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FBI Investigating Oregon Obamacare Exchange

1:15 PM, May 5, 2014 • By MICHAEL WARREN
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On January 1, the director of Cover Oregon resigned after having been on "medical leave" since January. Then in March, the interim director resigned. The practice has become a regular occurence for top officials at the exchange, even as the site's initial problems subsided and federal extensions of the enrollment deadline meant Oregonians could start enrolling. Meanwhile, Oregon's Democratic governor, John Kitzhaber, took to avoiding the media as local outlets pressed him on the failures of the exchange.

All this, despite (or perhaps because of) Oregon's perceived advantage on health-insurance reform. As Mark Hemingway wrote in February, Oregon has long been thought of as the progressive laboratory of democracy on health care, though the results of pre-Obamacare have been disastrous. Here's an excerpt:

Cover Oregon had also won a $59 million “early innovator” grant from the federal government to help offset the cost of building its website. In order to keep the federal money flowing, Lawson had to demonstrate that various aspects of the website were working as the Obamacare enrollment deadline approached. Now Lawson stands accused of building a nonfunctioning dummy website to make it appear that website construction was progressing. Sheehan has since asked the FBI to pursue fraud charges against Lawson. 

Despite the fact that Kitzhaber’s legislative director had responded to Sheehan’s email saying, “You have raised some serious allegations, and I will get this into the right hands in addition to the governor,” Kitzhaber, when confronted, denied any knowledge of the allegations against Lawson and stormed out of the interview with KATU. Less than a week later, Cover Oregon’s interim head announced he was considering scrapping Oregon’s exchange altogether and letting state residents try their luck on the federal exchange, which has also been beset with problems. 

That Oregon ended up with the most disastrous of all the Obamacare exchanges—an impressive achievement, considering how bad the law’s rollout has been—has stunned America’s growing herd of health care wonks. Twenty-five years ago—long before Massachusetts created the template for Obamacare—Oregon began trying to implement universal health care coverage. The state should know more about its uninsured population and how to reach them than any other. But no one who’s watched developments over that quarter-century should be surprised that, once again, Oregon’s attempt to provide health care coverage to everyone in the state has culminated in a nationally embarrassing failure. 

The Cover Oregon disaster isn't just bringing on an FBI investigation--it may be hurting Oregon Democrats in the upcoming elections. Kitzhaber was elected to a third (non-consecutive) term in 2010, and the state's Democratic leanings mean he's unlikely to lose his bid for a fourth. But one poll last week showed Kitzhaber tied at 40 percent with a GOP challenger. The same poll found incumbent Democratic senator Jeff Merkley actually trailing Republican Monica Wehby by one point. And a plurality of 46 percent of voters said Cover Oregon and the Obamacare exchange have been failures.

Merkley, who voted for Obamacare in 2010 and promised plenty of benefits to the plan at the time, has been polling weakly for reelection all year. In response to Cover Oregon's problems, Merkley laid the blame at the feet of Oracle, the contractor who built the exchange's website.

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