This copyrighted document is intended for use in Yael Grushka-Cockaynes Fundamentals of Project Planning and

Management. Any other use is prohibited.

UVA-QA-0833
Apr. 10, 2015

The Healthcare.gov Exchange

The Affordable Care Act

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care
Act (PPACA), commonly referred to as the Affordable Care Act (ACA) or simply Obamacare.1 The most
comprehensive piece of legislation passed in the United States in nearly half a century, the ACA established a
wide-ranging set of laws, including ending insurance discrimination for patients with preexisting conditions,
providing further coverage for young adults and women, and making health insurance more affordable and
accessible for all Americans. Despite being passed into law, the bills far-reaching impact was intensely
challenged. Ultimately, on June 28, 2012, the Supreme Court upheld the majority of the key provisions of the
law and put to rest many of the legal challenges threatening Obamacares survival.2
A major tenant of the bill, the individual mandate, required that by January 1, 2014, most individuals
those without specific exemptionsobtain a minimum level of health insurance coverage or pay a penalty fee
for noncompliance with the law.3 As such, the ACA included the establishment of affordable insurance
exchanges, or marketplaces, to allow consumers to compare and select from different qualified health plans.
Serving as a single access point for consumers, online exchanges allowed for easy comparisons across
different plans, increased competition among insurance issuers, and improved affordability of health insurance
coverage. Under the ACA, states were allowed to construct their own state-based exchanges or choose to
partner with the federal government and participate in the federally facilitated exchange (FFE).4
HealthCare.gov

The Department of Health and Human Services (HHS) was tasked with establishing and operating the
FFE for all states that chose not to establish their own exchange. The federal marketplace, known as
HealthCare.gov, would be a fully functional website that allowed consumers to compare plans and purchase
1
U.S. Department of Health and Human Services, Key Features of the Affordable Care Act, HHS.gov,
http://www.hhs.gov/healthcare/facts/timeline (accessed Mar. 27, 2015).
2 http://www.hhs.gov/healthcare/facts/timeline.
3 Annie Mach, Individual Mandate Under ACA, Congressional Research Service, August 12, 2014.
4 Center for Consumer Information and Insurance Oversight/Centers for Medicare and Medicaid Services, General Guidance on Federally-facilitated
Exchanges, May 16, 2012, https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ffe-guidance-05-16-2012.pdf (accessed Apr.
1, 2015).

This public-sourced case was prepared by Brian Ward (MBA 15) and Yael Grushka-Cockayne, Assistant Professor of Business Administration. It was
written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2015 by the
University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to
sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by
any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of the Darden School Foundation.

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health insurance online. In addition to the online interface, the website would need to be supported by a
federally facilitated marketplace (FFM) system to accept and process data, as well as a federal data services hub
that could route and verify consumer information with other sources. In March 2012, the HHS issued a final
ruling that the initial enrollment period for health plans on HealthCare.gov would begin on October 1, 2013.5
Consequently, the site and supporting systems needed to be completed and fully operational by this date.
Within the HHS, the Centers for Medicaid and Medicare Services (CMS) was the lead agency responsible
for overseeing and implementing the federal marketplace. Specifically, the newly created Center for Consumer
Information and Insurance Oversight (CCIIO) focused on defining policies and regulations for the federal
marketplace. The technical development of the project was tasked to CMSs Office of Information Services,
which worked alongside hired IT contractors to construct the information systems and technology.6 CMS
would hire numerous outside contractors for various applications; it awarded initial contracts on September 31,
2011, that obligated approximately $55.7 million in funds for the FFM system and nearly $30 million for the
data services hub.7
Project Execution

Delays in establishing regulatory guidelines as well as extensions for states to declare partnerships with the
federal exchange compressed the window for website construction and testing. Consequently, the FFM
systems final design review was pushed out from September 2012 to March 2013. At the time, contractors
estimated that only 65% of the FFM and 75% of the data hub would be ready by September of that year.8 In
March 2013, McKinsey & Company presented a report that found there was insufficient time for testing
because the window was continually shrinking, increasing the likelihood that there would be multiple defects
after launch.9
HHS and CMS publicly remained confident about the websites on-time completion. On August 7, 2013,
CMS spokesman Brian Cook said, We are on schedule and will be ready for the marketplaces to open on
October 1.10 Senior contract personnel were equally confident about delivering a fully functional site prior to
the enrollment period.
On October 1, 2013, HealthCare.gov officially launched, allowing millions of Americans to compare and
purchase health insurance coverage online. Day one was marred by technical glitchesvisitors to the site
received error messages such as Be patient and The system is busy right now and webpages didnt load.
HealthCare.gov was built to support 50,000 to 60,000 simultaneous users, but instead it was seeing traffic from
as many as 250,000 users at once.11 An Internet analytics company estimated that, of the 2 million users that
attempted to register in the first week, only about 125,000 made it to the end of the registration process.12 The

5 Government Accountability Office, Ineffective Planning and Oversight Practices Underscore the Need for Improved Contract Management, July
2014.
6 HHS Office of Inspector General, Federal Marketplace: Inadequacies in Contract Planning and Procurement, January 2015.
7 Government Accountability Office.
8 Government Accountability Office.
9 Senate Finance Committee and Senate Judiciary Committee, Red Flags: How Poor Management Led to the Meltdown of HealthCare.gov, June
2014.
10 Senate Finance Committee.
11 Tim Mullaney, Obama Adviser: Demand Overwhelmed HealthCare.gov, USA Today, October 6, 2013.
12 Christopher Weaver and Louise Radnofsky, Healthcare.Govs Flaws Found, Fixes Eyed, Wall Street Journal, October 10, 2013.

