This Obamacare Contractor Just Got the Boot. Who Could Be Next?

As kids, we're always taught that trying our best is, more often than not, good enough. The troubles of the Obamacare website thus far demonstrate that trying doesn't always cut it.

We're roughly two months into the trial-and-error-filled beginning to Obamacare's health exchanges, and considerably fewer people than expected have completely signed up for health insurance -- at least according to the latest figures from the Department of Health and Human Services which showed that a meager 106,185 people had completed their enrollment in Obamacare between Oct. 1 and Nov. 2, including less than 27,000 from the 36 states operating on the federally run Healthcare.gov platform.

Although I was able to sign up with little issue within the first week, I had the luxury of using one of the few state-run exchanges that's working well (Washington). For the remainder of the country, it's been a logistical nightmare that's culminated in server overloads, power outages, and countless lines of bad IT architecture.

Take a hike!
At some point we knew the ball was going to drop and contractors that had been in charge of various aspects of Healthcare.gov could get the boot. Two days ago, the first Obamacare contractor was "officially" shown the door. I say "officially" because it hasn't been officially announced yet, but according to a Bloomberg report via a spokesperson for the HHS, Verizon (NYSE: VZ  ) subsidiary Terremark, which is a data center operator for Healthcare.gov, will be replaced when its contract is up in March by Hewlett-Packard (NYSE: HPQ  ) . The Terremark data center actually crashed twice in October and, during one of those crashes, managed to knock another critical system offline.

In the grand scheme of things, Verizon's losing the data center contract to HP isn't that big of a deal. Verizon recently purchased the remaining unowned stake in Verizon Wireless from Vodafone Group and makes a good chunk of its money from wireless and wireline services. Similarly, for HP, winning the data center contract from Healthcare.gov isn't going to generate a significant amount of revenue (Terremark earned just $49 million in contracts according to Bloomberg), but it does give the struggling tech giant a big confidence boost and the ability to use its win to tout its technological expertise to potential customers.

What this really represents, though, is the wake-up call to Obamacare's remaining contractors that "trying their best" isn't going to be tolerated any longer. It very well could turn into a case of "Deliver or we'll find someone else who will!" Let's have a look at two contractors that could be next in line to take a hike if Healthcare.gov isn't functioning like a charm within the next couple of days or weeks.

Who's next?
I believe the most logical choice here would be Canada's CGI Group (NYSE: GIB  ) . Being the lead architect behind Healthcare.gov and really being unable to offer much headway in how to fix its innumerable problems, CGI has been kept around at all probably because of its knowledge of the IT-code that it wrote. Once the so-called "tech surge" has diagnosed and repaired Healthcare.gov and things are working properly, I wouldn't be shocked to see CGI dismissed from its need to oversee any further maintenance of the site. Like Verizon, we're not talking about a catastrophic revenue loss here, but the damage to CGI's reputation throughout this process could reverberate for years to come and keep potential customers on the sidelines.

Another contractor that'd be wise to get its act together, but that I'm also far less confident is in the cauldron relative to CGI Group, is UnitedHealth Group (NYSE: UNH  ) subsidiary Quality Software Solutions, or QSSI. QSSI is responsible for aspects of personal identification and in linking personal information with the appropriate government agency. Early on, QSSI's systems, like practically everything else, failed to work well, but it managed to resolve a number of its own technical glitches since the launch. Where I feel QSSI could be on the hook is with the Nov. 30 deadline (that's today!) to get Healthcare.gov up and running. QSSI was named the Healthcare.gov "fix" supervisor last month and stands to take the full brunt of the blame should the website not be working for a majority of people come Monday.

This sector will continue to gain momentum
I've often said that one person's trash is another person's treasure, and Obamacare's website woes are proving pure gold for private platform insurers such as eHealth and Aon (NYSE: AON  ) .

