Health Care Exchange in Oregon Not Meeting High Hopes

SALEM, Ore. - As the federal health care overhaul was rolled out over the last few years, Oregon was invariably the eager overachiever in the first row, waving a hand to volunteer. The governor, John Kitzhaber, a doctor who left the emergency room for politics, made health care his main issue. Fellow Democrats controlling the Legislature went along, embracing ambitious plans to extend insurance coverage and Medicaid to low-income residents.

Yet for all that, by some measures Oregon has among the most dysfunctional online insurance exchanges in the nation. Only about 50,000 people in Oregon have signed up for a commercial insurance plan through the exchange, well below the state's goal, according to federal estimates. And almost all of those people enrolled using paper applications or with help from an insurance professional because the website had been so unreliable.

On Thursday, a grim-faced Mr. Kitzhaber released a new report, commissioned by the state with a private company, that underscored how systemic Oregon's failure has been. The report found fault not only with the code-writers at Oracle, the software company contracted to build the site, but also with the state managers who overlooked or minimized repeated warnings that the system they had asked Oracle to build was too complex.

'Bad news needs to flow up quicker than any other kind of news - it's true here, it's true in the emergency room,' Mr. Kitzhaber said at a news conference in his office. He said that he had discussed with federal officials the possibility of reducing federal penalties for people who have not been able to enroll, and that other options were on the table, including abandoning Oregon's system entirely and using the federal website, or another state's. With a March 31 deadline for first-year enrollment looming, the online exchange, Cover Oregon, is still unable to process an applicant from start to finish without help or paperwork.

He also accepted the resignation of the acting executive director of Cover Oregon - two previous executives have left since December - and said that legal action was being considered to recover some of the tens of millions of dollars already paid to Oracle.

Calls to Oracle's corporate offices for comment were not returned.

In an interview, Mr. Kitzhaber, who is running for a fourth term this fall, said he had no doubt that Cover Oregon and its struggles would be 'the issue' in the campaign. 'There's a lot of frustration and anger out there, and there should be,' he said.

But he said he thought that broader Republican attacks on the Affordable Care Act itself - a script likely to be followed in elections around the nation - would not find as receptive an audience in Oregon, with its strong Democratic base.

'What happened in Oregon is not a policy failure, it's technology failure,' he said.

State Representative Dennis Richardson, a Republican who is seeking his party's nomination for governor, disagreed, saying the report showed that Mr. Kitzhaber was 'disengaged' and that he should have accepted greater responsibility for the system's breakdown.

'The problems that are being faced with Obamacare across the country are also being faced here in Oregon,' he said.

While Thursday's report focused mostly on the past, the failures of Cover Oregon have also created a powerful wave of economic and political implications going forward.

The state, for example, has one of the nation's lowest rates of enrollment under the health care law among young people - a crucial demographic group that President Obama has reached out to as the March 31 enrollment deadline nears. In the most recent federal report, earlier this month, the state was tied at the bottom with West Virginia, with only 18 percent of eligible 18- to 34-year-olds.

'They're web-savvy, they're smart, they're quick and they're impatient,' said Dr. Ralph M. Prows, the president and chief executive of Oregon's Health CO-OP, a nonprofit health insurance company based in Portland. 'If they go to try to sign up and can't, they're going to give up.'

Low enrollment numbers, in turn, pose trouble for organizations like Dr. Prows's co-op, which had planned to get 34,000 enrollees this year under a fully-functioning exchange, but so far has only about 5,000.

Some national health care experts said they believed that Oregon's insurance system - partly because the political will in support of a health care overhaul is abundant, from Mr. Kitzhaber on down - would ultimately recover.

'Oregon will benefit from all the groundwork, all the good work that they've done,' said Andrew D. Hyman, a senior program officer at the Robert Wood Johnson Foundation, a health philanthropy that worked with Oregon and other states in putting the federal health law into place - though not on the information technology component. 'But there are still going to be challenges, such as financing the marketplace, in that the IT system cost them more. And with fewer people enrolled than projected, will the revenue generated to support the exchange be there?'

The frustration of residents like Paul Breed is its own corrosive force. Mr. Breed, a lawyer in Portland, was a big supporter of the health care overhaul - and would have liked it to have gone even further, to a single-payer system like Canada's.

But his arduous journey in trying to sign up for coverage for him, and his wife and college-age daughter has sorely tested that faith. The effort, through numerous paper forms and repeated snags, began in December and is still not complete.

'The system is Kafkaesque,' Mr. Breed, 60, said this week in an interview.

Insurance agents, helping people enroll, say the snags are fewer now than a few months ago. But crashes at the last second and information lost in what one agent here in Salem called 'The Cover Oregon Vortex' are still common.

And there are potentially further blows still to come. The federal Government Accountability Office has said it plans an investigation of how federal money was spent in building the exchange in Oregon and other states.

And this week a former state official who oversaw the exchange's construction filed a notice with the state of her intent to sue for wrongful discharge, defamation and other damages in what her lawyer said, in a letter to the state, was a 'cover-up' of the insurance exchange's troubles.