Close this search box.
Close this search box.

Why Oregon’s Failed Health Insurance Exchange Explains The Problem With Obamacare

It’s easy to laugh at Oregon. And after the performance of the state’s health insurance exchange, it deserves it.

It’s easy to laugh at Oregon. Not as cool as California, not as rugged or seafaring as Washington—much less Alaska—Oregon is by far the least interesting West Coast state. It lacks a strong identity, a sense of “Oregonianess,” which is probably why it’s so easy for all us non-Oregonians to assume the sketch comedy show Portlandia pretty much captures the essence of the place. (The show lampoons radical feminists, progressives, hipsters, and so on. Representative Earl Blumenauer, whose district includes most of Portland, told National Review Online that he watched three episodes before he realized it was a parody, not a documentary.)

But now Oregon really deserves it. Last week, directors of Covered Oregon, the state’s health insurance exchange established under Obamacare to help people sign up for subsidized coverage, announced their website was broken beyond repair and that they will scrap it and allow the feds to take over exchange enrollment through

It’s not even that the site is broken so much as it never worked in the first place. The 64,000 Oregonians who managed to gain private coverage through the exchange since last October had to submit paper applications—and that’s after Covered Oregon was awarded more than $300 million in federal grants to set up the exchange.

Of course, those hundreds of millions in taxpayer dollars weren’t all spent on the website. Some of the money was spent on ultra-twee outreach efforts that consisted mostly of videos like this:

(As former Daily Show guest host John Oliver put it during his HBO show’s debut Sunday night: “Look, we get it, Oregon. You people live in a cartoon.”)

So far, Oregon is the only state to admit its complete failure to set up a functioning exchange and hand the problem off to the feds. But plenty of other states are having major problems, too. Josh Archambault at Forbes noted last week that the state-based exchanges are running into costly technical troubles and uncertainty over long-term financing. The board of Maryland’s faltering exchange voted earlier this month to completely overhaul a system it already spent $129 million to build (the fix will cost an additional $40 or $50 million). Back in February, the board fired the IT company that designed the exchange.

Massachusetts, which had an insurance exchange years before Obamacare came along, “is actively seeking an additional $16 million in funds to pay for newly hired private contractor Optum to build manual workarounds to process paper applications, and has yet to go public with the potential costs to fix the broken website,” Archambault reports. To date, the state has only enrolled 769 people through its website and temporarily dumped more than 160,000 into Medicaid while they figure out who qualifies for what. No wonder so many of the state-based exchanges’ executive directors and top officials have resigned or taken medical leaves of absence.

Meanwhile, at a recent Senate Finance Committee hearing, outgoing Health and Human Services Secretary Kathleen Sebelius suggested cutting federal Medicaid funding to states struggling with hundreds of thousands of backlogged Medicaid applications,  most of which have come to states through the exchange site set up by the federal government. Reports The Daily Caller: “ is supposed to direct applications of customers eligible for Medicaid to state agencies, which should be able to confirm eligibility and finally enroll the applicant, but miscommunication in states across the country have forced customers to sign up again.”

No one seems to know whether the tech problems are on the state or federal side, or how to fix them. California’s progressive leaders, like Oregon’s, have fully embraced Obamacare, yet the state exchange has a backlog of about 800,000 Medicaid applications because of “computer glitches.” To date, California has been awarded federal grants totaling more than $828 million to build its exchange,

All this suggests the 36 states that declined to set up an exchange at the behest of Washington, D.C., were right. Some, like Texas, initially accepted grant money but later gave it back. Florida did the same, as did Oklahoma, Alaska, and others.

Contrast that to Oregon’s neighbor, Washington State, which has been awarded nearly $265 million in federal grants but only managed to sign up 164,000 people for coverage, as of last week.

If all this didn’t amount to so much wasted taxpayer money, the whole thing would be laughable. But a troubling pattern has emerged at the state and federal level: profound incompetence and profligate spending seem to be intertwined, and their mutual reinforcement has now become the hallmark of this administration’s botched implementation of Obamacare.

That’s no laughing matter—even if progressive states like Oregon deserve our scorn. The silver lining is that the exchange debacles illustrate the limits of government’s ability to remake and control our health care system. Maybe now Oregonian songwriters will understand that being “free to be healthy”—if it means anything—means being free of government mandates, especially when it comes to health care.

And maybe they will never again use tax dollars to make something as irritating as this:

Mr. Davidson is a writer based in Austin, Texas, and a health care policy analyst at the Texas Public Policy Foundation.

Notify of
Inline Feedbacks
View all comments