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UPDATE 1-Crucial Obamacare financial technology still unfinished -U.S. official

David Morgan
Tuesday, 19 Nov 2013 | 9:41 PM ET

official@ (Recasts with details from hearing, adds background and quotes)

WASHINGTON, Nov 19 (Reuters) - Up to 40 percent of the technology needed to run the new Obamacare health insurance marketplace has not yet been built and will not be ready when insurance companies start sending in bills when coverage begins Jan. 1, the project manager of HealthCare.gov told the U.S. Congress on Tuesday.

The missing "back-end" technology may not be ready until mid-January, Henry Chao, deputy chief information officer for Centers for Medicare and Medicaid Services, told a House of Representatives oversight subcommittee.

If the business functions are not in place on time, it could create havoc with a system through which billions of dollars in federal tax money will flow to subsidize coverage for consumers who otherwise could not afford it, insurance industry officials said. The first payments are due in mid- to late January.

The disclosure added to an atmosphere of uncertainty that has engulfed President Barack Obama's signature domestic policy achievement since HealthCare.gov crashed soon after its Oct. 1 launch.

The absence of the back-end technology behind healthcare marketplaces that have sprung up in all 50 states and the District of Columbia does not prevent consumers from enrolling for coverage through market portals such as HealthCare.gov.

Administration officials said the technology was set aside in the run-up to Obamacare's Oct. 1 rollout, so that CMS could concentrate on the consumer features of the troubled federal website, HealthCare.gov.

Obama's Patient Protection and Affordable Care Act requires most Americans to be at least enrolled in health coverage by March 31 or pay a penalty.

CMS spokeswoman Julie Bataille told reporters that technology for those functions would not be needed until January.

"The back-end financial management systems are something that we do not believe are essential until 2014 and we'll roll those out in those timeframes," Bataille said on a conference call with reporters.

But a program needed to confirm the identities, subsidy levels and coverage choices of individual plan enrollees would have to be in place in December, if coverage is to begin on time on Jan. 1, said an insurance industry official who asked not to be named.

A CMS official warned as early as July that the financial management project was short staffed, weeks behind schedule and the target of a bureaucratic tug-of-war over resources and priorities, according to internal CMS emails.

"The upshot is that the (financial management) build appears to be way off track and getting worse," said a July 8 email from Jeffrey Grant of the CMS unit, Center for Consumer Information and Insurance Oversight.

The document, provided by Republican investigators in Congress, said staff had been transferred to other projects leaving only one highly skilled developer.

(Reporting by David Morgan; Additional reporting by Susan Heavey; Editing by Sandra Maler, Fred Barbash and Lisa Shumaker)