For individuals looking to get health insurance before the Dec. 23 deadline to be covered by Jan. 1, when the individual mandate kicks in, they can bypass Healthcare.gov altogether and simply go to eHealth's private platform, which is essentially the same type of open health insurance marketplace as Healthcare.gov. The only difference -- not to make light of Healthcare.gov's shortcomings -- is that eHealth has been in business for years and is working like a charm even with the increase in recent business.

For small businesses, which represent an even bigger opportunity, with the HHS noting that Healthcare.gov won't be able to handle small business enrollments until well into 2014, Aon Hewitt's Corporate Health Exchange may represent the smartest alternative. Aon has already garnered 18 clients with 5,000 or more employees onto its private corporate exchange, including Walgreen, Darden Restaurants, and Sears Holdings. With few options available to small businesses, look for Aon to thrive.

If Obamacare still confuses you, let us help
Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." But don't hesitate, because it's not often that we release a free guide containing this much information and money-making advice. Please click here to access your free copy.


Read/Post Comments (31) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 30, 2013, at 5:35 PM, GuyG wrote:

    Obama is stupid.

  • Report this Comment On November 30, 2013, at 5:39 PM, GhostdogWarrior wrote:

    A person with a pen and paper and 5th grade math skills can tell you the answer. It will end in a massive tax hike to pay for an underfunded risk pool hence, a major decline in care due to doctors leaving the profession. Enjoy

  • Report this Comment On November 30, 2013, at 5:54 PM, platinumdj wrote:

    actually the deadline for coverage to begin on 1/1/14 is December 15th, 2013- if you sign up after the 15th of any month- you're coverage will begin on the 1st of the 2nd following month- so a 12/23/13 sign-up will have coverage starting on 2/1/2014- that also assumes they pay their first month's premium on time as well

  • Report this Comment On November 30, 2013, at 5:55 PM, one4dwin wrote:

    The creators of the Obamacare should be the one getting the boot.

  • Report this Comment On November 30, 2013, at 6:28 PM, bcweir wrote:

    Give the jerks doing the booting the boot too. What could be more heartless than terminating someone's job during the holidays?

  • Report this Comment On November 30, 2013, at 7:01 PM, 2smartforlibs wrote:

    All the Marxist regime wants is your money. They can get it by lying to you and telling you the site will someday work and it never will. You low information types will at some point scream for single payer and than the regime has beaten you but your so uninformed all you know is the kool aid keeps coming

  • Report this Comment On November 30, 2013, at 7:09 PM, SLTom992 wrote:

    As we all know it's the Internet provider who handles hundreds of thousands of data links per second rather than the Website.

  • Report this Comment On November 30, 2013, at 7:19 PM, SLTom992 wrote:

    I've been told but I can't follow the bouncing ball deeply enough to verify that one of CGI's major stockholders is Diane Feinstein's husband, Richard C. Blum.

    This is exactly the sort of thing that Obama is known for - making political partners at taxpayer expense but as I say there's no independent verification on it.

  • Report this Comment On November 30, 2013, at 7:32 PM, bamissfa wrote:

    so when can US taxpayers expect to receive a REFUND of the $678 MILLION DOLLARS that dumabss oabama paid to his buddied to build this worthless website

  • Report this Comment On November 30, 2013, at 7:36 PM, Squirrel7y6g wrote:

    Obamacare accounts for more than 150 of the entries on this list: Obama supporters will go hysterical over this well sourced list of 462 examples of his lying, lawbreaking, corruption, cronyism, etc. http://danfromsquirrelhill.wordpress.com/2013/08/15/obama-25...

  • Report this Comment On November 30, 2013, at 7:45 PM, scrumrob wrote:

    I've been in this sort of twilight zone before. It is likely not the vendors who were the problem. From what I have been reading, the failure occurred on the management side. Requirements were changing up to the last minute and no one in management had the gumption to take the bull by the horns. I think the first person who should have been fired was Kathleen Sebelius. Her failure to oversee the overseers of the project is the ultimate failure of management.

