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Oregon’s Health Exchange Failed So Terribly, There’s Now a Federal Investigation

Oregon’s Health Exchange Failed So Terribly, There’s Now a Federal Investigation

Oregon was one of the early supporters of the Affordable Care Act. Its residents overwhelmingly supported the creation of the state’s exchange, Cover Oregon. In the months leading up to its launch, public officials were eager to be a shining example of how states could successfully set up and run an exchange to deliver affordable health insurance to its residents. Now two months after open enrollment has ended, Oregon has found itself in the midst of a federal investigation just as the Department of Health and Human Services takes over the state’s ACA enrollment and has earned the dubious title of Obamacare’s worst website.

When the open enrollment period began on October 1, 2013, much of the attention was spent on the numerous problems with the Healthcare.gov website. Technical issues are expected with any website launch, yet the importance for the health insurance exchanges brought extra scrutiny. While the sheer volume of visitors to the site undoubtedly overwhelmed the system, over the following days and weeks it became apparent that the federal exchange, which managed the enrollment for 36 states, was not up to par and had to be revamped. After several weeks, the overhaul was completed and enrollments soared.

As national attention focused on the federal website, the 14 states that chose to run their own sites were having varying degrees of success.  All together these states, along with the District of Columbia, represent less than a third of the U.S. population. In the early months of open enrollment, however, these same states accounted for nearly half of all Medicaid enrollments and 75 percent of the private insurance signups.  This was due in large part of the state run website exchanges outperforming the federal one.

Kentucky, the lone red state that decided to run its own exchange, had one of the most trouble-free experiences. Due to its simple interface, it far outpaced large exchanges in the number of enrollments, averaging almost 1,400 enrollments per week for private insurance and enrolling 29,000 in Medicaid in its first month of operation. As the exchanges got larger across the states, more problems would present themselves, largely due to the volume of visitors and issues regarding the exchange of data with insurance providers.

Some state exchanges, like Cover Oregon, were spectacular failures.

It was immediately apparent on the first day that Oregon’s website was not working. While everyone was having problems, Oregon’s issues were not just about high traffic. Journalistic investigations have uncovered a series of missteps that included the perfect storm of politics, poor planning, poor technological design, and contractors that were not up to the herculean task of setting up a health exchange. In the end, not one Oregonian was able to sign up through the exchange. Customers that ended up completing the task did so via paper enrollment.

While Oregon’s results are the most extreme, they are not alone in failing to meet the demands of their residents. All six states had issues so severe they are currently considering options that range from partial system overhauls to entirely dismantling and having the federal government run their exchanges. Oregon announced this week that 80,000 people that signed up for private insurance will have to reenroll during open enrollment in November via the federal exchange. The federal government will handle Oregon’s exchange as the state attempts to overhaul its system, which it hopes will be ready in 2015.

Three other states – Maryland, Massachusetts, and Nevada – join Oregon as the states with the worst performing websites. Like all states that set up their own exchanges, they took advantage of the little over $4 billion in funding of the federal government in order to do so. These four states represent approximately $475 million dollars for exchanges that, in the end, were completely ineffective.

The federal government must now decide if – and how – to spend more.

When the ACA passed, the government had expected far fewer states to participate in the federal exchange, considering the generous offer of funding available to set up their own versions. When SCOTUS ruled that states could not be required to participate in the Medicaid expansion, Republican-led states refused to create exchanges in protest, forcing their residents to use the federal one. This caused a greater burden on the government site both technically and financially. With the failed exchanges, the government had to decide if it was better to give the states the needed funds for an overhaul, or to have them join the exchange.

Massachusetts has also decided to shut down its site entirely for the next enrollment period to overhaul its system. The failure of the state that gave us the model on which the ACA was modeled is particularly poignant. In the end, hardware and software issues that made its existing system unable to integrate with the federal exchange is blamed for the failure. Nevada is also sending Nevadans to the federal exchange beginning in November as it expects to spend $25 million to address infrastructure and software issues. Maryland recently approved the hiring of the firm that created Connecticut’s successful exchange. However, the plan has not yet been met with federal approval and the government has not committed to providing the additional $40-50 million that will be needed for the overhaul.

