The 1 Thing Standing in the Way of Obamacare's Utter Collapse
Without it, the entirety of Obamacare is in jeopardy. Without it, the entire health-insurance industry could be at risk. If it fails, the federal government could be financially harmed.Those words didn't come from the mouths of opponents of the Affordable Care Act. They originated directly from the federal government -- to be specific, the Centers for Medicare and Medicaid Services, or CMS.
What could possibly be so important to the future of Obamacare and the health insurance industry? The one thing standing in the way of the collapse of health reform and the aftermath of such a meltdown is ... Accenture (NYSE: ACN ) .
Source: White House on Flickr.
After the disastrous launch of the federally run HealthCare.gov website, the White House made some changes. CGI Group (NYSE: GIB ) , a primary contractor on the initial effort, was shown the exit door. The company walked out whistling, though: CGI's contract with the U.S. government generated up to $300 million in revenue. CGI's stock soared nearly 45% last year.
UnitedHealth Group's (NYSE: UNH ) Quality Software Services, or QSS, unit won the job as lead contractor in the salvage effort of HealthCare.gov. QSS staff worked day and night alongside others for weeks to fix the hundreds of bugs in the website. By early December, federal officials were pointing to the apparent success of those efforts, with many Americans finally able to enroll for health insurance.
Behind the scenes, though, some government insiders weren't celebrating victory yet. A justification was submitted on Dec. 27 for skipping the standard open bidding process in selecting a vendor to "perform urgently required services." What was so urgent? The need to develop the back-end financial management platform for HealthCare.gov by mid-March.
CMS recommended that Accenture be awarded a $91 million contract without allowing other companies to bid. The federal government's bidding process takes at least six months. There simply wasn't enough time to avoid the dire consequences spelled out in detail by CMS officials without taking immediate action.
Were all the gloomy predictions about the threat to Obamacare and the health insurance industry overblown? That doesn't appear to be the case. CMS said that critical functionality was totally missing from the back-end system, including the ability to track eligibility and enrollment transactions and to pay insurers correctly.
A significant opportunity
Tongues are already wagging that the Obamacare website mess is worse than previously disclosed, but let's leave that to the political commentators. There's a possible investing opportunity here -- not because $91 million is a huge amount for Accenture, but because of the bigger picture.
Although there wasn't an open bid process, the feds didn't pick Accenture willy-nilly. CMS looked at more than a dozen companies for the job. It selected Accenture because the big consulting company possessed the technical expertise needed, had proven experience tackling complex tasks, and claimed a good track record.
If Accenture successfully pulls this project off, the company will be able to talk to prospects in the future and honestly say, "The U.S. government picked us for one of the most critical efforts it has ever faced with an incredibly tight window -- and we delivered." Regardless of whether a prospect is a government agency or a private company, that kind of achievement holds the potential to land Accenture considerable business over the next few years.
The obvious question, though, is: Can Accenture do it? Can the company actually build the back-end system functionality in just a couple of months or so? As massive of an effort as it appears to be, I think it can. Sure, there will probably be some problems. However, I suspect that Accenture will be able to pull a rabbit out of the hat.
My view is based on a few factors. First, I worked for Accenture years ago and know how it operates. It'll tackle the project as methodically as ants building an ant bed. Second, it has a lot of ants -- a huge pool of talent from which to choose. The company has no doubt assembled some of its best resources for the project.
Third -- and perhaps most important, I doubt Accenture would have signed up for the project if it didn't think it would succeed. That's not to say the company has been successful in every project in the past. It hasn't.
However, this effort is so visible, so politically charged, and so critical, my take is that Accenture wouldn't have ventured forward if it thought this was a lost cause. And the company was already a contractor on parts of the Obamacare implementation already, so it wasn't making the call without some knowledge of what it was getting into.
end quote from:
http://www.fool.com/investing/general/2014/01/26/the-1-thing-standing-in-the-way-of-obamacares-utte.aspx
This article is more a corporate view of Obamacare. There are many other views. But, to some degree what Obamacare is now and will be will depend upon the will of the American People more than any single thing. If they want it to work it will. If not enough do it won't. However, I think people are getting used to the good things it does and likely will find a way to prop it up and find ways to actually make it work because otherwise we just prove to the rest of the world that we are basically uncivilized if we don't.
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