Obamacare: And the IT Winner Is ... Dell / Perot / Texas?

by: Dennis Byron

The Wall St. Journal reports September 30, 2010 about the information technology (IT) and other shortages that U.S. states will face implementing the Obamacare health insurance industry mandates between now and 2019. That's especially an issue in terms of the many IT and call-center aspects of the Obamacare kickoff in 2014.

The WSJ news should be good for Dell (NASDAQ:DELL) and its services arm Perot Systems (NYSE:PER) as well as for employment in Texas and any other geograpy to which Perot outsources IT and call-center work. (That's ironic given the Texas state government's and Texas citizens' opposition to Obamacare.)

Dell/Perot has a leg up especially in terms of the need explained in the WSJ to build 40-plus insurance-brokerage exchanges from scratch in the next few years because Perot had already done that here in Massachusetts, the U.S. state often termed the test lab for Obamacare. Utah, the other state noted for its pioneering health insurance exchange work, appears to have done its systems integration (pdf) in-house based on services and enterprise software from eHealth (NASDAQ:EHTH), Chicago-based bswift and Utah-based Health Equity. Apparently there was less opposition here in Massachusetts to outsourcing employment to other states. This sort of thinking might change based on upcoming U.S. elections but Massachusetts' approach to healthcare insurance reform is more popular among the U.S. federales right now than Utah's.

I would expect IBM and HP (NYSE:HPQ)/EDS (that other little Perot start-up) to be fighting tooth and nail for this business, state house to state house as well.

Microsoft (NASDAQ:MSFT) might be a big winner too, although I haven't dug that far back into the supply chain to say for sure. As recently as three or four years ago, Dell was such a large Microsoft customer (more than 10% of Microsoft revenue) that it was called out in Microsoft's SEC filings. And despite open source propaganda to the contrary, Massachusetts state government is a major Microsoft shop.

One of the Utah-state-owned-insurance-broker software providers, bswift, uses Rackspace (NYSE:RAX), providing another Texas connection.

Disclosure: no financial interest in companies mentioned.