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10 Oct, 2013 21:17

Obamacare sites cost more than Facebook, Twitter and LinkedIn

Obamacare sites cost more than Facebook, Twitter and LinkedIn

An array of issues surrounding the recently launched websites for President Barack Obama’s Affordable Care Act have rendered them largely unavailable during the last week, and a lack of funding might not be to blame.

With the official launch of so-called Obamacare last Tuesday, millions of Americans flocked instantly to brand new Web portals where people could sign up for inexpensive health insurance plans. Bugs, glitches, an overload of traffic and other snafus resulted in many of those sites voluntarily shutting down while programmers picked through code and attempted to revamp the websites in recent days, but a new investigation by Digital Trends’ Andrew Couts suggests that a stupendous amount of money was involved in getting some of those sites off the ground — only for them to crash and burn almost instantly.

Couts has since revised his original estimate since going live with his report on Tuesday this week, but his latest round of research led him to assume that American taxpayers spent over $500 million on the Obamacare websites that have been plagued by problems since their launch one week earlier.

The website for healthcare.gov, Couts wrote, has been so prone to problems “that its track record for failure is challenged only by Congress.” Perhaps an even better example of something the two entities have in common is the vast amount of money spent on making either all too unbearable.

According to Couts’ calculations, data from the US Government Accountability Office and subsequent IT contracts he has stumbled on suggest that at least half-a-billion dollars has been invested in Healthcare.gov and other similar websites so far, which might not seem all too much when compared to other endeavors entertained by Washington.

Compared to other websites, though, Couts says the cost is astronomical.

From his DigitalTrends piece:

Given the complicated nature of federal contracts, it’s difficult to make a direct comparison between the cost to develop Healthcare.gov and the amount of money spent building private online businesses. But for the sake of putting the monstrous amount of money into perspective, here are 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 justt $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.”

Indeed, not only is the $500 million blown on Obamacare websites a lot by Washington standards, but even some of the most successful names in Silicon Valley history spent fractions of that sum to steer their projects to the pinnacle of the Web.

There have been more expensive government boondoggles over the years,” American Thinker blogger Rick Moran added. “But as a metaphor for government incompetence, this example takes the cake.”

Couts settled at his latest estimate by taking into account the “almost $394 million from fiscal year 2010 through March 2013” awarded in federal contracts to build the “federally facilitated exchanges,” or FFEs, including healthcare.gov and similar sites. Not all of that figure was used towards building the site, Couts determined, but roughly $363 million did get funneled towards technology-related costs, which was then topped off by at least $150 million just during 2012 and 2013, according to budget requests filed by the Center for Medicare and Medicaid Services to go towards the sites.

At this point I can only speculate on the total cost to build out Healthcare.gov and the related FFEs. Based on the available data, however, a conservative estimate puts the cost so far at over $500 million,” he wrote.