  • Report this Comment On November 30, 2013, at 7:48 PM, SoopaCoopa wrote:

    I want my money back that was paid to Michelle's old friend at CGI. We the People have been sold a pig in a poke, and nobody in this corrupt administration or democratic Senate is willing to take the blame. The Obamas owe We the People about $630 million, the way I see it.

  • Report this Comment On November 30, 2013, at 8:42 PM, Gman wrote:

    Obama pushing unrealistic expectations off on his contractors isn't going to help matters any.

  • Report this Comment On November 30, 2013, at 8:58 PM, VIP8636 wrote:

    It will not be CGI. CGI hired Mo Obama's Princeton classmate two months after the ACA was signed into law. She is a Executive VP even though she has very little business experience, once served in the Peace Corps and had spent the previous six years as a stay-at-home Mom. She can, and has, been able to get into the White House without an appointment. She is active in The Black Women of Princeton organization along with Michelle. She and CGI are donors to Obama.

  • Report this Comment On November 30, 2013, at 9:50 PM, Goldenboys wrote:

    The string of incompetence leads directly to the Oval Office, it's inhabitant and his wife.

  • Report this Comment On November 30, 2013, at 10:38 PM, bugmenot wrote:

    The Obamacare implementation was led by Obama. He is the one responsible for the incompetent roll out. Obama appointed the bureaucrats to execute a complex technical plan that required an experienced executive. This is the Obama legacy - incompetence in management. Obama may end up being the first President not asked to speak. His oratory skills are tremendous but his message is pure clusterfck.

  • Report this Comment On November 30, 2013, at 10:39 PM, elliotSam wrote:

    Had Obama just called me back this summer, I could have told him that government IT contractors are incapable of meeting deadlines. This is pervasive across the government IT contracting. They are all incapable of delivering a product on time and as a completed product. Had he just asked, I would have provided him 20 years of experience in dealing with these people. Instead, he got embarrassed, just as I have times in the past, but not anymore ...The pain is, we hire them as contractors to be able to replace them if they are unable to perform, instead, we should pay them when they deliver a completed product, not get any pay until they deliver.

  • Report this Comment On November 30, 2013, at 10:54 PM, NotFondOfLibs wrote:

    Whatever the final cost is, there needs to be an intensive investigation of this issue. It seems the Obama administration has been extremely negligent if managing this project and holding the contractors accountable.

  • Report this Comment On November 30, 2013, at 10:54 PM, VROD2003 wrote:

    Years and months and weeks of this chicanery. A web site which fails, is un workable, un enterable and un available to most americans is not an asset. Nor do I think it was ever intended to be so. This folly of events is the movement of capitol hill politicians to another scourge in health care reform. Socialized medicine. One plan regulated by government. Freedom of choice has been stepping americans out of quality health care.

  • Report this Comment On November 30, 2013, at 11:13 PM, johnwest2 wrote:

    Too little Too late he shouldn't wait for an ATABOY from anyone they had three years to test and prepare shows no one is running anything in the white house . They talk a great game and they know how to use smoke and mirrors and the media but time is running out people are mad and scared the economy is bad not enough jobs and not enough tax payers to support all of those who need help . Over regulation out of controlled spending and bad bad decisions backing companies that have failed . Only democrats to blame for this mess bush has been gone.

  • Report this Comment On December 01, 2013, at 12:49 AM, kosmos wrote:

    Hopefully the next one to get the boot is Obama.

  • Report this Comment On December 01, 2013, at 12:54 AM, Winston6312 wrote:

    Obama is going to screw the best cloud data center provider Verizon/Terramark simply because Sebelious needed someone to blame. You can't have a failure when CGI Group's system software doesn't work in the first place. You just have a situation that you can't get to something on the internet that doesn't work.

    My sister in law recently naturalized from Canada has heard of how bad CGI Group's junk is in Canada too.

