The Strange Demise of Cover Oregon

The Strange Demise of Cover Oregon
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Oregon was the state considered most likely to succeed when applicants for health insurance began enrolling online for policies last October under a key provision of the Affordable Care Act.

In keeping with its progressive reputation, Oregon embraced Obamacare soon after it became law in 2010. Three-term Gov. John Kitzhaber (D), an emergency room physician, envisioned a sophisticated state exchange that would become a model for the nation. Unlike some other states that stumbled because they depended on inexperienced technological providers, the Oregon state exchange, Cover Oregon, hired Oracle, an iconic Silicon Valley firm. The federal government contributed $250 million to help set up the website.

But last week the board of Cover Oregon threw in the towel after the exchange failed to enroll a single applicant online. Earlier, the board had fired Oracle. Last Friday it voted to abandon the exchange entirely and switch to the federal website, the first state to do so. The Oregon board made its decision after being told it would cost $78 million to fix Cover Oregon compared to $4 million to $6 million to make the technical changes needed to join the federal exchange.

Defenders of Cover Oregon note that despite the technology fiasco, some 70,000 Oregonians enrolled for health care insurance with paper applications and that another 172,000 enrolled in the Oregon Health Plan, the state’s version of Medicaid, which provides health care for low-income families and individuals.

Nonetheless, Cover Oregon’s demise was monumentally embarrassing to the governor and other state officials. An independent investigation ordered by Kitzhaber found that state managers repeatedly ignored warnings of technical problems and accused Oracle, which received $134 million, of doing shoddy work in building the exchange. Five officials connected to the development of the Cover Oregon portal resigned. The Government Accountability Office is investigating, trying to determine if any of the federal grant money given to the development of Cover Oregon can be reclaimed.

Republicans seized on the demise of the state exchange as an election-year gift. Typical of the GOP response was a comment from state Rep. Patrick Sheehan, who assailed what he called “a culture of coverup that goes all the way to the governor’s office.”

Kitzhaber, who is seeking a fourth term, acknowledges Cover Oregon will be a major issue in his campaign. Three Republicans are vying to oppose him in the May 20 primary. Cover Oregon may also be a key issue in the U.S. Senate race, especially if Monica Wehby, a children’s brain surgeon, emerges from a contested primary as the Republican nominee. Even before Cover Oregon collapsed, Wehby made opposition to Obamacare a centerpiece of her campaign.

Kitzhaber and U.S. Sen. Jeff Merkley (D) remain favored to win in a state that has not elected a Republican to statewide office in more than a decade. But their challenges in deep blue Oregon could portend trouble elsewhere for Democrats.

Whatever the political fallout, the collapse of Cover Oregon demonstrates that technology holds primacy over politics in the delivery of health care. “The core success to IT projects is achieving things in bits and pieces … and that’s really one of the things we’ve struggled with in the state of Oregon,” said Alex Pettit, head of the state’s technology office.

Robert Booz, an analyst with the IT research firm Gartner, told “If you look at Cover Oregon completely as an IT project, take the politics out of it, take the so-called Obamacare issues out of, it was subject to catastrophe early on.” Booz said the exchange lacked a clear statement of its mission “and a clear and unified voice” to run it.

A similar statement could also be made about state exchanges that have flopped in Hawaii, Maryland, Massachusetts and Minnesota. Every one of these states has a Democratic governor committed to the goals of the Affordable Care Act.

“You have government employees who are well-intentioned, good people but who don’t understand software code and basically have to trust that the vendors they hire know what they are doing,” Sabrina Corlette of the Georgetown University Health Policy Center told the Los Angeles Times. “There was such a gold rush on the part of these vendors that there was lot of over-promising and underpricing.”

The most successful state exchanges focused on technology, not politics. Most notable was California, which also used targeted media advertising to attract potential applicants and wound up enrolling 1.4 million people in insurance plans, about a sixth of the national total, plus another 1.9 million in MediCal, the state’s version of Medicaid. Connecticut was another success story, so much so that Maryland now wants to use its technology. The exchanges in Kentucky, New York and Washington state have also performed relatively well.

On balance, the story of the state health care exchanges in their first year of existence -- as well as the disastrous rollout of the federal website, now fixed -- is a tale about the limitations of politics. Having one’s heart in the right place matters. Getting the technical part right matters even more. 

Lou Cannon worked 26 years for The Washington Post and is the author of “President Reagan: The Role of a Lifetime.”

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