Feds to Take Over Oregon's Failed $300 Million Health Insurance Exchange


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The state of Oregon received $303 million in federal grants—more than all but two other states—to build and operate a health insurance exchange, dubbed Cover Oregon, under Obamacare. One of those grants was a $48 million "early innovator" grant for states whose exchanges were intended to serve as models for the nation. The state was among the most enthusiastic about implementing the law, with Democratic Gov. John Kitzhaber touting both the law and his state's work building the exchange. 

The state's work on its exchange recieved praise throughout the media, and it was reportedly loved by the Obama administration: In May of last year, The Washington Post described it as "the White House's favorite health exchange." The week before the exchanges were set to launch around the country, Government Technology magazine profiled Aaron Karjala, Cover Oregon's Chief Information Officer (CIO). The opening line: "As states launch their federally mandated health insurance exchanges, officials in Oregon say they are poised to set a high bar for just how smoothly such a system can operate." On October 1, the day the exchanges launched around the country, Information Week published an adulatory commentary piece on Cover Oregon: "Obamacare Health Exchanges: How Oregon Got It Done." 

Oregon didn't get it done. The bar was not set high. It was hardly set at all. The state delayed the opening of its exchange. At the end of October, state officials were still struggling to bring the system online. Gov. Kitzhaber, however, continued with the happy talk. "I think we're in really good shape here in Oregon. Do we have some problems? Yes. Are we concerned? Of course. But I believe we'll come through this very well," he told KATU news

Cover Oregon didn't come through it at all. There were delays, and then more delays. The exchange never successfully went online. No one ever signed up for private coverage through the system. Reports surfaced showing that independent consultants had warned for years that the ambitious project was likely doomed. The warnings were ignored.

In March, Gov. Kitzhaber accepted the resignation of Cover Oregon's acting director Bruce Goldberg, who supervised the exchange-building process, and requested that the exchange's board remove Chief Operating Office Triz DelaRosa and CIO Aaron Karjala. It was a $300 million disaster—a model for the nation that turned out to be a total failure. 

State officials may finally be coming to grips with the idea that they have failed completely. It looks like the exchange will be closed down and turned over to the feds. Perhaps fittingly, the White House's favorite exchange will be turned over to the White House.  Via The Washington Post:

The Obama administration is poised to take over Oregon's broken insurance exchange, according to officials familiar with the decision, who say that it reflects federal officials' conclusion that several state-run marketplaces may be too dysfunctional to fix.

In public, the board overseeing Cover Oregon is scheduled to vote Friday whether to join the federal insurance marketplace that already sells health plans in most of the country under the Affordable Care Act. Behind the scenes, the officials say, federal and Oregon officials already have privately agreed that closing down the system is the best path to rescue the state marketplace, the country's only one to fail so spectacularly that no residents have been able to sign up for coverage online since it opened early last fall.

According to a Tweet from KATU reporter Chelsea Kopta, the state won't be returning any of the federal grant money. 

Here's an ad for the exchange: