Cover Oregon’s short train wreck of a life was the Obamacare equivalent of a celebrity meltdown. Almost seven months after the federal healthcare exchange made its halting, glitch-filled launch, Oregon’s state-based marketplace still couldn’t take insurance applications or issue policies, making it one of the biggest boondoggles in the healthcare law’s short history.
The board of directors of Cover Oregon voted today to let the federal government take over its botched, state-based Obamacare health insurance exchange. Oregon spent nearly $248 million in federal funds on the project and its website, CoverOregon.com, which never did function properly, even after Washington gave Oregon a one-month extension to open its online marketplace. Today, Oregonians must use a cumbersome hybrid paper-electronic process to enroll in Obamacare-mandated insurance plans.
The problems with CoverOregon.com were more than a computer glitch, though. An independent report commissioned by Gov. John Kitzhaber found textbook examples of government largesse and ineffectiveness that doomed the project from the start. Among the report’s findings:
- Multiple government agencies, including the Oregon Health Authority and the Oregon Department of Human Services, came together to work on the health exchange website, but no single entity or person was in charge. The agencies did not share critical information such as the poor performance of software company Oracle, and no one took responsibility for making sure the project was ready on time.
- The state decided to act as its own “systems integrator,” the IT equivalent of a contractor for building a house. It signed substandard contracts with Oracle that tied payment to time and materials, not results. Oracle made more than $100 million early-on and never delivered a workable product.
- The project suffered from poor recordkeeping and communication. Its Executive Steering Committee neglected to keep minutes or write down its decisions. The official decision log for the project reflected only nine decisions.
- A quality analysis company warned Oregon officials as early as September 2012—a full year before the website’s completion deadline—that “this project is in substantial jeopardy of being Oregon’s next multimillion-dollar IT project fiasco.” But state officials kept moving forward, insisting such concerns were normal for such a big project.
State officials estimated they would need another $78 million to fix the problems with Cover Oregon. Instead, Cover Oregon’s board of directors decided to spend $4 to $6 million to link its state insurance providers with Healthcare.gov to sell private insurance plans to Oregonians. Medicaid recipients will still have to use the state-based system.
The move also will cost insurers who must make their systems compatible with HealthCare.gov. A Cover Oregon official told The Washington Post that five out of the 16 insurers in Oregon’s program will have to overhaul their technology to continue to participate. It’s unclear whether people who signed up for coverage this year will have to do it all over again for 2015.
In March, the federal Government Accountability Office (GAO) announced an investigation of Oregon’s exchange, including looking at whether the federal government can reclaim grant money given to Cover Oregon.
“It is the worst financial failure in information technology in state history, and it was completely avoidable,” said Oregon’s only Republican congressman, Greg Walden, who asked for the GAO probe. “Today’s admission of failure underscores the need to stop the waste and get the truth.”