Nevada, which had a $75 million deal with Xerox to build its state-managed health insurance exchange under Obamacare, is scrapping its current technology and joining the federally run exchange system at Healthcare.gov.
It will be the second state to toss its custom-built exchange technology and join the federal system. The first was Oregon, which ditched its $300 million health exchange earlier this year. Maryland and Massachusetts have made decisions tojunk their initial faulty exchanges and start over on new, state-managed systems.
The decision, which the Nevada health exchange board voted on this afternoon, comes in the wake of a sobering report by consultants at Deloitte, which concluded that "the current project team has not proven they can successfully deliver the required management, processes or solution to successfully deliver an operational exchange." As of the middle of this month, the state's exchange had only signed up about 30 percent of its target of 118,000 people for insurance coverage.
The Deloitte report found that there were more than 1,500 defects with the Xerox-created system, about 500 of which were categorized as "severe." The report also said that the system Xerox built was so bad, and its reliability with users so discredited, that unless basic communications and trust issues could be resolved, "the success of the project is not feasible."
State exchange officials have reportedly indicated that they do not plan to join the federal system permanently. Instead, they will work with the federal government for next year's enrollment, and then, the following year, switch back to a state-run system built on modified technology from another state. Or at least that's the hope. State officials also "noted that they are allowed to rely on the federal system indefinitely," according to a report in Politico.