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Congress Must Get to Bottom of Obamacare State Exchange Failures

The opinions expressed by columnists are their own and do not necessarily represent the views of

Over the past four years, billions of dollars have been funneled from the federal government to states to construct Obamacare state operated healthcare exchanges. This money has not been well-spent. Several states have failed and others have misused hundreds of millions in taxpayer funds.


When Oregon announced it would become the first state to shutter its taxpayer-funded Obamacare exchange in early 2014, it was undoubtedly due to mismanagement, not lack of funds. Emails uncovered since show state officials in over their head during the construction and roll-out of the exchange. Perhaps worse, the Governor’s office was so determined to win reelection that it gave campaign consultants with zero IT or healthcare experience total control over Cover Oregon’s fate.

Despite these allegations, there aren’t enough facts or answers two years after the ill-fated state-operated exchange launched.

$5.5 Billion Spent with Little Oversight

Taxpayers shelled out $305 million for the Oregon exchange, and $5.5 billion nationwide, yet strong oversight over the Centers for Medicare and Medicaid Services (CMS) from Congress has been lacking for years. This must change. Remarkably, the first Congressional hearing into this issue was ONLY held late last month, when the House Energy and Commerce Subcommittee on Oversight questioned officials from six states under the leadership of Chairman Tim Murphy (R-Pa.). Although this hearing is a step in the right direction, the Committee has its work cut out for it to get to the bottom of this spigot of taxpayer funds.


Tough questions must be asked to the states and to CMS acting administrator Andy Slavitt, who has been nominated by the President to serve in the role permanently. While Oregon is the poster child of troubled Obamacare state exchanges, the list of failures is far beyond a single state and includes Hawaii, Vermont, Nevada, Rhode Island, Massachusetts, andMaryland.

Failure from Day one

In October of 2013, Obamacare exchanges across the country were set to go live after years of preparation. While many exchanges floundered, the poor performance of Oregon stood out. Weeks after this first deadline, Cover Oregon had enrolled zero applicants and officials were soon forced to install dozens of extra fax lines so that applicants could fax in a 20 page document.

The debacle was an embarrassment for the state’s governor, John Kitzhaber, who had fashioned himself as one of the nation’s healthcare reformers.

Doomed from the Beginning?

Cover Oregon started as an ambitious project based around a “no-wrong door” approach. This vision would allow Oregonians to easily access all of the government benefits, subsidies, and welfare through one portal. There was just one problem – it was completely unrealistic from a cost-benefit perspective. Oregon officials never even bothered to conduct a cost-benefit analysis.


In the year leading to launch, problems vastly outnumbered any real progress. In fact, each and every month, the state’s quality-control contractor Maximus rated the overall health of the exchange as “high risk.”

Despite these ominous signs, CMS awarded $226 million in early 2013.

By July, amidst concerns the deadline could not be reached, Cover Oregon’s advertising campaign was rolled outfeaturing a “Long Live Oregonian” theme that cost taxpayers close to $21 million.

The Coverup

Behind the scenes, the scope of the website continued to be narrowed and planned software tests all ended in failure. As it became clearer and clearer that the system would be a disaster, those involved allegedly began to craft a cover-up story and assign blame.

The deadline came and went and the system did not work.

With his reelection campaign kicking into gear, Kitzhaber quickly turned to self-preservation mode, unleashing his“secret weapon” to oversee Cover Oregon, an aide known amongst her peers as the “Princess of Darkness.”

Documentation uncovered since suggests that the campaign made the call to shut down the exchange based on what was deemed best for Kitzhaber’s reelection prospects. However, recovered emails suggest that the Cover Oregon system was close to 90 percent complete when aides made this call.


While the Governor did win reelection, he was forced to resign months later amid a public corruption scandal involving his fiancée and her misuse of public office. In the meantime, the transition to the federal system cost an estimated $41 million more, mostly in federal funds.

Now out of public eye, Kitzhaber continues to resist releasing emails in court, claiming they are personal even though it is clear he used these accounts for government business. Previously released emails have provided important information on the Cover Oregon debacle but so much remains unknown.

Two years after the exchange launched and five years since receiving its first grant the picture of Cover Oregon’s failure remains incomplete. For far too long, real federal oversight has been missing from this story. With over $5.5 billion spent on Obamacare exchanges across the country, taxpayers deserve the truth.


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