The Rising Cost Of Massachusetts’ Failed Insurance Website

The cost to launch and maintain a website where Massachusetts residents can sign up for health insurance is estimated at $121 million through the end of next year. The actual price could be plus or minus 20 percent of that figure. Gov. Deval Patrick’s special assistant, Sarah Iselin, outlined the plans and expenses at a Health Connector board meeting Thursday.

“That’s shockingly high,” said Erika Beahr, a consultant from Waltham who buys health insurance through the Connector. “The state has to have a working website, but it’s hard to understand why it should cost so much in this day and age.”

Part of the reason for the high cost is that the state will spend a few months, at least, building toward two websites, as first outlined Monday. Iselin defended that decision Thursday.

“We’re really making the best of a bad situation.”
– Sarah Iselin,
special assistant to the governor

“It’s not as though there were other things that were viable that we rejected,” Iselin said. “We could spend 30-40 percent more and try to fix our existing exchange, and be in the same position we were in last fall.”

Iselin says she and her team looked at importing a site built by another state, but concluded that customizing it to fit Massachusetts could not be done in time for the next open enrollment, in November.

“I wish that we were in a different situation, but we’re not and we’re really making the best of a bad situation,” she said.

The Dual-Track Solution

The plan is to buy some “off the shelf” portals or components for a new website from Virginia-based hCentive — things like an enrollment program, a chain of questions to determine income eligibility and an online shopping tool. Massachusetts will tailor the hCentive products to include local health insurance plans and subsidies the state will provide, in addition to federal assistance.

If the hCentive site isn’t ready, the state will be prepped to merge with But only for one year. The state would keep working on an hCentive site for 2015. (This assumes whomever is elected governor in November agrees, but that’s another story.)

The move to would be much cheaper than the hCentive option. Iselin showed the Connector board this chart that breaks down the costs. (Here, FFM, or Federally Facilitated Marketplace, is
The cost estimate for fixing the state's broken health insurance website

Continued payments to Optum, the firm that has been advising Iselin, are included in the $121 million. Optum will replace CGI as the state’s systems integrator, bringing the components, software and hardware together on the new site. CGI built the failed website.

Conflicted Interests?

So did Optum advise Iselin to hire itself? A spokesperson for the Patrick administration said “given Optum’s successful work with us … combined with the role they played in turning around, they were our preferred IT expert to partner with for fall 2014.”

But some board members are bothered by apparent conflicts of interest.

“I wish we’d had more opportunity to discuss the fact that Optum was the evaluator as well as CGI’s replacement,” Ian Duncan said. He and fellow board member George Gosner also raised questions about Optum’s role in helping the state select hCentive. Optum owns 24 percent of hCentive.

Gosner was the only board member who did not vote for the two-track approach during Thursday’s meeting. Several members spoke in favor of it.

“I very much want us to end up with hCentive working, and being able to maintain a state-based exchange,” board member Nancy Turnbull said. She says the state needs a site that can be customized for all the ways Medicaid, subsidies and insurance are different in Massachusetts.

Connector Board Doesn’t Oversee Website

The Connector vote was not binding. All the vetting and decisions about the website are being made by Iselin, Patrick and an executive steering committee that does not hold public meetings. It’s a committee model that was put in place to build the first website. Iselin says there’s a key difference. This time, someone is in charge.

“Having a single point of accountability with authority to make decisions is a hugely important conclusion for this project,” Iselin said. “We didn’t have that kind of governance structure at place in the beginning; we have it now.”

Iselin has been overseeing the website fix for almost four months and will return to her job at Blue Cross Blue Shield of Massachusetts soon. She will be replaced by Maydad Cohen, Patrick’s deputy chief of staff for Cabinet affairs.

Who Pays?

The state’s initial federal website development grant was $175 million. Connector Board Chair Glen Shor says about $65 million of that has been spent. Much of the $110 million that is left is obligated, but some of it will be available for the new site. No one has firm numbers at this stage. In any case, the state plans to ask the feds for additional money.

Some critics say requesting more money now — before the past spending is explained, and before there is a firm budget for the new website — is irresponsible.

