Oregon's Switch to the Federal Health Exchange Creates New Problems

May 7, 2014

In the end, there were 73 million compelling reasons for Oregon to dump its expensive, troubled in-house health care exchange in favor of the federal exchange.

Trying to make the Oracle-based system fully functional would have cost at least $78 million, on top of the $248 million already spent, compared to about $5 million for moving to the federal system, Oregon Chief Information Officer Alex Pettit said Tuesday to the Legislature's Joint Committee on Legislative Audits, Information Management and Technology.

The third option, adopting another state's exchange, would have cost an estimated $45 million, Pettit said.

But moving to the federal exchange presents a host of new wrinkles. The 75,000 Oregonians who have signed up for commercial insurance through Cover Oregon will have to re-enroll in the federal plan. Managing that migration of Oregon customers and data to the federal exchange will be a challenge, Pettit acknowledged.

Meanwhile the dearly bought Oregon technology will live on. It will be adopted by the Oregon Health Authority, which under the new plan, will take responsibility for the 300,000 Cover Oregon customers who qualify for Medicaid.

State officials have ballparked the cost of completing the IT project to make it useable for the OHA at $35 million.

Moving to the federal exchange raises all sorts of questions about Cover Oregon's finances. The public corporation is currently living on federal grants. It has $54 million remaining from those grants. But as of 2015, it was supposed to be self-sufficient through fees paid by insurance carriers for each customer they enrolled.

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