Nevada is Scrapping Its Obamacare Exchange, Joining Healthcare.gov

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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. 

Comments

[Caleb Turberville]

Do the states have to pitch in anything to join the federal system? If not, what incentive do they have to go back to the state-run model once they are tied to the federal system?

[Bardas Phocas]

Local Control, which is code for Contracts for Cronies. With the Fed system, the HHS boys and girls are getting the kickbacks.

[Caleb Turberville]

Good point. I was at a conference not too long ago. Some speaker was trying to convince Alabama to adopt a state exchange system so that "we can keep those tax dollars at home." Or whatever that means.

I guess it means cronyism.

[Jurisrachel]

I don't think it _necessarily_ means cronyism. If a state uses a state exchange, it surely could create in-state jobs. And t hose folks are more likely to spend their paychecks in-state ... . Thus (perhaps) the tax dollars at home comment.

[Drake]

Nevada and Massachusetts are enjoying the best of both worlds. They blew through millions of federal dollars with nothing to show except new friends - then they gave up and joined the federal exchange.

[Paul.]

This is beginning to be like judges overturning restrictions on gay marriage.

I guess we can have what, a maximum of 50 of these reports? How many we down thus far?

[Corning]

It might be more then 50.

What does Puerto Rico and DC use?

[PapayaSF]

"the current project team has not proven they can successfully deliver the required management, processes or solution to successfully deliver an operational exchange."

Of course, that applies to the Healthcare.gov team as well.

[Rufus J. Firefly]

Lesson time.

What does it mean states are leaving Obama exchanges to go on healthcare.gov. Aren't they the same thing?

[PapayaSF]

State exchanges are different from the federal one.

[MikeP]

$75,000,000 / 118,000 signups = $635 per signup

The people approving these contracts are truly bonkers.

Obamacare should be doable with something like $8 million of core software with maybe $1 million required to customize per state and perhaps $10 per enrollee of variable costs. And then every state could use it off the shelf.

Has anyone tallied the hundreds of millions burned across all the state and federal websites -- websites! -- combined?

[MikeP]

Did I say hundreds of millions? If small Nevada and average Oregon went through $400 million, these United States could be on the cusp of $10 billion all together.

[R C Dean]

This could get really interesting if the good guys prevail in the current case pointing out that the statute does not authorize subsidies unless the individual bought their insurance through a state exchange.

With the kicker that some (all?) of the employer penalties for not offering Obama-approved insurance apply only if you have an employee who collected a subsidy.