Go to the Globe and Mail homepage

Jump to main navigationJump to main content

People sign up for health insurance information at a California event marking the opening of the state's Affordable Healthcare Act, commonly known as Obamacare. (LUCY NICHOLSON/REUTERS)
People sign up for health insurance information at a California event marking the opening of the state's Affordable Healthcare Act, commonly known as Obamacare. (LUCY NICHOLSON/REUTERS)

Canadian IT firm at centre of Obamacare foul-up furor Add to ...

A Canadian firm is at the heart of America’s historic health care overhaul – and smack in the middle of a political maelstrom.

A unit of CGI Group Inc., the information technology giant based in Montreal, is the main contractor behind the new federal marketplace for health insurance. The system is the centrepiece of the Affordable Care Act, better known as Obamacare.

More Related to this Story

So far, that effort is earning the company plenty of brickbats and a small helping of partisan controversy.

Well before they launched last week, the insurance marketplaces were the source of bitter debate. Republicans in the U.S. Congress shut down the government in an unsuccessful attempt to force Democrats and President Barack Obama to delay or repeal the roll out of such exchanges, which are designed to serve the millions of Americans without any health insurance.

More recently, the system has been plagued by delays and errors since it went live on Oct. 1, prompting some technology experts to criticize the design and structure of the online marketplace. Users have complained the site is frozen or unavailable and doesn’t allow them to complete the process of buying insurance.

The U.S. government has said the main cause of the problems is a surge of traffic to the federal website, which serves the 36 states that are not building their own insurance marketplaces.

“We are spending 24 hours a day, seven days a week working with our client and working with our partners in order to stabilize the enrolment [process] and finish the roll-out of this very complex project,” said Lorne Gorber, a CGI spokesman.

CGI is in charge of designing and developing the technology architecture for the new marketplace. Several other technology contractors also have key responsibilities for the functioning of the platform, which is managed by an arm of the U.S. Department for Health and Human Services. A spokesperson for the department did not respond to a request for comment.

The Canadian company is discovering the perils of playing a leading role in a high-profile, politically-charged project. Earlier this week, for instance, the business channel CNBC aired a segment on the problems with the federal marketplace. The host began by posing the question: “Should we immediately go to war with Canada over the CGI thing?”

The guest, former Vermont governor Howard Dean, laughed and said no. Such glitches are “pretty standard,” he said. “It happens in almost every tech roll-out that I’ve seen over a long period of time.”

The company’s role has also attracted comments from a smattering of right-wing bloggers and generated an article in the Washington Examiner, a conservative newspaper. The piece emphasized CGI’s work in Canadian health care, describing it as “deeply embedded in Canada’s single-payer system” – a system that American conservatives find objectionable.

Analysts who follow CGI said the initial issues with the Obamacare roll-out aren’t a major source of concern. “It is unfortunate that we are seeing headlines where things are breaking down and CGI’s name is attached to it,” said Justin Kew, a software analyst at Cantor Fitzgerald. “They’ve done enough work in these verticals that they’ll get it right eventually.”

CGI’s share price is little changed since the roll-out of the marketplaces; over the past year, its stock is up more than 30 per cent. With a market capitalization of more than $10-billion, CGI is the largest technology firm in Canada, far surpassing BlackBerry Ltd. Founded in 1976 by Serge Godin and André Imbeau, its original name was Conseillers en Gestion et Informatique. It now employs 69,000 people worldwide.

For CGI, health care reform in the U.S. is a major business opportunity. The firm is the main contractor on not just the federal marketplace, but also nine state platforms where Americans can shop for insurance. The IT services giant saw its revenues from health care grow 90 per cent from a year earlier thanks to the impact of policy changes in the U.S., Michael Roach, CGI’s chief executive officer, said during its most recent quarterly earnings conference call in July.

Providing services to the U.S. federal government represents a “big market,” Mr. Roach said. “A big market means big opportunities for those that are focused and for those that are hungry, and we’re both.”

Mr. Roach said he expected the firm’s business in U.S. health care to grow as more states set up their own exchanges or expand the ones already in place.

However, the company has run into friction with one of its state customers. CGI missed half of its performance deadlines in a contract with the state of Vermont, according to a report on a local news website last month. A Vermont official overseeing the marketplace declined to comment. Mr. Gorber, the CGI spokesman, also declined to comment on its work for the state.

 
Security Price Change
GIB.A-T CGI Group 37.12 0.54
1.476 %
Add to watchlist
Live Discussion of GIB.A on StockTwits
More Discussion on GIB.A-T

More Related to this Story

Topics:

Globe Investor - GIT Upsells
It's never been a better time to get Globe Unlimited
Try Globe Unlimited, featuring new Globe Investor Tools, for a special trial rate. Only 99¢ for your first month.

Are you a Globe Investor Gold subscriber?
You qualify for complimentary access to Globe Unlimited.
Visit: globeandmail.com/globeplusunlimited
Try it today

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories