Oregon scraps state health insurance exchange

DURHAM, Ore. — Oregon officials voted unanimously Friday to jettison the state’s disastrous health insurance exchange and switch to the federal system, admitting disappointment and defeat in an arena where the state had been a trailblazer.

With its 7-0 vote, the board of directors for Cover Oregon acknowledged that the state exchange was too expensive and too troubled to fix. Although the state has spent an estimated $248 million to get the operation up and running, it never enrolled a single private insurance customer online.

Oregon’s move makes it the first state to abandon its own portal in favor of the federal website.

Alex Pettit, the state’s new chief information officer, said after the vote that the state’s vision did not fail, but that Oregon tried to do too much too quickly. The hope was that insurance customers could sign on to CoverOregon.com and shop for a private plan, find out whether they were eligible for tax credits or Medicaid, and enroll online in one place.

“It wasn’t anything wrong with the vision,” Pettit said. “The vision the state has is a very valuable, very lofty vision and should not be discounted. This was not a failure of policy. Our problems were in the build.”

Dr. George Brown, a member of the Cover Oregon board and chief executive of Legacy Health System, said he was dismayed by the state exchange’s fall from grace, but maintained that the effort did not fail entirely.

“Of course, we’re very disappointed,” he said after the vote. “People have worked very hard to make this work, and I think there’s been significant successes. You look at the numbers of people who’ve been enrolled through the qualified health plan as well as Medicaid.”

Although CoverOregon.com enrolled just 70,192 customers in private plans using paper applications, the state made big strides under the provision of the Affordable Care Act that expanded Medicaid, enrolling about 172,426 Oregonians in the shared state-federal program.

An additional 130,000 people were enrolled in Medicaid through a fast-track program that contacted residents who were receiving state and federal assistance through other programs.

Oregon will switch to the federal exchange for the next enrollment period beginning in November, scrapping the system built by primary technology vendor Oracle for use by Oregonians who wanted to enroll in private plans. But it will continue to rely on the Oracle system to power its Medicaid enrollment.

Clyde Hamstreet, interim executive director of Cover Oregon, said the state was still weighing whether to bring legal action against the Redwood City, Calif., tech giant.

Oracle spokeswoman Deborah Hellinger said in a statement that the firm “looks forward to providing any assistance the state needs in moving parts of Oregon’s healthcare exchange to the federal system if it ultimately decides to do so.”

Cover Oregon officials said it was too soon to tell whether residents who purchased insurance through the exchange during its first enrollment period would have to re-enroll in November.

One of the only things certain Friday was that policy considerations had quickly given way to political ones. Gov. John Kitzhaber, a former emergency room physician who has dedicated his career to healthcare reform, is up for reelection in November. So is U.S. Sen. Jeff Merkley. Neither Democrat commented Friday, but their Republican opponents wasted little time before pouncing.

State Rep. Dennis Richardson, who is considered the GOP front-runner for governor, accused Kitzhaber of committing “gubernatorial malpractice” in the exchange’s troubles.

“We knew this was coming,” Richardson said in an interview Friday. “The system has been destined to fail from at least a year before the launch date.… We’re stuck paying the bill, the taxpayers are.”

Dr. Monica Wehby, a pediatric neurosurgeon and GOP contender for Merkley’s seat, issued a statement Friday describing herself as “the only U.S. Senate candidate who has opposed Obamacare and Cover Oregon from day one.”

“This latest move to the federal exchange,” Wehby said, “still doesn’t solve the root of the problem. Obamacare is bad for Oregon.”

Jennifer Duffy, a senior analyst for the nonpartisan Cook Political Report, said the failure of Cover Oregon is “a pretty good blow” to Kitzhaber. But she also called him “politically fortunate” because his state runs reliably Democratic, and Republicans have not fielded a strong challenger. Merkley, she said, could be in greater jeopardy if Wehby wins the May primary.

“She’s a moderate,” Duffy said. “She’s very articulate. She’s a physician. And she understands this stuff.”

maria.laganga@latimes.com