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Epic Fail: Where Four State Health Exchanges Went Wrong

Memo Pad National News

Epic Fail: Where Four State Health Exchanges Went Wrong


by Charles Ornstein, ProPublica.

Much has been written (and will continue to be written) about the spectacular failure of health insurance exchanges in Minnesota, Massachusetts, Oregon and Maryland — all blue states that support the Affordable Care Act.

All were woefully unprepared for their Oct. 1 launch, and unlike HealthCare.gov, the federal marketplace, they are still having trouble getting back on their feet. As a result, enrollment in those four states has lagged behind other states, including many that actively oppose the health law.

The New York Times recently reported on how problems in these states could give Republican candidates an opening. “Last month, the Republican National Committee filed public-records requests in Hawaii, Maryland, Massachusetts, Minnesota and Oregon seeking information about compensation and vacation time for the exchange directors, four of whom have resigned. All five states have Democratic governors whose terms end this year. Three of them 2014 Gov. Neil Abercrombie of Hawaii, Gov. Mark Dayton of Minnesota and Gov. John Kitzhaber of Oregon 2014 are seeking re-election,” The Times reported.

One common element emerging in the coverage of these exchanges is that at least some state employees knew they were heading for disaster but didn’t take action early enough to remedy it. All the states have blamed some, if not all, of their problems on outside tech contractors. Here’s a sampling of what has been reported in each state.


The Oregonian newspaper has done a great job chronicling the unfolding disaster with Cover Oregon. The state is the only one in which no one has been able to enroll using the website. In an article last month, the newspaper reported that a technology analyst at Oregon’s Department of Administrative Services warned last May that managers at the exchange were being “intellectually dishonest” in claiming it would be ready Oct. 1.

As the Oregonian set forth in its findings:

  • The project’s significant flaws were well documented dating back to November 2011. Multiple independent analysts repeatedly raised questions about poor management along with strong doubts that it could be operational by the Oct. 1, 2013 deadline.
  • Cover Oregon leaders wavered between despair and an almost evangelical enthusiasm that they could complete the site. In the end they charged ahead, piloting an unfinished, largely untested exchange project right up to the Oct. 1 go-live date with no backup plan ready to go.
  • Senior officials in Gov. John Kitzhaber’s office and elsewhere read at least some of these warnings but took no significant steps to intervene, apparently after being convinced by others the project was on track.
  • A key official in the massive IT project took steps to silence the critics. The Oregon Health Authority last January withheld payment from the company hired to monitor the project, claiming its persistent criticism was inaccurate and inflammatory.

The director of Cover Oregon left on medical leave in December. The Oregonian also has a good piece comparing Oregon’s failures with the successes of Kentucky, whose exchange has been lauded.


Blame is being spread around in Minnesota, where the MNsure exchange is sputtering and its call center is unable to keep up with demand. As news site MinnPost reported last month: “The vendors are blaming the state. Gov. Mark Dayton and state officials are blaming the private companies who built the faulty technology, and MNsure leaders are quick to point out that they weren’t around when controversial decisions were made. Republican lawmakers, meanwhile, are saying that the governor needs to take responsibility for the project.”

MinnPost reported that despite their efforts to blame vendors, state officials were responsible for key decisions:

Newly released contract documents suggest the state and MNsure leaders had a more direct role in the health exchange’s many missteps than they have publicly acknowledged.

In recent weeks, Gov. Mark Dayton and MNsure officials have increased their criticism of vendors, blaming the private technology companies for some of the underlying problems and glitches with the health exchange’s operation.

However, in early May, the state of Minnesota in effect took over responsibility from its lead contractor, Maximus Inc., for constructing MNsure’s technical infrastructure, according to contract amendments released to MinnPost by MNsure.

The new documents show that the exchange staff quietly made a significant change to its key contract for building MNsure 2014 just months after making major revisions to the timeframe and size of the project.

Dayton later said he was unsure if senior MNsure staff were keeping him apprised of the serious issues with the exchange as soon as they came up.

The Star Tribune has reported on lengthy delays at the exchange’s call center and how officials in charge of the project received bonuses before its disastrous launch.

As in Oregon, the head of Minnesota’s exchange also resigned.


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  1. old_blu February 7, 2014

    These people (in Oregon anyway) have spent so much and received so many federal dollars on these sites that they’re having a hard time just biss bagging them, but that is what should be done and just get on board with the ACA.
    I think Oregon has spent 300 million and haven’t been able to sign one person up on line, they do have a snail mail way that is working.
    It’s going to be rough on the Democrats at midterms if they don’t hurry. Good thing we, as in us voters have such a short memory.

