The Parallel Failures of the Oregon and Maryland Health Exchanges



There are plenty of notable bits of information in The Oregonian's detailed, damning report on Oregon's failed health exchange: The $160 million state-run project was one of the most ambitious in the nation, but it failed to launch at all last October, and now state officials are considering ditching the project completely and joining the federal exchange system. 

What stands out the most to me, however, is how similar Oregon's troubled experience attempting to build an exchange was to the similarly disastrous experience building a state-run exchange in Maryland.

Unlike Oregon's exchange, Maryland's exchange went live on October 1 last year, at least in the sense that it went online. But it was basically unusable, and remains largely broken.

The pre-launch development of both exchanges, however, had a lot in common. 

Both states were recipients of "early innovator grants" from the federal government to develop what the administration hoped would be model exchanges: Oregon got $48 million, plus an additional $11.8 million IT supplement; Maryland got $6.2 million. Along with the grants came praise from the administration. In May 2013, a Washington Post report described the Oregon exchange as a White House favorite. And just days before the October launch of the exchanges nationwide, President Obama went to Maryland to tout the state's work developing its system.

And yet despite heavy funding and praise from Washington, there were clear early warnings that both exchanges were headed for trouble, with independent analysts telling officials in both states that the projects were not on track.

In Maryland, those warnings came from consulting firm BerryDunn, which warned of significant risks to the project as early as 2012. Oregon's warnings came even earlier, in November of 2011, when analysts from the consulting firm Maximus "noted high risks due to insufficient management controls," according to The Oregonian's report.

Both exchanges suffered under muddled leadership and lack of planning: Oregon's system was to be built by one bureaucracy, but managed by another, which led to managerial confusion and bureaucratic turf wars. In Maryland, BerryDunn reported early on that there was simply no one in charge of the project, and that no one had even taken the step of drawing up a basic timeline of milestones and achievements.

There were problems during the testing phase in both states, with Oregon delaying its initial tests and Maryland flunking late summer performance reviews. And there were clueless senior state officials, pushing forward despite the warnings and the risks. Those closer to the projects seem to have ignored the warnings; those at the very top appear to have been out of the loop. 

Part of what these stories tell us is that you shouldn't always trust the official narratives when it comes to the implementation of large-scale projects like Obamacare's exchanges. In both cases, officials insisted that everything was basically fine with the exchanges, right up until the point that it became blindingly obvious that everything was not. (The same, notably, was true in the federal system.) 

The parallel problems of the two exchanges also suggest something about the health law's hopes and limits. These were two of Obamacare's most ambitious exchange projects. It's telling, then, that they turned out to be two of the law's biggest failures.