The task that has befallen the federal government will impose formidable and unanticipated burdens. HHS will have to create at least 25 front-end interfaces to take in users' personal information, screen insurance schemes and itemize acceptable plans. It will also need to build systems to verify user identities, certify health plans that meet standards and provide ways for users to navigate the exchanges and apply, not just online but over the telephone and by conventional mail. Complicating the process still further, HHS cannot build a single system. Each exchange will have to account for that state's insurance laws, a task that will require the federal authorities to come up to speed on local insurance markets in at least the 25 states which have balked on exchange building, and very likely more of them.

The overlap with Medicaid will complicate the effort further. Since the states control Medicaid eligibility and the Supreme Court has allowed states to opt out of federal requirements, the exchanges run by HHS will have to cope with Medicaid questions. They will likely have to ask users to fill out separate Medicaid applications, probably on a separate, state-administered site. There will be delays as users wait for the state authorities to determine their eligibility. Should they be rejected, they will have to return to federally run exchanges to make the mandated insurance purchase. Without diligent efforts, many users will become confused as to whether they qualify for Medicaid or must buy personal insurance. Such people could easily fall through the cracks of a federally run system and lose all medical coverage.

To protect against such hardships and set up the massive administrative machinery involved, HHS will have to do a tremendous amount of work in the year remaining before the exchanges are supposed to begin operations. The effort should quickly burn through the $1 billion budgeted to the department to implement Obamacare. It will undoubtedly have to tap budgets from other programs under its jurisdiction and perhaps even return to Congress for additional funding. Such a request will lead to more complexity. House Speaker John Boehner has already indicated that such funding requests will become a bargaining chip in the fiscal cliff negotiations as well as any subsequent fiscal debate.

HHS is under considerable pressure to get it right from the start. If Affordable Care is to work, it needs participation. There is a huge business risk, then, if the exchanges fail to work well for users or the IRS cannot track participation effectively or enforce compliance. As a policy analyst at Consumers Union noted: “Consumers are going to form an impression … based on the first year's experience, and if you create a negative impression, it would take 10 years to overcome that.” That is not the outcome the administration wants for its “signature legislation.” Moreover, any level of dissatisfaction will almost certainly spark future legislative challenges for this already unpopular piece of legislative. Either way, the give-and-take, successes, failures and foibles of this year of implementation will surely affect investor perceptions, fears, expectations and pricing.