Maryland and Oregon’s implementation has launched investigations due to uncovered evidence that show public officials knew of problems with their exchanges long before the October 1, 2013 deadline – possibly for up to a year prior. Maryland officials reportedly ignored repeated warnings that infighting between contractors and lack of project oversight which included no project manager would prevent a successful launch. Their total enrollment was less than 75,000 – far below the projected 150,000 expected to be eligible.

Federal prosecutors and the FBI have launched investigations into Oregon’s exchange amid reports of deliberate misrepresentations of the status and functionality of the exchange. All states had to meet specific benchmarks before launching, including repeated demonstrations for Health and Human Resources officials that showed that the systems worked and integrated properly with the federal network. These milestones had to be met in order to continue receiving funds. After one such demonstration in Oregon, state officials were reportedly notified that the demonstration showing their system working was not representative of what was actually happening.

The feds are investigating if the misrepresentations were deliberate in order to get the millions of dollars in funding – which could result in criminal charges – or a colossal failure of management on the part of elected officials and contractors.

All four states are parting ways with the original contractors. The main vendors were Oracle, Xerox, and Canadian company CGI. CGI is also the same contractor responsible for the failed Healthcare.gov launch, as well as other states with problems, including Massachusetts. In response to the investigation, Oregon Governor John Kitzhaber has announced he is considering legal action against Oracle.

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70 comments

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4:06PM PDT on Jun 16, 2014

25 million to fix this mess? wow. And why does it cost so much? Someone is making money on ACA not working.

5:49AM PDT on Jun 11, 2014

No comment

1:40PM PDT on Jun 10, 2014

here's something you won't hear from all those who push single payer health care- http://rt.com/news/uk-nhs-healthcrisis-049 http://www.telegraph.co.uk/health/healthnews/7529454/Hospital-wards-to-shut-in-secret-NHS-cuts.html

1:01AM PDT on Jun 9, 2014

thank you for sharing

7:39AM PDT on Jun 8, 2014

One of the reasons we dont have single payer is becasue the right KNEW if it went throuhg small business would have recovered much faster……and even places like Walmart would have. the economy would have bounced back much quicker. THATS why Obama went for THAT before a jobs plan….because in effect it WAS a jobs plan.

But the right was never going to allow that to happen. And the Dinos couldnt allow it either if they wanted to be reeelcted. Of course the right has been lying about this ever since Obama was elected.

4:54PM PDT on Jun 7, 2014

How can we expect our nation to work, together, when we have a group of racist hating citizens who are determined to undermine everything President Obama puts forth, even when it was their idea in the first place?
Add to that, _the old white boys club_, who feel threatened by women, minorities and the poor. God forbid, they should help them out.

Pay close attention when they say, 'I want my country back'. What they are really saying is, 'I WANT MY POWER & CONTROL back'.
They are a group of fearful people who WANT WHAT THEY WANT, WHEN THEY WANT IT, and nothing else matters.

We should be on a single-payer health system, which would have eliminated most, if not all, of the problems with the different states. Of course, benefiting the entire population is not what the Teapublicans want.
Someone must have told them that, selfishness was next to godliness.

If you are interested, type in 'The Real Origins of the Religious Right', which is in Politico Magazine. It isn't that long and it will clearly explain, the truth behind this abortion business is really all about.
It is fascinating reading, I promise you.

6:01AM PDT on Jun 6, 2014

Noted

3:40AM PDT on Jun 6, 2014

Thanks for the comments about IT. I guess even with things like this, a lot of it comes down to leadership issues. Why can't people work well together and motivate each other in teams? And why is the "bad manager" so prevalent? I have absolutely no idea.

1:45AM PDT on Jun 6, 2014

Thanks for the article.

11:39PM PDT on Jun 5, 2014

Thanks for the article and the interesting comments.

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