Oregon's health care marketplace is all on paper

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In Oregon, a state envied for its high tech, sign-ups under the new federal health-care law have been anything but.

About 400 newly hired workers in Salem are processing paper applications by the thousands for health insurance under President Barack Obama's law. They review each 19-page application, calculate eligibility for tax subsidies, and then mail back a packet of each consumer's options — which the customers must mail back to complete their enrollments.

Meanwhile, at the headquarters of Cover Oregon, the agency set up by the state to run its transition under the Affordable Care Act, dozens of software engineers have fanned out at long tables on the first floor, trying to untangle the technical problems that have made Oregon the only state with a health insurance exchange that has yet to go online.

One floor up is the "Go Live Situation Room," where the state's tech pros strategize around a conference table. But the name hints at the irony: There is no "go live" date for Cover Oregon's exchange.

Federal officials say their own site — even with all its troubles — should work by the end of November for the vast majority of Americans in the 36 states it serves, but Oregon's leaders are making no such promises. Yet they insist that even with the state's Dec. 4 deadline looming for those seeking coverage as of Jan. 1, they will get people covered one way or another.

"Even if the website doesn't get fixed, we're confident that we can get everybody who wants to get enrolled enrolled by Jan. 1," Gov. John Kitzhaber said in an interview last week.

Kitzhaber, a Democrat and former emergency room doctor who will announce by the end of the month whether he is running for reelection, is eager to draw attention to Oregon's feat on the other side of the health-care law's ledger. The state has already enrolled about 75,000 Oregonians in the health-care plan's expansion of Medicaid, the state-federal program providing coverage to low-income people — and officials expect to top 100,000 by March, slashing the state's uninsured rate by about 20 percent..

But the pool of new Medicaid enrollees is separate from the pool of Oregonians eligible to sign up for private plans through the insurance exchange. It is estimated that Oregon has about 560,000 uninsured people. The state has received more than 40,000 paper applications — with many representing an entire household — but a spokesman for Cover Oregon could not estimate how many of those applicants were signing up for private plans; an initial sampling suggested many of them were headed for Medicaid.

That is potentially a major problem for Oregon, which, like every state, is aiming for high turnout among the young and healthy to offset the inclusion of older and sicker customers. The inability to directly enroll online "will probably be the greatest deterrent to people who essentially feel they are healthy and don't need insurance," said Deborah Chollet, a health insurance expert at Mathematica Policy Research, based in Princeton, N.J. The 11 insurance companies offering plans on the exchange have not received any data from the state, leaving them in the dark about the mix of enrollees.

"Younger people in particular are more inclined to do things electronically and more frustrated if they cannot; people who have health problems are going to be motivated to overcome that frustration," Chollet said. Even with a small army of state workers engaging potential applicants at fairs across the state, "they have their work cut out for them," she said.

No one would have expected Oregon, of all states, to be so far behind nearly two months into the implementation of the Affordable Care Act. Oregon has been an innovator in trying to improve health outcomes among its Medicaid population, attempting to transform the system by ensuring that the agencies caring for those low-income patients are coordinating care for varied ailments — including mental health, nutrition and chronic conditions like congestive heart failure.

Faced with a budget gap, the state made an unusual deal with the federal government last year: Oregon would get $1.9 billion over five years if it demonstrated that it could reduce Medicaid costs while improving the health of that population. If the state fails, it faces serious financial penalties.

In the state's most recent quarterly progress report, health officials found that ER visits within that population had dropped by 9 percent; and emergency department spending was down 18 percent from 2011. There were also 29 percent fewer hospital admissions for chronic conditions. Before the reforms, Medicaid expenditures were estimated to grow about 5.4 percent a year, more quickly than the 4.5 percent growth in state revenue. Based on current projections, Kitzhaber says, Medicaid costs are expected to grow at no more than 3.4 percent annually by next fiscal year.

"We're just a little state and we're not going to, all by ourselves, drive national change," the governor said. "But if we can demonstrate this model, and four or five other states adopt it ... then I think you've got something to look at."

But none of that has quieted debate over the embarrassing rollout of its online exchange — and puzzlement over how things went so awry. Making matters worse for Oregon, neighboring Washington has been an exemplar of efficiency, signing up nearly 100,000 people through its exchange so far, with 159,551 applications in progress.

The debate has been fueled by the fact that Oregon, which ranks around the middle of the 50 states in population, was among the largest recipients of federal grant money to build its system and publicize the program, receiving more than $305 million overall.

Those dollars led to a colorful advertising campaign in which the state recruited folk singers to write songs about the benefits of living "long in Oregon." (The idea, officials said, was inspired by Woody Guthrie, who was hired by the Bonneville Power Administration in the 1940s to write songs that would build support for the then-unpopular Grand Coulee and Bonneville dams.)

But the all-important website was tripped up when it persisted in generating inaccurate estimates of tax subsidies available to some customers.

"We were doing what should have been a four-year program in two," Cover Oregon spokeswoman Amy Fauver said in an interview. The subsidy calculation was such a key piece, she said, "we couldn't afford to get that wrong."

Kitzhaber and other state officials have been clear about their unhappiness with Oracle, the firm contracted to create the site; Cover Oregon has withheld 5 percent of the company's pay, a spokesman said.

After members of the Cover Oregon board voiced frustration with Oracle during a 41/2-hour meeting last week, the state program's executive director assured them that he had asked Oracle to bring in the "A team" and send home "the C team."

"We're still hoping we'll get the full website up and running by early December," Kitzhaber said. "At the end of the day, people are going to try to grandstand on this, but the public concern is -- they don't care about the website -- they want to be covered. They want some certainty. So if we can address that issue, I think this will not be a huge issue in Oregon.

"I believe there is no survival value in pessimism, so I remain optimistic," Kitzhaber said.

But he is not making any guarantees.