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Impact of U.S. debt downgrade Related Topics Health » Technology » Small Business » By Alina Selyukh WASHINGTON | Thu Aug 11, 2011 5:25pm EDT WASHINGTON (Reuters) - The U.S. government effort to set up state-run health insurance exchanges may be falling behind schedule, but technology firms are lining up for the lucrative contracts to build the network's infrastructure. Less than a dozen states are far enough along in planning insurance exchanges mandated by the U.S. healthcare overhaul to bid out contracts, but many of the biggest names in IT are jumping on those contracts and positioning for more, according to industry and government officials. They include Hewlett Packard Co, Deloitte & Touche LLP, Dell Inc, Computer Sciences Corp, eHealth Inc, Ceridian Corp, Xerox, IBM, Oracle and smaller peers. IT executives say the value of such contracts could run between $5 million and $100 million per state, depending on how many functions the exchange will perform. Even the most bare-bones option could take up to a year of construction. "There isn't a Microsoft Office for exchanges... This is really uncharted territory," said Jordan Battani, a researcher with IT and systems integration giant CSC. "Everybody thinks there's a pony for them in this." The healthcare law passed last year requires all states by 2014 to have exchanges, open marketplaces where uninsured people and small businesses can compare and buy insurance. States now have less than 17 months before they must present their plans for how they will run those exchanges to the U.S. Department of Health and Human Services, which has given out millions in grants toward that effort. Otherwise, HHS will have to create the exchange itself. Either way, tech companies will benefit from the system to be used by millions of Americans. "The healthcare law actually creates full employment opportunities for the IT sector and the legal sector," said one healthcare industry source who declined to be identified because the person was not authorized to publicly discuss the financial nature of the exchanges. "Ancillary players are going to be making the real money." BIG IMPACT FROM LITTLE PIECES Starting in 2014, many of the 30 million newly insured are expected to log into the new healthcare websites to file applications, submit payments, claim Medicaid eligibility or call customer service. "It's very important to us because we see this as a new market... It's a major expansion of services," said John Petraborg, a healthcare industry executive at HP. Many states, especially Republican-led ones, reject the notion of the exchanges envisioned by the Obama administration. Still, a handful of states have sought bids from IT vendors. HHS has also issued its call for contractors. An average exchange would allow people or small businesses to shop around for an insurance plan similar to how one would shop for insurance on online broker sites such as eHealthInsurance.com or GetInsured.com. A comprehensive exchange would require a website where people could compare plans, securely submit applications and pay for them. The exchange would link to federal databases, for example checking for eligibility for federal subsidies. Some exchanges could also plug into federal tax databases and, if income fluctuates, simplify the process of switching between private insurance plans and Medicaid, the state insurance program for the poor. There is also a need to create and run local systems for people who choose to visit an exchange location as well as to run customer service call centers. "We are out there trying to sell our components to states," said John Hunter, president of Ceridian Exchange Services. "The way we're going to market, we don't have to be the general." LEGO MODEL In the past seven months, Sam Gibbs has been on the road, meeting with policymakers and explaining his tech world to regulators in about 20 state capitals. Gibbs, the president of eHealth Government Systems, has two things going for him: his online broker eHealthInsurance.com has a model that state exchanges could adjust and adopt. EHealth also serves government contracts, including one with HHS to expand www.healthcare.gov. "There's not a wealth of people that have extensive experience with this," Gibbs said. "Hopefully what the industry can do is have a sort of a Lego set of different blocks and states can come and get those blocks that are maybe different colors for each." Such building blocks would require widespread cooperation and partnerships. In addition, "early innovator" states could use the industry expertise to create several exchange models that they would sell to other states. "The vendor community is not really pleased about selling their secret sauce and giving it away for free," said Manny Munson-Regala, government strategies vice president on Ceridian's exchange services team. "There's a lot of grumbling about this, but it's all about the money, right?" said Gibbs. "It's solvable if everyone is fairly compensated." (Editing by Michele Gershberg and Robert MacMillan) Health Technology Small Business Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above. Social Stream (What's this?) 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