Cover Oregon Obamacare Exchange Sacrificed for Governor’s Reelection Campaign

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Posted by Alexander Hendrie on Wednesday, May 25th, 2016, 5:00 PM PERMALINK

Former Oregon Governor John Kitzhaber and his advisors unlawfully took control of the now defunct $305 million Cover Oregon Obamacare exchange for political gain, according to a report released by the House Oversight Committee under the leadership of Chairman Jason Chaffetz (R-Utah).

Political staffers took over the exchange despite state law explicitly establishing Cover Oregon as an independent entity. This latest report proves previous accusations that the taxpayer funded exchange was abolished purely for political purposes to benefit the Governor’s reelection campaign.

Following a botched launch in late 2013, the Cover Oregon exchange became an embarrassment for the Governor and the state. Weeks after this first deadline, the exchange had enrolled zero applicants, forcing officials to install dozens of extra fax lines so that applicants could fax in a 20 page document.

From late 2013 to April 2014, when the state decided to abolish the near working $305 million exchange and move to the federal system, the Governor’s political advisors tightly controlled decision making based on political considerations. As the report notes:

 “Documents and testimony show the Cover Oregon Board of Directors’ decision to switch from the state-supported information technology platform to the federally-facilitated exchange, HealthCare.gov, was driven largely by political considerations and steered by Governor Kitzhaber’s staff and campaign advisers.”

State legislators clearly intended for the Cover Oregon Obamacare exchange to be an independent organization, as the report notes. But even though Governor Kitzhaber did not have authority to make decisions over the exchange, he did so anyway. In one case, staff from the Governor’s office was paid from campaign funds to manage issues related solely to Cover Oregon.

Campaign aides were so desperate to avoid negative publicity they even worked behind the scenes to undermine an attempt to salvage the Cover Oregon system.  As the report notes:

Rather than publicly advocate for a move to HealthCare.gov, the Governor’s staff and campaign operatives privately thwarted the work of the Technology Options Workgroup and manipulated the process to coerce a decision to switch to HealthCare.gov.

These decisions were clearly made based on careful calculation. Campaign staffers even viewed the exchange as a campaign issue. Documentation shows a concerted effort by the Governor's staff to divert attention away from Kitzhaber and assign blame to Oracle, the primary vendor for the project. 

Despite this project being financed by federal taxpayers, recovery of funds has been non-existent. A recent report by the House Energy and Commerce Oversight Subcommittee found that just over $20 million of the more than $5.4 billion spent on 17 state exchanges has been returned. In addition, this $20 million represents funds that have been “de-obligated,” meaning they were leftover funds not spent before the grant expired.

Given these latest troubling findings, it is clear that stronger oversight and recovery of taxpayer funds is needed. 

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