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Oregon Abandons State HIX, Failure Was Obvious From the Start

After months of struggle and trying to make it work, the failing and costly IT project will be abandoned as the state takes cover under the wing of the federal exchange.

by / April 25, 2014

After months of struggling to enroll even a single applicant through its Cover Oregon health information exchange (HIX) website, the state will join the federal HIX, as approved by the Cover Oregon advisory board on April 25.

"The Cover Oregon Board of Directors voted ... to utilize the federal technology as the engine for private health insurance plan enrollment through Cover Oregon," said Spokesperson Ariane Holm via e-mail. "As part of this, Oregon will retain front-end customer outreach and education, initial management of private plans and some oversight of those private plans."

The reason for the decision was that the state did not look at this as an incremental, deliverable project, Oregon State CIO Alex Pettit told local reporters. “The core success to IT projects is achieving things in bits and pieces, and delivering those in milestones and in elements," he said. "And that’s really one of the things we’ve struggled with as a state in Oregon.” Pettit, the former CIO of Oklahoma, took leadership of the state’s technology office earlier this year.

The option to move to the federal exchange, Holm noted, presents the lowest risk to complete a functional online exchange in time for open enrollment and comes in at the lowest cost. 

Early estimations of the cost to move Oregon to the federal exchange are between $4 million and $6 million, while the estimated cost of fixing the failed state website were about $78 million -- on top of the $137 million already invested, according to Oregon officials. Oracle was initially the primary vendor on the project.

Oregon was one of the first states to embrace the notion of running its own exchange, and consequently had a head start on most of the other 14 state-run exchanges. Overall enrollment in the program, however, lagged as the website was so broken that it did not facilitate the enrollment of even one applicant.

Cover Oregon’s imminent failure should have been obvious from the beginning to anyone experienced who was paying attention, said Robert Booz, an analyst with IT research firm Gartner.

“If you look at Cover Oregon completely as an IT project, take the politics out of it, take the so-called Obamacare issues out of it, it was subject to catastrophe early on,” he said. “It didn’t have a clear statement of work, therefore you don’t have a lot of scope control; there wasn’t a clear and unified voice around the way the project needed to work; and you didn’t have a system integrator to actually get the work done. Now, you layer on the politics of it, of national and state and even within a state government. It was not unexpected that there were going to be problems.”

In the coming weeks, more details about how this project was such an utter failure are likely to be revealed, but for the time being, it’s not clear how this was allowed to happen, Booz said. But generally speaking, when project fails like this, he notes that there are a few common themes -- over-confidence and a failure to understand the complexity of the project from the beginning.

“The states that got it right saw beyond that it’s not just about getting people enrolled. Success is not determined by how many people sign up. Success is determined by how many people can actually use the product,” Booz explained, adding that organizations often lose focus when, instead of being practical and focusing on utility, they get wrapped up in the concept of what they’re doing and making it an "elegant" solution.

“The elegance of the solution is this idea of simplicity and directness, and taking into account all the variables,” Booz said. “Those are all good things, but at the end of the day, it’s all about why are you doing this? What’s the business problem you’re trying to solve?”

This story is far from over, Booz said, but he’s sure people will see that the state’s vision was flawed from the start.

How the state expects to cover its costs for the failed IT project is yet unclear. The original project was partially funded by a 2.5 percent tax on insurers selling through the exchange, according to state officials. Holm did say, however, that "the state will be leveraging our investment in the Cover Oregon technology for use in determining Medicaid eligibility."

People who have enrolled in coverage through Cover Oregon do not need to do anything right now, Holm said, and people who haven’t yet applied can still do so until April 30th.

This story was updated on April 27 at 3:51 p.m. to include comments from Cover Oregon

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Colin Wood former staff writer

Colin wrote for Government Technology from 2010 through most of 2016.

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