  2. latebloomingrandma February 7, 2014

    With so many things wired in this country, and so many computer geniuses, it is a head scratcher why this is such a disaster. I sit here on my wireless computer and order a piece of clothing and it arrives in 2 days. Or I do several clicks on my Kindle and a 5oo page book is in my hand in less than a minute. I realize the incredible complexity of getting 50 states set up with insurance exchanges, but it seems to me there is some huge hidden roadblock to why this is so badly functioning after preparation for almost 3 years. Is it all the Republican obstructionism? WAs it hiring computer contractors with not enough experience for such a large project? Was there not a big name experienced business person in charge as the overall project manager? Just screaming that it’s a “bad law” is not the answer I’m looking for. This country put a man on the moon in less than a decade from when JFK threw the idea out. And that was before we had all the sophisticated technology.

    1. alwaysthink February 7, 2014

      With privatization of services including IT what all these states have in common is that they do not have the necessary expertise in house to do these kinds of projects. The private “free market” contractors all messed up these projects.

      It should be the private contractors who have failed who are held responsible.

      I’ve been interested in the Oregon failure since the main contractor in that state was Oracle run by one Lawrence Ellison. Look up his contributions in 2012 and you’ll find he’s the number 2 contributor just behind Sheldon Adelson to RW groups trying to defeat PBO and end the ACA.

      The real question is why did Oregon decide to hire a company whose founder and CEO hates healthcare reform? Are any of these states suing the private contractors? The discovery in those cases might be very interesting.

      1. latebloomingrandma February 7, 2014

        Where is Darrell Issa now?

      2. 4sanity4all February 7, 2014

        I, too, am suspicious of right wing nutters gumming up the works in many places. As latebloominggrandma said, so many businesses can show you goods, accept payment, send you the goods in a couple of days, and their computers were set up by regular IT people in a timely manner. I will admit that the ACA web sites had to also interface with government agencies, to verify tax status and income, as well as show you the policies and let you choose one. Then they had to turn information over to the company you chose, so you could be enrolled and billed. So it was a little more complicated than buying a shirt, but I would think that computer science in the U.S. is at a place where they could handle it. I think someday we will read a story about shadowy, disgruntled individuals who messed up the computers because they hate the government.

  3. pisces63 February 7, 2014

    I keep saying, there was a Nedry in the woodworks. Ala Jurassic Park. Find them and you’ll get your answer. I would not put anything past the right when it comes to sabotaging this law.

  4. 4sanity4all February 7, 2014

    And I thought that the (federal) web site in Illinois was bad. After over a month of snafus I was able to get on, and it took a few weeks to complete my application, but I persisted, and I now have insurance. And there was a good interface between the web site and insurance companies in Illinois, because I was able to pay just before January 1, and I promptly received my membership card, and have already had a doctor visit and some prescriptions. My February bill came pretty late in January, I was getting concerned, but we have had snow up to our gizzards most of this winter. I don’t want to ask for my payments to be automatically deducted until I feel sure that things are ready to go on that front. So far, so good. I hope most of the country is having a good experience generally. The thing is, if it is working well, you never hear about it.

  5. Allan Richardson February 11, 2014

    I have mentioned in other blogs my suspicion of hidden sabotage by states and companies opposed to the ACA, which may have impeded the FEDERAL web site in red states especially, but since some insurance companies wanted the ACA to fail, at least at first, to justify rate hikes and get some customers locked into non-exchange policies with high rates (it has been noted that almost all of the people whose “junk” policies were cancelled were also offered high-premium replacements, with the letter implying that those WERE the lowest priced ones, and no reference to the exchange for comparison with other prices). Apparently insurance companies, and IT contractors whose CEOs (or programmers) are ideologically opposed to health care reform, have been able to do some damage in blue states also.

    Mass. had the additional issue of transferring from an EXISTING exchange which would not be totally compatible with the new one, rather than building their first one from scratch. Surprisingly (to non-IT folks), conversion can be more difficult than design ab nihilo.

    One possible form of sabotage is to send preliminary interface formats that are inaccurate (by mistake?) during the testing phase, in which the developers have to build a “dummy” copy of the system with which they will interface. If that dummy state agency, or dummy insurance company, connects properly, the testing would be successful. On going live, when they connect for the first time to the REAL system on the other end, the errors show up. By analogy, if you are an Olympic athlete, and your manager tells you that the person you will meet when you land speaks Russian, you study Russian. Then, when you land, you are met by a tour guide who only speaks Ukranian, and you have no way to communicate (this is a very loose and unrealistic example, but you get the idea).

    The thing is, it only takes a few subtle differences to snarl up a development project, differences that can easily be blamed on mistakes, unclear documentation (for which the computer industry has been known since early mainframe days, since so much of it was foisted on developers themselves rather than professional tech writers), and with outsourcing, language difficulties on the phone can be added to the mix.


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