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The Cover Oregon Disaster

The spectacularly wasteful failure of Oregon’s health-care insurance exchange.

It would seem that if one place in the country could get a working health-care insurance exchange up and running it would be progressive Oregon.  As the old tourist campaign used to say, “Things look different here.” No, that’s not a Portlandia episode.  That’s a real slogan.

Gov. John Kitzhaber is a former doctor who had pushed the implementation of the Oregon Health Plan during his first term. This was going to be the signature achievement this time around. The state, which received a $300 million grant from the Obama Administration to implement the plan, possessed all the ingredients to make it work, including a capable IT and high-tech sector from which to draw expertise.

Given these advantages, the project should have been a layup that proponents of Obamacare could point to as a success. Instead, it has become a spectacular failure.

It’s unclear how much Cover Oregon has cost up to this point, but the most common estimate comes in at around $200 million. As of Jan 1, Cover Oregon has claimed that 36,000 Oregonians had signed up for private insurance via the program. That’s a cost of over $6000 per enrollee at this point.

But even with that whopping amount of money, Oregon, a state with less than 4 million residents, is still woefully impaired and has yet to sign up a single enrollee on-line. On-line applications now need to be completed by hand and then submitted by Cover Oregon staff.

Now there are serious calls for scraping the entire Cover Oregon site and moving over to the federal exchange. Out of the pan…

If that were not scandalous enough, Kitzhaber has repeatedly said that he unaware of problems that the crippled site. Recent documents obtained by a Portland news station (KATU), however, contradict that narrative. The governor’s office, it turns out, may have have been regularly informed of problems, starting with the roll out of Cover Oregon.

From its first report to the governor’s office, Maximus — a quality assurance auditor hired to monitor the CO project — warned that the scope and schedule were at high risk of failure. In November of 2011, Maximus warned: “The delivery date is being driven by a need to meet a deadline unrelated to technical estimates”

All those interviewed for that first report indicated that they “believed the scope was as yet undefined sufficiently to complete requirements and schedule” and all but one “believed that more information on scope is necessary to complete a detailed schedule. Until such schedule can be assessed, there is risk that the dates cannot be met.”

Maximus kept producing monthly reports on the status of the project.  In none of those reports do auditors rank the scope or the schedule of the site less than at highest risk.

September of 2013 notes from a “Go Live” meeting show that the launched looked dire. Of 780 necessary site tests, only 78 were run. And they all failed.

During that same time, Rocky King, Cover Oregon’s executive director, sent an e-mail saying that, “We are in serious trouble – this whole IT side has gotten away from us and I need to figure out how to best fix.” King resigned earlier this month citing health issues.

In the final report, less than a month after the federally mandated launch date of Oct 1, 2013 Maximus warned:

“[C]ritical categories including “Scope”, “Schedule” remain high (red), which drives the overall high (red) risk assessment.”

Because of the high visibility of Cover Oregon, Kitzhaber has been (uncharacteristically) pressured by the in-state media for answers. An interview with a local reporter was cut off when a staffer stopped the proceedings and the governor walked out.  The reporter had asked about an email Rep. Patrick Sheehan (R) sent a year earlier about the potential problems with the exchange. Sheehan called for Carolyn Lawson’s (Cover Oregon Chief Information Officer) termination for “present[ing] fraudulent testimony in a legislative hearing”.  Lawson resigned last moth ‘for personal reasons’.

Most recently Sheehan informed a reporter for KATU that he had gone to the FBI with allegations that Cover Oregon project managers had demoed ‘dummy pages’ to convince officials that the web site status was farther along than it actually was to keep the project funded.

In order for Cover Oregon to continue receiving funding, managers needed show that project milestones had been met by demonstrating functionality, security, and that it had signed up clients. Sheehan:

“One of the allegations that was made was so alarming that it went way beyond a legislative oversight committee and so I did reach out and contact the FBI”

 “The issue had to do with federal funding and proving some amount of compliance with the federal regulation in order to get funding.”

If the Sheehan’s allegations are true, then those project managers might face jail time.  The FBI has not confirmed that they are investigating Cover Oregon.

Kitzhaber’s continuing refrain is that he didn’t know anything was amiss until October of 2013.  “This isn’t New Jersey, and I don’t think you’re going to find any traffic cones out there”, the governor told reporters in a meeting last week.

The governor is right.  It isn’t New Jersey.  It’s Oregon.   Things look different here.

Steve Holder is a life long Oregonian.  When he’s not avoiding Portlandia (the place and the show) he writes Systems Software, rafts the rivers of the PNW with his wife Lisa, and enjoys big game hunting.

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