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high traffic volumes initially took the primary blame for the sites poor functionality, but soon the failed launch
exposed the problem to be more than simply glitches and instead larger technical flaws to the sites design.
In a hearing before the House Energy and Commerce Committee, IT contractors testified that they had
had only two weeks to test the system before the launch date as opposed to the weeks or months usually
necessary for such a large project. A week later, HHS Secretary Kathleen Sebelius sat before the same
committee, ultimately taking responsibility for the failed launch and vowing to ensure the sites successful
completion.13
Despite increasing costs and necessary adjustments, the sites functionality was steadily improving by late
December 2013. In January 2014, CMS replaced its original contractor for the FFM system with Accenture.
Due to changes in design and scope in addition to the underlying modifications, the FFMs costs increased to
$209 million. Similarly, costs for the data hub were revised upward, to approximately $85 million.14
In its initial enrollment report, released on November 13, 2013, HHS announced that 106,185 individuals
had selected a marketplace plan, 26,794 of whom had enrolled through the FFM. Total enrollment figures were
merely 1.5% of the Congressional Budget Office estimates for 2014 health-care plan marketplace enrollments.15
Despite the disappointing initial figures, by the May 2014 reports release, HealthCare.gov had showed a
significant uptick in enrollments, largely attributed to the sites improved functionality and awareness of the
service. Between the sites launch on October 1, 2013, and the end of the open-enrollment period on April 19,
2014, approximately 8 million people selected a marketplace plan, 5.4 million of whom enrolled through the
FFM. Notably, only 13% of those who enrolled through the FFM indicated that they had health insurance
coverage at the time of their application.16 HHSs March 2015 report showed that since open enrollment began
on October 1, 2013, 14.1 million adults had gained health insurance coverage. Over that time period, the
uninsured rate in the United States dropped from 20.3% to 13.2%.17
Forum Questions

1. How would you define the HealthCare.gov project? What was the scope? The timing? The budget?
2. What was the organization of the project? Who were the main parties involved?
3. Was the project a success? Why or why not?

David Morgan and Caroline Humer, Timeline: U.S. Healthcare Laws Technology Breakdown, Reuters, October 30, 2013.
Government Accountability Office.
15 HHS, Health Insurance Marketplace: November Enrollment Report, November 13, 2013.
16 HHS, Health Insurance Marketplace: Summary Enrollment Report for the Initial Open Enrollment Period, May 1, 2014.
17 HHS, Health Insurance Coverage and the Affordable Care Act, March 16, 2015.
13
14

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Exhibit 1
The Healthcare.gov Exchange
Timeline
2010

May 23
September 30
March 27
June 28
November 6
March
August 7
October 1
October 24
October 30
November 13
January
May
March 25

PPACA officially signed into law, mandating minimum health insurance

coverage and the construction of an FFE
2011
CMS awards initial contracts for construction of FFM and data hub
2012
HHS issues final ruling announcing October 1 as the beginning of the openenrollment period and the deadline for HealthCare.govs completion
Supreme Court ruling upholds major provisions of the ACA
Barack Obama reelected as president of the United States, defeating
Republican candidate Mitt Romney
2013
McKinsey & Company issues report warning CMS of potential barriers to
project completion
CMS spokesman publicly announces expectation for on-time project
completion
HealthCare.gov launches
IT contractors testify before House Energy and Commerce Committee
HHS Secretary Kathleen Sebelius testifies before House Energy and
Commerce Committee, taking responsibility for failed launch
Initial enrollment report released
2014
Accenture hired to replace contractor for FFM project
Enrollment report shows 5.4 million people insured through HealthCare.gov
2015
Enrollment report shows 14.1 million adults have gained health inisurance
since HealthCare.govs launch

Data source: Compiled by case writer.

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Exhibit 2
The Healthcare.gov Exchange
Key Terms and Abbreviations

Abbrevation

Full Name

ACA

Affordable Care Act

CCIIO

Center for Consumer Information and Insurance Oversight

CMS

Centers for Medicare and Medicaid Services

FFE

federally facilitated exchange

FFM

federally facilitated marketplace

HHS

Department of Health and Human Services

PPACA

Patient Protection and Affordable Care Act

Data source: Compiled by case writer.

Yael Grushka-Cockaynes Fundamentals of Project Planning and Management, Spring 2015