Obamacare by the Numbers

A state-by-state analysis of failed health care exchanges



Of all the failures spawned by Obama­care, perhaps the most complete was the meltdown of Oregon's health insurance exchange. After spending three years and being awarded $300 million in federal money to build a website where citizens could buy insurance, the Beaver State has absolutely nothing to show for it.

Oregon was one of 14 states, plus the District of Columbia, that chose to build its own exchange rather than join the federal portal Healthcare.gov. Dubbed Cover Oregon, it was one of the most ambitious efforts in the nation. In January 2013, the state won a $226 million federal grant to build and operate the system.

"This is a strong vote of confidence from our federal partners," said Democratic Gov. John Kitzhaber at the time. Kitzhaber promised that the online insurance portal would increase access to information, boost value, and promote overall health. It was to be ready in the fall, in time for the nationwide launch of the exchanges.

In addition to the $226 million grant, Cover Oregon was also the recipient of almost $80 million more in federal cash, including a $48.1 million Early Innovator grant awarded in the hope that the system could eventually serve as a model for other state-based exchanges. This was the second largest of the Early Innovator grants handed out.

In the months prior to launch, Oregon's ambitions were lauded, with The Washington Post suggesting in May 2013 that it "may be the White House's favorite health exchange." There were adulatory profiles of the state's exchange technology in publications such as Government Technology and Information Week.


But even before the scheduled unveiling of the exchanges in October, problems began to appear. In August, the state became the first to announce that its online functionality would be delayed.

Initially, state officials indicated that the setback would last only a few weeks. But at the end of October, the system was still plagued by technical problems. Gov. Kitzhaber continued to insist that the project was still largely on track. "I think we're in really good shape here in Oregon. Do we have some problems? Yes. Are we concerned? Of course," he told KATU News. "But I believe we'll come through this very well."

By January, however, it was unclear whether the state's exchange would ever get off the ground. A scathing report in The Oregonian revealed that Maximus, a quality assurance firm hired to keep tabs on the project, had repeatedly filed critical reports indicating that the project was risky, poorly managed, and unlikely to be ready on time. In response to one particularly critical report from the consultants, the exchange's chief information officer, Carolyn Lawson, had threatened to withhold payment unless the company delivered a rewrite with a different verdict. Throughout 2013, testing on project components was delayed, and when tests had occurred they revealed an unready system rife with major glitches.

State officials had pressed on anyway, spending $9 million on a twee advertising campaign featuring folk singer Laura Gibson—a contract that was expanded to $21 million in October, even as the glitches multiplied.

In the following months, Cover Oregon completely collapsed. Five senior officials involved in the project resigned. In April, state officials decided to scrap all existing work on the state-run exchange and join the federal portal. It was the first state to do so, but it would not be the last.

In May, the FBI indicated that it was looking into fraud allegations made by Oregon State Rep. Patrick Sheehan, a Republican long critical of the exchange. Sheehan requested that the FBI look into charges that state exchange officials had knowingly created dummy websites during the build-out process in order to fool federal officials checking in on the state's progress. Later that month, federal prosecutors issued subpoenas for state records related to the exchange development process, pursuant to a grand jury investigation.

Oregon was Obamacare's most complete tech failure, but it wasn't the only state-run exchange to result in disgrace. A half-dozen other states either collapsed completely or experienced severe technical malfunctions, including several projects once hailed as being among the most technologically advanced.

  • Total federal grants: $305.2 million


Days before the October 2013 launch of Obamacare's national health exchanges, President Obama chose Largo, Maryland, as the backdrop for a speech touting the law's benefits. In the speech, he praised state legislators for their work and suggested that state-run exchanges were ahead of the curve.

But the Maryland site failed immediately after going live and never recovered. The exchange director resigned in December and investigations found that officials had been warned repeatedly by outside consultants that the project faced significant risks. In March the state fired one of its tech contractors, Noridian Healthcare Solutions. And in April the state decided to toss its existing exchange technology and try again with software copied from Connecticut.

  • Total federal grants: $171 million


Before Obamacare was signed into law, Massachusetts was the only state with a fully operational online health insurance exchange. It was slow, requiring offline paper processing to judge eligibility for subsidies, but it worked. Then Obamacare came along, and the state was forced to upgrade to a new exchange.

As in Oregon, the state's plans were ambitious. Emails obtained by the Boston Herald found that state officials hoped to build "the absolute Rolls-Royce of any health exchange." But the updated, Obamacare-compliant system never worked. State officials fired their tech vendor, scrapped the entire system, and requested $121 million to start over on a new exchange.

  • Total federal grants: $179 million


Nevada was the only state with a Republican governor that chose to build and run its own health insurance exchange. The project did not go well.

Plagued by bugs, delays, and outages, the Xerox-built system never functioned enough to be usable for most people. The state only signed up a third of its target of 118,000 people for coverage. The exchange director announced his resignation in February, and in April an independent assessment by consultants at Deloitte reported that "the current project team has not proven they can successfully deliver the required management, processes or solution to successfully deliver an operational exchange."

At the end of May, the state's exchange board voted to scrap its system and partner with the federal exchange for the coming open enrollment season, while working toward rebuilding a new system for later years.

