Troubled launch of federal online exchange marketplace shows importance of IT project risk management

One of the essential elements of prudent project management is to have a plan to manage risks that can derail a project from getting done. Project managers everywhere are likely asking what kind of plan, if any, did the U.S. Department of Health and Human Services have in place to mitigate the risk of the online federal health insurance exchange marketplace that serves nearly three dozen states suffering a serious, systemic failure at launch. If the online marketplace simply bogged down due to heavy traffic during the first week after it opened for 2014 enrollment October 1, that would be a minor risk that could be mitigated by leasing more server capacity or simply by the passage of time as the initial rush died down.

According to today’s New York Times, however, the situation appears more serious than that. The Times quoted people working to get the online system functioning as saying it might not be ready by the December 15 deadline for individuals to enroll for coverage effective January 1, 2014. That would be a catastrophic start to the marketplace since the federal Affordable Care Act and conforming state laws contemplate the new individual health insurance market rules and exchange marketplace effective as of New Year’s Day.

Aware of the time pressure, the Obama administration is crashing the project, pouring in a team of IT experts to work 7/24 to get the online marketplace up and running properly. Many seasoned project managers would likely suspect that wasn’t in the risk management planning but is instead a last ditch response to a crisis.

One option that could have been in the risk management component of the project would have been a team developing a parallel system. If the site didn’t come up, IT staff could then switch over to the parallel site. Yes, it would cost more to have multiple development teams working in tandem. But given the novelty, complexity and high stakes of a functional online exchange marketplace project serving more than half the states, the higher costs would be justifiable.

If the crash fix doesn’t yield rapid relief as The Times story suggests, it’s possible administration officials have a contingency plan to effectively privatize the online federal exchange marketplace by outsourcing it to a commercial entity with experience running an online health insurance marketplace. If it did so, a possible candidate would be EHealth. The company, which operates the online insurance brokerage, was awarded a $19.3 million contract in July to help develop the federal online marketplace.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

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