More Scrutiny for Failed Cover Oregon Rollout

The debacle of the “Cover Oregon” website may be the biggest healthcare scandal you’ve never heard about.

Cover Oregon is the name of the state health insurance exchange for The Beaver State. The name is now synonymous with perhaps the nation’s largest IT failure. More than $300 million in federal grant money was at stake. The state had already spent an estimated $200 million on the website that has yet to register a single Oregonian for healthcare. It may be a couple of years before the website will be up and fully functioning.

March 19^th marked the latest milestone in the failed website. Governor John Kitzhaber (D) held a late morning news conference to announce the results of the report he ordered to be completed. The timing of the press conference was suspect as it coincided with a previously announced town hall on the topic to be held by Portland’s KATU-TV ABC 2 only a few hours later. The investigation by First Data was intended to be very narrow in scope. Kitzhaber crafted the questions to be asked and reportedly identified who was to be interviewed. Eight people on that list were never interviewed.

While the report prepared by First Data revealed countless shortcomings, management SNAFUs, and suspect business practices, there was virtually nothing in the report that had not already appeared in investigative news reports or in the monthly quality assessment reports prepared by an auditing firm. Maximus had been hired by the state to serve as watchdog of the Cover Oregon website process, and it began raising red flags with its very first report in June 2012. Most of these warnings went unheeded. 

The First Data report did clarify what had previously been the subject of speculation. Progress reports of the Cover Oregon website effort were often modified, changed, or altered seemingly to create a misleading impression that a fully functioning website would meet the October 1, 2013 launch date, even though officials were privately worried the site wouldn’t be ready. Perhaps more astonishing was that committee members in the Oregon legislature who had oversight of Cover Oregon were never made aware that monthly audits were available for inspection.

In a January 2014 interview, the governor told a KATU reporter he first learned of Cover Oregon difficulties after the website failed to launch in October 2013; however, the television station had obtained emails showing the governor was warned as early as September 2012 that the program was spiraling out of control.

Thursday night’s town hall held on the campus of Portland State University did not result in any major bombshells. However, the four panelists who serve in the Oregon legislature acknowledged the significant problems with the website. They were divided on what to do going forward, with a pair of Democrats promoting a mend-it-don’t-end-it approach and the two Republicans arguing to scrap the entire program. Three of the four elected officials voted for the June 2011 legislation that created the Cover Oregon program. The fourth joined the legislature after the bill was signed into law.

Interestingly, there were other state officials in the audience who were watching the proceedings but did not wish to publicly participate. An exception was former Representative Patrick Sheehan, who warned Kitzhaber in a December 2012 email that he had major concerns with Cover Oregon and alleged fraud had been committed. Sheehan passed his warnings to the FBI. On Thursday night, he acknowledged an FBI investigation was underway but he wouldn’t comment any further.

Thursday’s activities may serve to increase national attention on what has been, up to this point, a local story. Political pundits assess that none of this has affected the political standing of Kitzhaber, who appears to be sailing toward a safe reelection in November. Like President Obama, healthcare has been the signature achievement of Kitzhaber. 

The events on Thursday have shone a national spotlight on the failed Cover Oregon website rollout. As of Friday morning, virtually every single state official associated with the state’s healthcare exchange effort has resigned, including Kitzhaber’s staunchest healthcare ally, Dr. Bruce Goldberg, who resigned on Thursday as executive director of Cover Oregon, a position he assumed only a few months earlier.

There is still another shoe to drop. The Government Accountability Office announced earlier this month it will conduct an investigation of Cover Oregon to determine how federal funds were spent. Governor Kitzhaber announced on Thursday he welcomes the GAO investigation. Few observers believe him.