Cover Oregon

Cover Oregon was the health insurance marketplace for the U.S. state of Oregon, established as Oregon's implementation of the Patient Protection and Affordable Care Act. Cover Oregon was intended to enable Oregonians and small businesses to purchase health insurance at federally subsidized rates.

Cover Oregon
Agency overview
FormedOctober 1, 2012 (2012-10-01)
JurisdictionHealth insurance marketplace for U.S. state of Oregon
Agency executive
  • Aaron Patnode, Executive Director
Websitewww.coveroregon.com

While the intent was to allow registration and selection of coverage via a website, the site was plagued with problems, and it was possible to purchase insurance only by paper registration.[1][2] As of January 2014, almost $200 million of the $300 million allocated to develop and operate the Cover Oregon website had been spent.[3]

As a result of the ongoing problems, in April 2014, the board of directors voted to close the state-run exchange and adopt the Federal HealthCare.gov exchange beginning in 2015.[4] The FBI began investigating the failed development of the website in March 2014.[5]

In March 2015, the state officially abolished Cover Oregon, permanently folding its functions into an existing state agency and the federal HealthCare.gov website.[6]

Background

Health insurance exchanges were established as a part of the 2010 Patient Protection and Affordable Care Act to enable individuals to purchase health insurance in state-run marketplaces.[7] In this legislation, states could choose to establish their own health insurance exchanges; if they choose not to do so, the federal government would run one for the state.[7]

In 2011, the Oregon Legislative Assembly passed Senate Bill 99, establishing Oregon's own exchange.[8] Rocky King was named executive director of the exchange in late 2011,[9] and on October 1, 2012, the exchange was named Cover Oregon.[10]

Website failure

Development of the website that would process online enrollments was done by Oracle Corporation and managed by the state of Oregon rather than an independent systems integrator.[11] The project was plagued by numerous management and technological issues, and though the website was supposed to begin processing enrollments on October 1, by mid-October, it was unable to process any enrollments.[12] As of mid-December 2013, the deadline for enrollment for coverage beginning January 1, the state had spent nearly $160 million and the site still could not process online enrollments.[11] Governor John Kitzhaber informed Oregon residents that they should obtain a paper application and mail it in to obtain coverage. The state hired or reassigned nearly 500 people to process paper applications.[13]

As of April 2014, the website was still not accepting online enrollments. 200,000 people had enrolled in Cover Oregon via paper applications, the majority through the Oregon Health Plan (Oregon's implementation of Medicaid).[1] Cover Oregon Executive Director Rocky King and Oregon Health Authority chief information officer Carolyn Lawson both resigned in the wake of the failure of the website.[2] Interim executive director Bruce Goldberg stepped down in April 2014 and was replaced by Clyde Hamstreet, a consultant who specializes in corporate turnarounds.[14]

Faced with millions to make Cover Oregon functional, the board of directors voted in April 2014 to scrap the website in favor of adopting the Federal HealthCare.gov website for 2015 enrollments.[4] Existing subscribers will have to re-enroll with the Federal exchange.[4]

In August 2014, Oracle Corporation sued Cover Oregon for breach of contract,[15] for allegedly using their software without paying[16] and then later that month the state of Oregon sued Oracle Corporation, in a civil complaint for breach of contract and "racketeering".[17] By September 8, 2014, Oracle America had filed an amended complaint in federal court accusing Oregon of copyright infringement as Oregon was alleged to be using and distributing unpaid-for works derived from Oracle America's software.[16]

In March 2015, Oregon Governor Kate Brown signed legislation dissolving Cover Oregon.

The parties came to a settlement in September 2016, in which Oregon accepted a package that included $35 million in cash payments from Oracle, and technical support and software licensing agreements with an estimated value of $60 million. Although only a portion of the $240 million spent by the state to develop the system was recouped, a significant part of that expenditure was provided by the federal government, which would likely have claimed additional cash settlement would likely have been claimed.[18]

"We are pleased to have this contentious litigation behind us and to provide Oregon with the flexibility to obtain the software and technical support it desires to address the state's needs over the next several years," said Dorian Daley, Oracle's executive vice president and general counsel.[18]

