The Obama administration is poised to take over Oregon's broken insurance exchange, according to officials familiar with the decision, who say that it reflects federal officials' conclusion that several state-run marketplaces may be too dysfunctional to fix.
In public, the board overseeing Cover Oregon is scheduled to vote Friday on whether to join the federal insurance marketplace that already sells health plans in most of the country under the Affordable Care Act. Behind the scenes, the officials say, federal and Oregon officials already have privately agreed that closing down the system is the best path to rescue the state marketplace, the country's only one to fail so spectacularly that no residents have been able to sign up for coverage online since it opened early last fall. The collapse of Oregon's insurance marketplace comes as federal health officials are also focusing intensely on faltering exchanges in two other states, including Maryland.
The board for the Maryland Health Connection this month became the nation's first to decide to replace most of its exchange with different technology. But Maryland did not obtain required federal approval before its vote. Federal officials have not indicated whether they will give the state the $40 million to $50 million it needs to make the switch - and remain uncertain whether the state exchange has the capacity to correct its own problems.
The third state that is the focus of federal scrutiny is Massachusetts, which was in the vanguard of insurance exchanges, opening its own years before the 2010 federal health-care law. But the commonwealth's insurance marketplace has developed severe technical problems as it attempted adjustments to interact with the federal system. Taken together, the federal uneasiness about these and other failing state insurance exchanges is a second-generation problem that is drawing attention now that the federal marketplace, HealthCare.gov, has improved enough to attract eight million Americans who enrolled during the first sign-up period, which just ended.
The fate of these state-run exchanges has significance politically and for consumers.
When the Affordable Care Act was enacted, the law's authors envisioned that virtually every state would build its own exchange - intended for people who cannot get affordable insurance through a job and for small businesses. Yet only 14 states, plus the District, have created their own exchanges. In the remaining three dozen states, Republican governors and legislators, as part of the intense GOP opposition to the law, have left their residents to rely on the federal insurance marketplace, which opened for business in October.
Some of the 14 state-run marketplaces have prospered, but others have been failures. Consumers have had trouble to various degrees in signing up for health plans. Oregon's consumers have had to resort entirely to cumbersome paper applications, because the state website has never allowed individuals to apply electronically.