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(Corrects company background in third last paragraph to make clear CGI Federal is a unit of Canada's CGI Group Inc, not Celadon Group, as earlier sent)
By David Morgan and Susan Cornwell
WASHINGTON, Oct 24 (Reuters) - The Obama administration launched its troubled healthcare insurance website after only a minimum of crucial system-wide testing, despite contractors warning officials repeatedly about performance risks, a congressional panel heard on Thursday.
Witnesses said the administration did not conduct end-to-end testing of the system's technology backbone until just the two weeks before one of the lynchpins of President Barack Obama's landmark healthcare policy opened to consumers on Oct. 1.
At a U.S. House of Representatives oversight committee hearing, contractors also blamed the administration for a last-minute design change that has been identified as a flaw responsible for leading millions of visitors into system bottlenecks.
Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services (CMS), the agency implementing the online marketplace, acknowledged the contractors' testimony.
"Due to a compressed timeframe the system wasn't tested enough," Bataille said. "What's important to realize is that we are putting in place a much more robust performance testing system now."
The glitches, delays and errors that have characterized Healthcare.gov are a growing concern for Republicans and Democrats alike. The administration is racing to solve the problems in time for millions of uninsured Americans to enroll for coverage and begin receiving health benefits from Jan. 1, as stipulated by the 2010 Affordable Care Act, commonly called "Obamacare."
CMS said on Thursday that about 700,000 applications have been submitted so far for U.S. healthcare coverage through the exchanges.
"We would certainly have liked to see as much time as possible for end-to-end testing," said Andrew Slavitt, executive vice president for the parent of CGI Federal and Quality Software Services Inc (QSSI), a unit of health insurer UnitedHealth Group.
QSSI produced the federal data hub and a software tool for creating online consumer accounts, which was at the center of early logjam problems. The design change involved turning off anonymous browsing and requiring online visitors to create accounts before researching health plan information and determining their eligibility for federal subsidies to help pay premiums.
Slavitt and Cheryl Campbell, senior vice president for CGI Federal, the main contractor, said months of testing would have been preferable for a big new IT system but that the testing schedule for Healthcare.gov was determined by CMS.
The rollout went ahead after QSSI said it made CMS aware of its concerns throughout the system's development, but Slavitt was not aware of any response from the agency.
"The concerns that we had, which were mostly related to testing and the inability to get as much testing as we'd like - we expressed all of those concerns and risks to CMS," he said. "My understanding is they understood those and were working on them. But I don't know further."
Healthcare.gov is the online web portal for a federal health insurance marketplace that contractors described as one of the most complicated large-scale information technology (IT) systems in existence.
The 4-1/2 hour hearing before the House Energy and Commerce Committee marked the first full-length public airing over the problematic rollout, giving lawmakers the chance to piece together what went wrong at the beginning of a six-month enrollment period expected to draw at least 7 million enrollees for 2014.
"This is not about blame - this is about accountability, transparency, and fairness for the American public. The broken promises are many," said Representative Fred Upton, the Michigan Republican who chairs the committee.
"We still don't know the real picture as the administration appears allergic to transparency and continues to withhold enrollment figures," Upton said.
Most of the criticism has come from Republicans who have long opposed the law, Obama's most significant domestic policy achievement, as an unwarranted expansion of the federal government.
Republican John Shimkus of Illinois demanded the names of administration officials involved in decision making: "I would venture to guess the regular bureaucrats did their job. The political appointees manipulated."
Democrats largely dismissed the Republican rhetoric as partisan politics, saying the committee's goal should be to "fix, not nix" the law.
"The Affordable Care Act is an enormous success with one obvious exception: it has a poorly designed website," said Representative Henry Waxman of California, the lead Democrat on the panel.
But some Democrats also expressed disapproval. Representative Anna Eshoo of California said it was "a lame excuse" for contractors and the administration to claim that high volumes of visitors were responsible for problems.
"Taxpayers paid you a lot of money and you're essentially saying to us that everything's alright when it's not," Eshoo told the CGI executive Campbell after she assured lawmakers that the problems would be fixed in time for consumers to enroll for benefits beginning Jan. 1.
"We anticipate that the system, as we have seen, is improving day over day..." Campbell said at the hearing. CGI Federal is a unit of Canada's CGI Group Inc.
The Department of Health and Human Services and the White House have largely declined to disclose information about the problems plaguing the system. It cost nearly $400 million to build, according to the Government Accountability Office.
The House oversight focus will switch next week to the administration as Health and Human Services Secretary Kathleen Sebelius appears before Upton's panel and her lieutenant, CMS Administrator Marilyn Tavenner testifies before the House Ways and Means Committee. (Additional reporting by Susan Heavey and Lewis Krauskopf; Editing by Karey Van Hall and Grant McCool)