    I still believe that Obama doesn't care about affordability or quality. It's all about his dream of trillions of additional dollars in the general funds.

  • Report this Comment On December 01, 2013, at 1:33 AM, Rigbly wrote:

    ...but look at the cool and fashionable dress Obamas wife Michelle wore to another dinner to raise awareness of stuff.

  • Report this Comment On December 01, 2013, at 1:34 AM, cdgib wrote:

    I've read that Valerie Jarett's daughter & son -in-law work for the Canadian firm that was hired to set up healthcare.gov. Figures. Another big dollar item given to Canada to do just like the motorhomes he used campaigning. Further, who woulda thunk that young people wouldn't be in line signing up to pay for older folks? Golly gee whiz, just think, young, healthy people who can stay on mama & daddy's insurance till they're 26 aren't buying insurance. This had to be the stupidest idea of the century right after electing the muzzy in chief twice.

  • Report this Comment On December 01, 2013, at 7:21 AM, bckjnk wrote:

    once again, they are firing the wrong people..start at the TOP..idiots....lol..they can't even fire the right people..

  • Report this Comment On December 01, 2013, at 7:50 AM, bkuhl33 wrote:

    If it's not Obama and everyone in his administration, at this point, what difference does it make ?

  • Report this Comment On December 01, 2013, at 9:05 AM, Barmil wrote:

    Is Obama special or what?

    NIxon takes a fall for the party's screw up and is humiliated by it.

    Clinton couldn't keep his fly zipped, and got burned.

    But here come Obama the teflon president and that one should stick but given the nature of teflon nothing sticks. We as a people have lost so much from our elected officials it has become normal for failure with no reprisals.

    I feel cheeted!

  • Report this Comment On December 01, 2013, at 10:27 AM, kcisobderf wrote:

    I got an idea! Boot any IT contractor, using H-1B or offshore employees in any Federal contract.

  • Report this Comment On December 01, 2013, at 11:27 AM, dkuhlone wrote:

    There is an easier answer to the health care issue. Just make Doctors government employees. Make it so the can not be sued, pay for their education, give them an equitable salary, give them housing and the you get doctors who want to be doctors not ones that want to try an get rich.

  • Report this Comment On December 03, 2013, at 2:04 PM, jammerh wrote:

    You might benefit from a little hiking yourself. CGI won't be next. Its Stanley Group,- actually a U.S. entity -, operates many U.S. federal gov't departments' IT services along with many individual state's healthcare systems. CGI itself runs many Canadian, European manufacturing, banking, and healthcare systems along with others around the world. The problem isn't CGI. The problem, at least on the surface appears to result from trying to go too fast with insufficient testing. On another level there are always people political, and non-political with a vested in throwing a loop into such efforts.

  • Report this Comment On December 10, 2013, at 2:52 PM, ayjaymay wrote:

    This is a completely irresponsible article, speculating on which contractors were at cause for the many healthcare.gov technical issues.

    The author has no inside technical knowledge of the architecture, interfaces, or design of the site, or root causes of the problems, though somehow he feels free to falsely speculate that CGI was "...really...unable to offer much headway in how to fix its innumerable problems", without offering any proof or references? This is serious journalistic malpractice.

    The author also completely ignores any oversight, coordination, and program management responsibility by HHS, or the amount of testing that should have been completed for such a complex system, versus the amount of testing that was actually scheduled and performed (far less than should have been).

    CGI has been working night and day after the healthcare.gov launch to fix these problems, sure, some of them were of their own making, and even some that were caused by other contractors. CGI's reputation for delivering quality commercial and government systems (better than most, if the author had actually done any research for this "article") should not be impacted in the long run because of a single project delay.

    I would commend ALL of the contractors for the work they've done for this initiative to get it to this point. To be only two months behind schedule to get such a complex system up and running, given the challenges they must have faced, must have taken a heroic effort by hundreds.

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