  • Total federal grants: $90.7 million


Throughout its development, Minnesota's exchange, MNSure, was plagued by poor management at both the federal and state level. State officials delayed picking a tech contractor, leaving it less time to complete the work, and then had to rework the system a few months before launch in order to comply with late-breaking revisions to federal exchange requirements.

When the system launched in October, it sputtered, and was nearly impossible to use. By mid-December, the exchange director had resigned, and Optum, an outside consulting group, found that there was no clear management structure in place; the project was operating in "crisis mode." There were at least 210 software defects, Optum reported, and rebuilding the system could take as long as two years.

  • Total federal grants: $153.7 million


Vermont has always had a problem with Obamacare: The president's health law just isn't progressive enough. In 2011 local officials announced a plan to implement a single-payer system in the state in 2017, when statewide waivers to the law become available. In the meantime, they would build an exchange.

But Vermont relied on CGI Federal, which also built the flawed federal system, and months after launch much of the planned functionality remained offline. At the end of April, about 8,000 state residents were stuck in coverage limbo due to ongoing problems with the site.

An independent review reported that the state and its tech vendors were in over their heads. They "had never completed a software development project of this magnitude and did not fully understand the Affordable Care Act." Republican state legislators have called for an investigation into the build-out process, alleging that CGI may have created a dummy website demo to fool federal authorities. State and federal officials said they were likely to proceed with an audit.

  • Total federal grants: $165.2 million


Hawaii's health exchange was taken down almost immediately after the October launch and didn't go back online until October 15. But even after the site was finally live, enrollment remained exceedingly low.

In December, the state's exchange director stepped down. Technical problems persisted throughout the open enrollment period, and so did low sign-up numbers. By the end of March, just 8,592 people had signed up for insurance through the state exchange, making it the most costly in the nation on a per-person basis, with a price tag of $23,899 per sign-up, according to a report by a former HHS official.

  • Total federal grants: $205 million

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  1. So 6 states is a detailed analysis? If that’s all you got, you’ve got nothing. I note that you don’t speak about California, New York, Connecticut, Kentucky, Washington, North Carolina, Idaho, Colorado, and more where its working well.

    By the way, Minnesota is far from a failure, but I’m sure you needed to push the envelope a bit to get to 6 states. Their uninsured rate has fallen by 41%.


    And in fact, even in the states you list with problems, they are working through them. In fact, Oregon is seeing a REDUCTION in health insurance premiums, another state you label as a failure.


    1. MN most certainly is a failure. From your own source, “Some 180,500 people gained health insurance, mainly through enrollments in the state’s two government-sponsored programs for the poor: Medical Assistance and MinnesotaCare.

      That’s not even close to the original demographic target. So the MN “Miracle” as you and Minnesota Pravda Radio would like to call it is merely an vast expansion of the welfare state. YAY!!! And what do we get for that expansion? Why, not only do taxpayers get to foot the bill, but patients get to see no to worse outcomes! FANTASTIC!

      1. It is just beyond boggling to the mind the amounts spent on all this by all these government entities.

        There already existed an online health insurance website. All along it has provided the VERY SAME insurance policies available on Obamacare exchanges.

        And, for those who need to know what their subsidy would be, wouldn’t a simple table suffice to make the determination (like the tax tables)?

        And, couldn’t eligibility be determined by existing IRS records (seems that SSN is used in the insurance application)?

        All this could probably be done for under $10M.

    2. I guess in your world its no big deal to waste a billion dollars on exchanges that don’t work.

      You do know that money could have been spent on simply buying people insurance.

    3. Actually covered california has lots of problems. The feds cited them after an audit showed that many applications had discrepancies and covered california admitted they don’t have the staff to reconcile them all. Plus there is backlog of about 300k medical enrollments. And they say they don’t have enough staff to report how many people are actually enrolled in a plan vs. The 1.4 million they announced had signed up back in April.

      1. “Good enough for government work” is a saying for a reason.

      2. Plus the lawsuit about how they sold plans that listed available doctors who weren’t actually on the plans.

    4. SUDERMAN! You’ve got nothing!

  2. “Despite initial technical difficulties and long waits to get through to MNsure customer service, Minnesota exchange enrollment numbers for 2014 seem strong. Between Sept. 30, 2013 and May 1, 2014, the number of uninsured Minnesotans decreased 40.6 percent (180,500)?the lowest rate since the 1990s,”


    “A study commissioned by MNsure and conducted by the University of Minnesota showed that the state’s uninsured rate dropped to just 4.9 percent over the course of the 2014 open enrollment period ? the lowest rate in state history.”


    But here is your problem, skippy. I never said Minn. was a miracle, they have had technical problems. And you should know by now, technical problems always get fixed. And in the meantime, even with problems, the interest is strong, and the numbers that the ACA wanted to impact (the uninsured) are very strong.

    Try reading what I wrote next time. The states with problems are working through them, and successfully. Even where I live (New York) there are problems, and the exchanges are still a big success.

