Oregon to leave state insurance portal, switch to HealthCare.gov

After months of trying to get its problem-plagued online health exchange to work – and failing to enroll even one person online – Oregon has officially given up on the state portal and decided to switch to the federal website, becoming the first state in the nation to do so.

An early adapter and early enthusiast of the Affordable Care Act, Oregon was once seen as the national leader in health care reform. The progressive state's ambitious vision for its exchange, its colossal multimillion-dollar failure, and the inability to fix the glitch-filled site illustrate the complexity of the health care law and the challenges for states that decided to build their own exchanges.

Oregon, which so far has failed to enroll a single person in coverage in one sitting through Cover Oregon, its online exchange, decided to ditch it because officials said fixing it would cost $78 million. Switching to the federal system will cost just $4 million to $6 million.

On Friday, the Cover Oregon board of directors voted unanimously to accept a recommendation by a technology advisory group to shift the private insurance side of the program to the federal exchange. The Medicaid portion will move to the Oregon Health Plan.

"I don't know that anybody sitting in the room was excited about the proposal that's getting put forth, but at least my impression felt like it was the best option that we had in front of us for those constraints," Cover Oregon Board of Directors Chairwoman Liz Baxter told Reuters.

Many consider Oregon's exchange the worst in more than a dozen states that developed their own online health insurance marketplaces. Oregonians must use a time-consuming hybrid paper-online process to sign up for insurance. The state also had to hire more than 400 workers to aid in the manual enrollment process, despite $134 million Oregon paid its main technology contractor Oracle to build the online exchange. Oregon received a month-long enrollment-deadline extension because of the technology problems.

The transition could mean that some Cover Oregon employees will lose their jobs, said Clyde Hamstreet, Cover Oregon interim executive director. Cover Oregon has 190 full-time and 270 temporary employees.

Officials did not rule out the possibility of one day returning to a state-based exchange.

Several other states have experienced major problems with their exchanges and are debating the future of the programs. But if they do, it is unclear how many would switch to the federal portal. Already, one other state has chosen to replace its site: Maryland recently decided to adopt the technology used on Connecticut's successful exchange.

Of the 14 states and the District of Columbia that built their own exchanges, some portals are running smoothly, including in California, Washington state, Connecticut and Kentucky. But in a half-dozen states, technical troubles have cropped up after exchanges launched last October, marring implementation of the health care overhaul.

Exchange glitches have led states to firing technology contractors, exchange leaders resigning, cost overruns and officials trying to figure out how — or if — they can salvage their portals.

Nevada, whose portal has also been wracked with problems since it went live on Oct. 1, is sticking with its state-run exchange, at least for now. The state is awaiting an analysis by Deloitte Consulting on problems with the system built by Xerox, and for recommendations on whether the exchange should be fixed or scrapped.

For its part, Oregon will continue using the current technology for Medicaid enrollments, but it will have to improve on the system. Officials estimated the cost of the improvements at about $35 million. They said the federal government would pay 90 percent of those costs and of the costs of switching to the federal exchange. In total, Oregon has spent nearly $250 million of the $305 million it received from the federal government under the Affordable Care Act.

Despite the exchange's technology fiasco, about 242,000 Oregonians have enrolled, on paper, in coverage through Cover Oregon. An estimated 70,000 of them enrolled in private health plans, while 172,000 enrolled in the Oregon Health Plan.

Federal officials said the federal exchange is able to add more states, and they are working with Oregon on the next steps.

In March, the federal Government Accountability Office announced an investigation of Oregon's exchange, including looking at whether the federal government can reclaim grant money given to Cover Oregon if taxpayer funds were mismanaged.

An independent investigation ordered by Gov. John Kitzhaber found state managers repeatedly failed to heed reports about technical problems that prevented the Cover Oregon exchange from launching. It also found Oracle did a shoddy job in building the exchange. Five Oregon officials connected to the development of the Cover Oregon portal have resigned.

Officials said they will keep the Cover Oregon website throughout 2014, but it will be redesigned to direct people to the federal site. Oregon also will use the federal call center, but it will retain some front-end customer outreach, education efforts and initial carrier management.

Wire services