The Parallel Failures of the Oregon and Maryland Health Exchanges

There are plenty of notable bits of
information in
The Oregonian’s detailed, damning report on Oregon’s
failed health exchange: The $160 million state-run project was one
of the most ambitious in the nation, but it failed to launch at all
last October, and now state officials are considering ditching the
project completely and joining the federal exchange
system. 

What stands out the most to me, however, is how similar Oregon’s
troubled experience attempting to build an exchange was to
the similarly disastrous experience building a state-run exchange
in Maryland.

Unlike Oregon’s exchange, Maryland’s exchange went live on
October 1 last year, at least in the sense that it went online. But
it was basically unusable, and remains largely broken.

The pre-launch development of both exchanges, however, had a lot
in common. 

Both states were recipients of “early innovator grants” from the
federal government to develop what the administration hoped would
be model exchanges: Oregon
got $48 million, plus an additional $11.8 million IT
supplement; Maryland
got $6.2 million. Along with the grants came praise from the
administration. In May 2013, a Washington Post
report described the Oregon exchange as a White House favorite.
And just days before the October launch of the exchanges
nationwide, President Obama
went to Maryland to tout the state’s work developing its
system.

And yet despite heavy funding and praise from Washington, there
were clear early warnings that both exchanges were headed for
trouble, with independent analysts telling officials in both states
that the projects were not on track.

In Maryland, those warnings came from consulting firm BerryDunn,
which warned of significant risks to the project as early as 2012.
Oregon’s warnings came even earlier, in November of 2011, when
analysts from the consulting firm Maximus “noted high risks due to
insufficient management controls,” according to The
Oregonian’s report.

Both exchanges suffered under muddled leadership and lack of
planning: Oregon’s system was to be built by one bureaucracy, but
managed by another, which led to managerial confusion and
bureaucratic turf wars. In Maryland, BerryDunn reported early on
that there was simply no one in charge of the project, and that no
one had even taken the step of drawing up a basic timeline of
milestones and achievements.

There were problems during the testing phase in both states,
with Oregon delaying its initial tests and Maryland flunking late
summer performance reviews. And there were clueless senior state
officials, pushing forward despite the warnings and the risks.
Those closer to the projects seem to have ignored the warnings;
those at the very top appear to have been out of the
loop. 

Part of what these stories tell us is that you shouldn’t always
trust the official narratives when it comes to the implementation
of large-scale projects like Obamacare’s exchanges. In both cases,
officials insisted that everything was basically fine with the
exchanges, right up until the point that it became blindingly
obvious that everything was not. (The same, notably, was true in
the federal system.) 

The parallel problems of the two exchanges also suggest
something about the health law’s hopes and limits. These were two
of Obamacare’s most ambitious exchange projects. It’s telling,
then, that they turned out to be two of the law’s biggest
failures.