Oregon set to construct new Obamacare exchange after failed attempt costs $305 million
Cover Oregon was intended to allow people seeking health coverage to register and select coverage options on a state-run website. However, the website was plagued with problems, forcing the state to resort to paper registration. By January 2014, approximately $200 million of the $300 million set aside to develop and operate the website had been spent.
A few months later, the operation was aborted and the board of directors voted to adopt the federal HealthCare.gov exchange instead, which the state pays close to $10 million a year to use. The fee is set to double in a few years.
“We’ve been covering Obamacare changes for the past year or two,” Alexander Hendrie, federal affairs manager for Americans for Tax Reform, recently told Patient Daily. “This is really an issue of waste and failure of oversight both on the state and federal level.”
Hendrie said the federal government spent $5.5 billion on state exchange grants, which states applied for when the Affordable Care Act was passed into law. The $5.5 billion didn’t include what the state spent on HealthCare.gov, so many states used the money to construct an exchange.
“Now, Oregon is probably the best example, or worst example, of how this failed,” Hendrie said. “They got $305 million in federal grants and their exchange is no longer around and that money was wasted. This isn’t unique to Oregon -- Hawaii’s exchange is gone, Vermont’s still has problems. It was running on manual for about two years, meaning they couldn’t actually update any personal information on any of the enrollees on the website. People had to call in to a help center and then have them enter it manually into as many as six different systems.”
Oregon received the third highest sum of the roughly 15 states that created an exchange, behind only California and New York, which are much bigger states.
In 2014, former Gov. John Kitzhaber assigned top campaign aides to the board in charge of the exchange to help shield him from embarrassment and preserve his public image as he ran for reelection, documents later revealed.
The major problem Oregon faced in undertaking the enormous task was underestimating how difficult constructing the exchange would be.
“Another thing they had was the executive directors who came from Oregon -- all four of them through the exchange’s history -- none of them had any IT or health care experience, and they were the decision makers behind this,” Hendrie said. “They subcontracted out a lot of the building of the system. But they were the ones making all of the major decisions and they didn’t, as history has shown, know what they were doing, hence the failure.”
Now Oregon hopes to get it right the second time around by possibly purchasing one of the successful state exchange systems that is already working, which would be a lot easier to implement.
“I would also point out they are on a relatively working system,” he said. “I say relatively because it has its own set of problems. But I think really the one issue -- the main takeaway I would have -- is that they haven’t returned any of the $300-plus million for the last one and now they are looking at another one.”
This time around, Hendrie doesn’t think any federal funds should be allocated for the exchange system. In fact, the state should be required to return some of the funds it wasted.
“I would think the state would remember the disaster of Cover Oregon,” he said. “There were a lot of stories. They had to install fax lines when the exchange wasn’t working because of the deadlines people had to enroll under law or face a tax penalty, and they couldn’t because the Cover Oregon website just didn’t work.”