The Portland Tribune criticized the settlement: "But when the details are examined, it's clear Oracle came out the clear winner in these negotiations, while Oregon receives very little beyond its legal costs."[19]

Federal investigation

In March 2014, the FBI announced it was launching an investigation into possible criminal wrongdoing related to the failed development of the site.[5] Subpoenas were issued in May 2014 by a grand jury.[20] As of May 2016 the FBI investigation into Cover Oregon was on-going.[21]

Participating insurance providers

In 2014, 11 insurers offered plans on the individual/family market through Cover Oregon.[22]

References
  1. Lane, Dusty (January 30, 2014). "Paging Dr. Kitzhaber: What did Gov. know about Cover Oregon collapse?". KATU.com. Archived from the original on February 3, 2014. Retrieved February 14, 2014.
  2. "Embattled Cover Oregon director King resigns". KGW.com. January 3, 2014. Archived from the original on January 4, 2014. Retrieved January 3, 2014.
  3. Colossal cost of Cover Oregon prompts lawmaker to call for end to spending Archived 2014-05-13 at the Wayback Machine by Chelsa Kopta Jan 20, 2014 KATU
  4. Manning, Jeff (April 25, 2014). "Cover Oregon: $248 million state exchange to be jettisoned in favor of federal system". The Oregonian. Retrieved April 27, 2014.
  5. Lane, Dusty (March 5, 2014). "Federal government announces Cover Oregon investigation". KATU. Archived from the original on January 28, 2015. Retrieved November 19, 2014.
  6. "Cover Oregon is dead; Brown signs bill eliminating troubled exchange". KATU. March 6, 2015. Archived from the original on March 8, 2015. Retrieved March 7, 2015.
  7. Lewis, Nicole (July 12, 2011). "HHS Proposes Health Insurance Exchange Rules". Information Week. Retrieved November 16, 2012.
  8. "Senate Bill 99: Establishes Oregon Health Insurance Exchange Corporation as public corporation to be governed by board of directors and supervised by executive director". OregonLive.com. Retrieved November 16, 2012.
  9. Waldroupe, Amanda. "Rocky King Named Permanent Director of Oregon's Health Insurance Exchange". Lund Report. Archived from the original on June 23, 2013. Retrieved November 16, 2012.
  10. "Oregon health insurance exchange unveils new name, website" (Press release). October 1, 2012. Retrieved November 16, 2012.
  11. Manning, Jeff (December 19, 2013). "Cover Oregon: Official who oversaw development of health exchange, Carolyn Lawson, resigns". The Oregonian. Retrieved January 3, 2014.
  12. Landa, Amy Snow (October 17, 2013). "Obamacare: 'Great start' here, while Oregon lags". The Seattle Times. Archived from the original on August 7, 2014. Retrieved September 28, 2016.
  13. "Statesman Journal". November 1, 2013. Archived from the original on November 2, 2013. Retrieved September 28, 2016.
  14. Manning, Jeff (April 15, 2014). "Cover Oregon: New executive director suspends Deloitte contract, more cuts likely". The Oregonian. Retrieved April 27, 2014.
  15. Manning, Jeff (August 8, 2014). "Cover Oregon: Oracle comes out swinging, files lawsuit, accuses Kitzhaber of 'campaign'". Oregon Live. Retrieved August 27, 2014.
  16. David, McAfee (September 17, 2014). "Oracle Adds IP Claim Against Oregon In Health Exchange Row". Law360. Retrieved October 4, 2014.
  17. Gallagher, Sean (August 25, 2014). "Oregon Attorney General sues Oracle for "racketeering activity"". Ars Technica. Retrieved August 27, 2014.
  18. Oregon, Oracle settle lawsuit over botched rollout of Cover Oregon health insurance exchange
  19. Editorial Board (September 27, 2016). "Our Opinion: Oracle the winner in settlement". Portland Tribune. Retrieved September 28, 2016.
  20. Miner, Colin (May 20, 2014). "Subpoenas issued in Cover Oregon investigation". KATU. Archived from the original on September 8, 2014. Retrieved November 19, 2014.
  21. New reports show U.S. House committee divided on blame for Cover Oregon failure
  22. "Medical Coverage". CoverOregon.com. Archived from the original on May 9, 2014. Retrieved May 9, 2014.
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