“It just sets up taxpayers to pay well over a half a billion dollars for [Affordable Care Act] exchange-related activities to, maybe, have a state-based exchange that basically works like it did in 2010,” said Josh Archambault, with the free market-oriented Pioneer Institute. “This is now Massachusetts’ Big Dig IT project.”

Archambault’s half billion number is higher than any the Patrick administration has used. He’s including a grant to UMass and one that went to MassHealth.

But there are other expenses, besides the new site, that stem from the failed one. The state is spending $10 million a month to supplement benefits for some residents whose subsidized coverage will likely be extended through the end of the year. And there are monthly bills for Optum — $16 million for February and March, so far.

In addition, the state has spent $51.7 million on temporary coverage for 190,000 residents (although many of these people may have qualified for coverage whether the site worked or not). The federal government may pay up to half of the cost of this group, once the state knows which program each person qualifies for.

If You Have Insurance Through The Connector…

You’ll probably stay with the coverage you have through the end of the year. So if you are one of the roughly 100,000 people who were on Commonwealth Care last year, and have had your policy extended, you will probably keep that policy through December. If you are in temporary coverage, you too, Iselin said, may be in that system until Jan. 1, 2015.

But what happens next year depends, in part, on whether the state gets its own site up and running or asks everyone to enroll through

The Massachusetts Association of Health Plans (MAHP) wrote to the Connector board saying “the technical problems, compressed time frame and significant additional costs of having to build two systems may result in some health plans being unable to participate in the Connector.”

MAHP says it has hired attorneys to determine if the state has the legal authority to move Massachusetts into the federal health exchange.

A leading health care consumer group is also weighing in against moving to

“While the federal option should be kept as a fallback, the state would best be served by a website that supports state affordability standards and allows access to all state-specific coverage programs,” said Amy Whitcomb Slemmer, Health Care for All’s executive director.

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  • fun bobby

    God help us. looks like the highest premiums in the country are going to stay that way. seems like my costs seem to keep going up and my coverage down.

  • mumtothree

    Have all of the applications that were pending been processed? Do those people get free MassHealth while others bailed on the Connector and purchased outside because of the need to actually have health insurance? What if it turns out they would not have qualified for a subsidy? Do they have to pay anything towards the cost of an individual plan while the state sorts out its IT woes? Or do the taxpayers get to fund their free ride too?

    • Martha Bebinger

      Hey mumtothree – Happy Mother’s Day, in advance.

      There are 190,000 people who are in temporary coverage because the Connector has not been able to determine which, if any, program they qualify for. Yes, this coverage is pretty much free. If it turns out that they are above 400% of poverty, and don’t qualify for anything, they will not be asked to reimburse the state for the cost of any care they received.

      Does that cover your questions?

      • jefe68

        If I’m not mistaken all the Health Connector people who had and still have insurance through this system are paying premiums based on the type of coverage they signed up for. It’s free unless you are on Medicaid.

        • Martha Bebinger

          Hey Jefe68- yes that is true for the 101,000 people who had Comm Care last year. In addition, there are 190,000 people who applied last year and were not processed because the eligibility determination tool never worked. These people are in a Medicaid fee for service plan now. Does that line up with your understanding?

          • jefe68

            That makes sense, I was not aware that the state put 190,000 people on Medicaid. I guess they had to do something. I might be mistaken, but it seems that the entire subsidized and individual health care/insurance system in this state is in complete disarray or close to it.

            I’m starting to wonder if it can be fixed at all.

      • mumtothree

        Yes, thank you. Happy Mother’s day to you, too.

  • X-Ray

    Isn’t it ironic? The Massachusetts experience was held as the model for the passage of the Obamacare program. Yet the on-line mechanisms were flawed in MA but that was withheld until after it was repeated on the Federal level by the same contractor. One wonders what other surprises await us.

  • jefe68

    What a mess. I’m curious how it is that Governor Patrick has not been held more accountable. I heard him not less than a month ago on WGBH’s show with Jim Braude and Margery Eagan making claims that are pretty much not what’s being outlined in this article. Where does the buck stop on this?

    • rc2132

      Certainly not with Deval.