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Md. spent $90M on health exchange tech
Gov. Martin O’Malley holds up a phone number for people to call to get help enrolling in health insurance in the state’s health care exchange on Friday, March 28, 2014 in Annapolis, Md. While the state’s online exchange still has serious technology glitches, O’Malley says more people have been able to get through in recent weeks after improvements were made. Dr. Joshua Sharfstein, Maryland’s health secretary is seated next to O’Malley, and Carolyn Quattrocki, the interim director of the exchange, is next to Sharfstein. (AP Photo/Brian Witte)

Md. spent $90M on health exchange tech

ANNAPOLIS — A breakdown of spending on Maryland’s troubled health exchange shows that more than $90 million of the nearly $130 million cost so far has gone toward technology expenses, even though the website is unsalvageable.

Officials, including Gov. Martin O’Malley and Lt. Gov. Anthony Brown, who was in charge of implementing the reform, have said the website is a small part of the exchange. But The Washington Post reports that a breakdown provided by Dr. Joshua Sharfstein, the state’s health secretary, shows the state spent $129.8 million to build and manage its exchange and that technology was the biggest expense, $91.7 million.

Most of that money, $72.1 million, went to Noridian Healthcare Solutions, including $49.9 million spent developing the exchange, Maryland Health Connection, and $8.1 million on developing a marketplace for small businesses, called the SHOP exchange.

The SHOP launch has been delayed three times. Officials have said they wanted to stabilize the individual exchange before moving forward with another project. The Maryland Health Benefit Exchange board voted last week to spend as much as $150,000 on a consultant to evaluate the state’s options for creating and operating a small-business marketplace.

Maryland also paid Noridian $11 million for website hosting and $3 million for maintenance, expenses Sharfstein said the state would have borne regardless of what sort of site had been launched.

More than 90 percent of the total cost of the exchange has been paid for with grants from the federal government. State officials have said they hope to secure more federal funds to pay for a new IT system for the exchange, which would be built and operated by Deloitte Consulting LLP, a company that created successful exchanges in other states.

It’s unclear at this point, however, how much the state could get from the federal government to pay for the transition. A contract with Deloitte could cost between $40 million and $50 million, plus extra hardware and software expenses.

The state has also indicated a willingness — even an eagerness — to pursue litigation against its original IT contractors to recoup some of the expenses of building what turned out to be a dysfunctional exchange.

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