Politics & Policy

The Obamacare Fiasco in Oregon

Cover Oregon commercial (via YouTube)
Cost overruns, software failures, missed deadlines, incompetence, cronyism — but those commercials sure were zany . . .

There have been numerous disasters along the way as the federal government and the states have struggled to implement the Patient Protection and Affordable Care Act (a.k.a. Obamacare), but none come close to Oregon’s sorry effort for the millions of dollars lost, the raw political opportunism, and the melodramatic plot twists.

Now from the Insult-to-Injury Department comes word that it all could have been avoided.

Earlier this month, five years after President Barack Obama signed ACA, The Hill published a series of articles about how Obamacare is working around the country. It reported that many of the 13 states that established their own stand-alone health-care marketplace exchanges are looking for ways to mitigate the damage and get something up and running before federal funding dries up.

Hawaii is on the verge of shutting its marketplace down, joining Nevada and Oregon, which have also closed their doors because of lack of funds. The story of Oregon’s health-care portal, however, is different. It is a story of waste, fraud, and potentially criminal abuse, and Congress has finally gotten around to writing its own chapter in the sordid tale.

Almost before the ink was dry on Obamacare, Oregon set out to establish a model exchange. On June 17, 2011, Governor John A. Kitzhaber signed a law creating the Oregon Health Insurance Exchange Corporation, a public body performing government functions with government authority. A year later, it was renamed Cover Oregon.

Cover Oregon received more than $300 million in federal grants to get started, including $226.4 million to establish a 50-operator call center and IT interfaces with the exchange website and to perform multimedia outreach. That outreach would include a broad range of marketing materials, using print, radio, and television, the grant said. “Communications materials will be translated into three or four languages, with a goal being to use more visual images and fewer words.”

Think Progress, a liberal news site, called Cover Oregon’s “Long Live Oregonians!” ad series “whimsical” and “slick,” and the Washington Post called the ads the “most twee” on the Internet. Comedian John Oliver called the ads a “waste tens of millions of dollars of taxpayer money on a website that doesn’t work.”

He wasn’t kidding. Cover Oregon was certified by the federal government in October 2012, but between then and the exchange’s April 2015 burial by the Oregon legislature, not one Oregonian signed up for health insurance using Cover Oregon. The ones who were motivated enough to register anyway had to fill out paper forms.

In 2014 Kitzhaber ran for his fourth (non-consecutive) term, and Obama campaigned for him. But it soon became apparent that the governor’s political ambitions and the unsuccessful launch of Cover Oregon were on a collision course. Previously undisclosed communications between the governor and his staff show that the state’s official announcements about the exchange were shaped by Kitzhaber’s political consultants. And as the troubles mounted, his team became concerned that rather than being a cornerstone of his reelection campaign, the exchange could cause his defeat.

Kitzhaber assigned his political sorceress to oversee the project. Patricia McCaig, the governor’s campaign consultant and self-described “Princess of Darkness,” took over. Fearing political disaster, she pulled the plug on the project. She then advised the state to sue the contractors who had done the back-end work, despite numerous pleas from technology experts that the site just needed more time and testing.

In August 2014, state attorney general Ellen Rosenblum, then an ally of Kitzhaber, sued Oracle, the lead contractor, for $5.5 billion in damages, claiming that the company had not only defrauded the state but had conducted a civil racketeering scheme. The suit laid out how Oracle presentations seduced Oregon officials into believing that the “Oracle Solution” was perfect for Cover Oregon. (Interestingly, Rosenblum’s own filing concedes that third-party evaluators agreed with the Oracle Solution and recommended awarding Oracle the contract.)

Somewhat opposite in tone was the February lawsuit filed by the state, asking a judge to order Oracle to continue to operate the state’s Medicaid program after the company declined to extend its contract. Oracle’s position is that it cannot reconcile the two extremes that Oregon’s officials are asking it to accept: On one hand, Oregon launched a publicity campaign and lawsuits accusing Oracle of incompetence and criminal fraud leading to the Cover Oregon debacle. On the other hand, it told a judge that Oracle Solution is critical to the successful operation of Oregon’s Medicaid — and that if Oracle refuses to operate that program, it should be banned from doing business in the state.

At the same time that McCaig was shutting down Cover Oregon, revelations about Kitzhaber’s fiancée, Cylvia Hayes, were chipping away at the governor’s own future. In the weeks before the election, the British press reported that Hayes had taken $5,000 to enter into a sham marriage with an Ethiopian seeking legal immigration status in the U.S. The local press could not ignore that story, or the one about Hayes’s pot farm.

After Kitzhaber was reelected, the Oregon media started asking more questions about Hayes and her apparent co-governor status inside the state government. It did not take long before reporters learned that Hayes had received a state contract to consult on green-energy projects. The unreported contract was also unreported income, which meant Kitzhaber’s political and personal challenges had become criminal challenges.

Kitzhaber’s political career crumbled due to yet another scandal involving his girlfriend and local environmental groups seeking to influence his policies. Meanwhile, before his February resignation, state lawyers told Kitzhaber he had no case against Oracle.

Now that the former governor and his betrothed have returned to private life, his successor, Governor Katherine Brown, should work to end the madness, end the lawsuits, and focus on unwinding the state’s interference with health care in the first place.

Even if Brown does come to her senses, now comes word that Rosenblum hired her friends at Portland’s Markowitz Herbold Glade & Mehlhaf law firm to basically do two things: First, handle legal issues with Oracle, and second, burn through as much money as Oregon has left, at rates up to $650 an hour. Why not, right?

What about the $300 million? Well, it turns out Congress noticed it was gone and is now looking for answers. Before it runs its course, this scandal could prove as embarrassing to Obama as it has already been to the people running Oregon.

— Neil W. McCabe is a Washington, D.C.–based reporter.

Most Popular

Law & the Courts

Bill Barr Is Right about Trump’s Tweets

Attorney General Bill Barr rightly and understandably rebuked government by presidential tweet in a notable ABC News interview on Thursday. The attorney general said that President Trump was making his job “impossible” by constantly commenting on an ongoing criminal case, and one involving Trump’s ... Read More
Law & the Courts

Bill Barr Is Right about Trump’s Tweets

Attorney General Bill Barr rightly and understandably rebuked government by presidential tweet in a notable ABC News interview on Thursday. The attorney general said that President Trump was making his job “impossible” by constantly commenting on an ongoing criminal case, and one involving Trump’s ... Read More