Oregon finally commits to jumping back into the state-based exchange pool in 2026

Ten years ago, during the very first ACA Open Enrollment Period, Oregon was one of 15 states which attempted to operate their own fully state-based marketplace SBM) under the new law, calling it "Cover Oregon."

Cover Oregon was, along with several of the other original SBMs in Nevada, Maryland, Hawaii and (surprisingly) Massachusetts, a complete and utter failure. They flushed a stunning $248 million down the drain on a website portal which, put simply...didn't work. Like, at all. From April 2014:

Cover Oregon poised to switch to federal insurance exchange

Alex Pettit, the state's top information-technology official, recommended Cover Oregon move to the federal exchange at an advisory committee meeting Thursday.

Oregon should pull the plug on the beleaguered Cover Oregon health insurance exchange and switch to the federal exchange, a technological advisory committee recommended Thursday.

The move is considered almost certain to be adopted by the Cover Oregon board, which meets Friday.

Changing to the federal exchange would cost about $5 million, while a partial fix to the Oregon exchange would cost more than $78 million based on an estimate from Deloitte, a Cover Oregon consultant.

The recommendation marks the first official acknowledgement that, despite $248 million spent in federal funds, the Cover Oregon information-technology project has been what IT experts call a catastrophic failure -- a lemon, too far gone to fix.

"This represents the lowest-risk option," said Alex Pettit, the state's new IT czar who was assigned to help fix the Cover Oregon situation, in delivering the recommendation.

The exchange was set up to be a one-stop shopping center for consumers to compare plans, qualify for tax credits and enroll. It was intended to go live Oct. 1 but remains the only one in the nation that does not allow the public to self-enroll in a single sitting.

The failure of Cover Oregon was so embarrassing it was even mocked by John Oliver in a Last Week Tonight segment at the time (see video above).

While Massachusetts and Maryland quickly overhauled their own state-based exchanges in time for the 2015 Open Enrollment Period, Nevada and Oregon moved back to the federal exchange, HealthCare.Gov, although they remained a "Federally-Facilitated State-Based Exchange," however, which means that they retained their own board of directors, independent marketing & outreach campaigns, decision-making process about which healthcare policies to include on the exchange and so forth.

Hawaii stuck it out a 2nd year but when they shut their exchange down they didn't even get to keep their FF-SBM status; it was such a disaster (not just technically, but the management of it) that they were placed entirely back under Federally-Facilitated Marketplace status, the only state to do so to date. Nevada eventually split off onto their own SBM a second time back in November 2019.

Well, after playing around with the idea of following Nevada's lead, Oregon has finally decided to give a full state-based exchange a second shot. Heather Korbulic, who was actually the original executive director of Nevada's new SBM, has posted an opinion piece in the Oregon Capital Chronicle laying it out:

Gov. Tina Kotek recently signed Senate Bill 972, which will enable Oregon to transition from the federal health insurance marketplace to a state-based exchange, a move that could lead to wider health insurance coverage and contain premium growth.

A state-based exchange is the lynchpin that could bring together Oregon’s broad spectrum of health care priorities. It would give state officials the flexibility to better serve disparate populations, reach underserved communities, improve access to behavioral health services, lower uninsured rates and save on administrative costs.

With her signature, Kotek is following through on her campaign promise to ensure every Oregonian has access to affordable health care. The launch of a state-based exchange could help increase enrollment and keep costs under the state’s control.

Every state participates in a health care marketplace where residents can shop for an affordable plan. In some states, the federal government runs the exchange, while others have a hybrid model. The District of Columbia and 18 states have chosen state-based exchanges over the federal marketplace, including Nevada, where I served as the exchange’s executive director and saw firsthand the advantages of making this transition. Of the many benefits I witnessed, the ability to run our system autonomously was most impactful, allowing us to implement state policies that were best for Nevadans – such as state-specific special enrollment periods. The same can be done for Oregonians.

Last year, about 150,000 people in Oregon signed up for health plans through the federal exchange. Switching to a state exchange could increase that number and at a time when the state is ending Medicaid coverage for people who no longer qualify for the free insurance.

State-based exchanges better enable outreach and enrollment efforts to target underserved populations. Whereas on the federal exchange, the approach often reflects a one-size-fits-all approach, state-based exchanges have been used across the country to target specific geographic, economic and demographic profiles, due in large part to increased access to state-specific data. States operating a state-based exchange also routinely invest in education campaigns and provide local assistance to help individuals and small businesses understand their options, apply for subsidies and enroll in suitable health plans. This localized support is particularly important for underserved groups that are often hard to reach.

...While there is no shortage of pressing health care challenges, an expedited move to a state-based exchange would truly make health insurance more accessible and affordable. The transition positions the state and its residents to embark on a new health care future, one run by and for Oregon.

To be perfectly honest, I'm not entirely sold on the idea that moving back to their own full state exchange will increase ACA enrollment significantly. SBMs did significantly outperform their FFM-hosted brethren for several years, but over the past couple of years this trend seems to have reversed itself. The reasons for this are unclear; the ever-changing landscape of a states Medicaid expansion status, whether or not Enhanced Direct Enrollment (EDE) platforms can be integrated with them, and the enhanced federal subsidies of the past 3 years make it difficult to parse out.

In addition, the cost savings (in terms of user fees) of moving to a state-based exchange over HealthCare.Gov have become pretty much moot as HC.gov has significantly reduced their fees for using the federal platform.

Still, there are several other advantages to a state operating their own ACA exchange: Whatever user fees they do charge remain in the state economy; they have more flexibility in timing of Open and Special Enrollment Periods; they're often better able to integrate Medicaid & CHIP enrollment into the platform (since Medicaid/CHIP are administered at the state level); and it makes it much easier to implement supplemental state-level financial subsidies, as nearly a dozen SBM states are already doing.

In any event, under SB 972, Oregon is required to transition off of the federal exchange and back onto their own (hopefully far superior & less expensive) state-based ACA marketplace platform by November 1st, 2026.