners was $26 million.

Another good example of simple, frugal software development that transformed an industry is While on Wall Street, Jeff Bezos observed the growing importance of e-commerce as a Business to Business (B to B) tool. He gambled it could be even more powerful as a Business to Consumer (B to C) tool.

Google and Amazon both had the advantage of being built from the ground up – unencumbered by legacy systems or artificially set external timelines. Their founders embraced a set of modern, open-systems architectural principles – simplicity, flexibility, modularity, and loose integration. They invested their own money.

Navigators Make Internet Accessible to all Users

Google and Amazon kept it simple. They both help users to navigate the internet for information, products and services. By delivering the user to the partner’s door, Google and Amazon, also, made themselves valuable to the “seller”.

Google asks nothing of the search customer except “how can I help you find that recipe for making ketchup or that explanation of gene code sequencing”. Amazon asks nothing of the customer until they’ve filled their shopping cart and then it’s limited to name, address and credit card number.

Similarly, they minimize the amount of data that needs to be passed and processed by a partner. That allows partners to connect to Amazon or be “searchable” by Google without changing the partner’s internal systems.

The success of Google and Amazon redefined E-Commerce. Success spawned hundreds of B to C specialized online navigators – for example health insurance broker For a decade, has been a Center for Medicare and Medicaid Services (CMS) contractor! CMS is the agency responsible for rolling out the Affordable Care Act!

The ACA Exchange is a navigation tool – just like Amazon or – developed as an online service introducing millions of under-insured Americans to hundreds of insurance companies that want to sell them approved health insurance plans. If it actually worked, the ACA Exchange would be a direct competitor to for the same individual health insurance market customers.

The government shouldn’t be allowed to compete directly against competent and successful private sector companies. has demonstrated it can serve a public purpose at no cost to tax payers.

Even if such public/private competition were somehow justifiable – is shouldn’t cost $450 million dollars of tax payer money. That is just absurd!

Efficient, Effective Government

Nothing that happened in the ACA Exchange rollout had to happen. But it was predictable that it would. It’s just the latest in a long series of expensive government technology failures.

Out of ACA debacle must come a 21st century approach to government technology acquisition.

  • More focus on public/private technology partnerships.
  • New technology procurement policies and practices that prioritize “buy” over “co-develop” and “co-develop” over “make”.
  • Competitive bids in all circumstances.
  • Stiff penalties imposed on both Government IT Managers and external contractors for project cost over-runs.
  • More authority for the Government Accountability Office and Inspectors General to stop projects as soon as they identify a risk of failure to deliver well tested functionality on-time, on-budget.

I’m tired of Congressional outrage, I want action. How about you?

Get involved. Forward this blog to your Congress person with your own comments.

Photo Credit: Christina Scotti/Fox Business

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2021-02-01T11:21:44+00:00November 11th, 2013|Comments Off on ACA Exchange Debacle Demands Government Reform Technology Procurement

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