    1. Vermont’s supermajority Democrat Party isn’t interested in helping anyone but themselves: single payer is yet another crony capitalism scheme that puts the State’s medical industry at the mercy of our corrupt, ambitious, money grubbing Governor Peter Shumlin. A man so morally bankrupt that (while in office) he swindled his mentally disabled neighbor out of his family farm for about 1/4 of its market value. Shumlin got caught and had to give it back.

      1. And got re-elected?

        Single-payer legal care for the win. If it’s good enough to put all these regulations on doctors, let’s put them on lawyers, too.

        1. But the lawyers are the ones putting regulations on the doctors…

    2. Remember, states are the “incubators of innovation” according to the 10thers. So it is important to measure policy by the failures and not the successes.

      1. And the federal government can do no wrong and should only be measured by intentions according to progressives.

        1. Yes, that notion is stupid too.

          1. Good. Now are you going to admit that the tax payer was defrauded, and are you willing to endorse a criminal investigation that will hold officials at both the state and federal level accountable?

      2. Part of innovation is having the freedom to say “I’m not going to participate in this project at all because I know it is going to fail.” Which states or individuals were allowed to opt out of PPACA?

      3. What innovation? The Fedgov has dictated the way the exchanges are to be set up, the plans that qualify and don’t, the rates to be used and just about every other detail of this boondoggle.

    3. But here is your problem, skippy. I never said Minn. was a miracle, they have had technical problems.

      This is an article on the failed state exchanges, you imbecile. It doesn’t matter how many uninsured were added to the rolls of government provided healthcare when the topic at hand is the exchanges!

      Technical problems get worked out? Well, no, not always as the csse of Oregon shows. They do get resolved usually if you throw even more money at the problem.

      The question is why it’s ok for the government to waste money and lie about the results they are getting. But you obviously have no intellectual integrity and would prefer to just ignore that question.

    4. The states with problems are working through them, and successfully.

      Well they’re certainly working through a pile of taxpayer dollars anyway.

    5. Jackie, Jackie, Jackie. Your MPR link called it the MN miracle and you endorsed the link, so you implied it was. Without a doubt you claim it’s a success with all of the gushing about lowest uninsured rate, EVAH! I simply pointed out YOUR lack of reading comprehension of your own links. MN isn’t a success when the majority of the new signups are for Medicaid which is exactly what was not supposed to happen. What’s worse is that you didn’t even bother to read the very revealing links I attached which show that the Medicaid studies show no statistically significant medical improvement for those on it. So even if the rate of uninsured went down primarily through more welfare, there’s no reason to believe that their health will improve.

      As far as NY goes, you can hardly claim a success there when BarryCare was actually LESS regulation than the dog’s breakfast you Leftards created for yourselves.

  3. Vermont blew the cash and got nothing. Now they are forcing single payer on us for $2 Billion. Nobody had announced how they will pay for this yet.

    1. The problem with Vermont, is that it’s full of Vermonters!

      1. Actually, the problem is it’s full of transplants. I suspect most native Vermonters outside of Burlington aren’t totally crazy.

      2. As I have noted previously, we really need to consolidate New England into a single state.

        1. And undercut the Free State Project?

  4. These aren’t failures, but examples of colossal fraud. If a private entity wasted money like this while deceiving investors, they would have been charged with crimes and it would have been a major story.

    The fact that the federal exchange was just as much of a mess, and they misled everyone on the state of that until launch, it defies reason to suggest that everyone up in the chain was simply deceived here. Yet, we aren’t supposed to ask these sorts of questions or hold anyone accountable for massive waste as if this is all just play money.

    For some odd reason, situations that would be called a disaster in the private sector are excepted when it’s government work. We’d have had legislation on top of legislation nominally to prevent something like this happening against if investors were defrauded the way taxpayers were.

    Vermont blew the cash and got nothing.

    Did Vermont have any plans for their exchange when they implemented their single payer system? Or did they just intend to spend 165m for a system that would be in place until 2017 and need replacing?

    1. “…examples of colossal fraud.”

      Yep. Theft, plain and simple. Feudal style extortion. Wring every penny out of the populace possible and distribute it to the King’s minions. Give the populace nothing.

    2. Well, yes and no. Large government IT projects have a huge failure rate (@50%), in part because of scope, and in part because of political meddling.

  5. In response to one particularly critical report from the consultants, the exchange’s chief information officer, Carolyn Lawson, had threatened to withhold payment unless the company delivered a rewrite with a different verdict.

    “How to Govern 101: A Manual for Bureaucrats”

  6. Every time Suderman skips alt-text it feels like a fresh betrayal.

    1. ‘A non alt-texter dies a thousand times before his death, but the alt-texters taste of death but once.’

  7. Why were so many officials allowed to resign (and I’m sure keep their pensions) instead of being fired?

    Oh, who am I kidding. They probably keep their pensions if their fired, anyway.

  8. Other people’s money. Invitation to con artists.

  9. So, the State of Oregon willfully and purposefully misrepresented their progress by creating fake web-sites designed specifically to pass mandated “benchmarks” to obtain increased federal funding, and nobody is going to jail? I smell Holder.

  10. Obamacare is a big project. Therefore, It cost a lot also. As I may know, We have to spend a billions dollar just for build a website.

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