Did the Obama administration know Healthcare.gov would fail?

Brendan Bordelon | Contributor

The British multinational in charge of processing Obamacare paper applications received a hefty contract boost just days before Healthcare.gov’s disastrous roll-out, a sign that the Obama administration may have expected serious problems with the website.

The Business of Federal Technology (FCW) reports that on Sept. 26, the Centers for Medicare and Medicaid Services (CMS) increased their planned payout to Serco’s U.S. subsidiary by 75 percent, adding an extra $87 million to the $114 million promised for processing initial Obamacare enrollment applications.

The contract documents do not explain the last-minute infusion of federal dollars, and neither Serco nor CMS would disclose why the agreement was modified so soon before the rollout.

“Serco is a highly-skilled company that has a proven track record in providing cost-effective services to numerous other federal agencies,” CMS said in an emailed statement to FCW. “The company has provided exceptional records management and processing support to other federal agencies, similar to work they will do for the Marketplace.”

Awarded in June, Serco’s first contract required the company to process 6.2 million paper applications between Oct. 1, 2013 and March 31, 2014.

The Congressional Budget Office estimated that paper applications would represent about 30 percent of federal Obamacare sign-ups during the six-month open enrollment period, with the remainder being handled by Healthcare.gov’s online insurance exchanges. But that website has proven more unwieldy than anyone anticipated, and very few eligible individuals have so far managed to purchase insurance.

Numerous deadlines were missed in the run-up to the Oct. 1 rollout, including one for the development of privacy and security systems for Healthcare.gov. At the time, CMS said it was “confident” that those and other systems would be operational by the beginning of October. But the eleventh-hour boost to Obamacare’s paper processing component suggests they may have been more aware of their IT troubles than they cared to admit.

The Daily Caller News Foundation previously reported that Serco, which stands to gain as much as $1.2 billion through a series of application-processing contracts with the Health and Human Services Department, is under investigation for serious fraud in its native United Kingdom.

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