Editorial: The scary in the Cover Oregon shortfall

The scary thing about Cover Oregon’s $16 million shortfall is it came with an all-to-familiar ache: The government didn’t keep good track of taxpayer money.

Cover Oregon’s health care marketplace is a project in a hurry. The Oct. 1 launch is only days away. And Oregon is one of the few states striving on its own to get that piece of the Affordable Care Act done on time.

You may have seen the cheery, multimillion-dollar musical ads for Cover Oregon, but its purpose is to establish a website where individuals and small groups can easily compare and purchase health plans.

The budget for the project is some $226 million. In August, the first news reports started appearing that Cover Oregon was about $16 million short in its programming budget.

How did that happen?

Cover Oregon’s official explanation was accurate: In April, updated budget projections showed the spending was going over. But Cover Oregon emails about the shortfall reveal more — a first-rate mess.

“To say that I’m spitting mad would be an understatement,” Rocky King, Cover Oregon’s executive director, wrote in a May 4 email to the governor’s staff. He called for the people in the Department of Human Services who he thought made the mistake to “be canned but both will slip by with a wink — that’s what really pisses me off.”

He describes that email now as an angry letter to an ex-girlfriend that should never have been sent. He says he was stressed, embarrassed and over-reacted. But King was very right to be frustrated about how carelessly the spending was monitored.

Let’s first be clear about what went wrong. Cover Oregon didn’t lose track of the $16 million. At that time, other parts of state government, including the Department of Human Services, were in charge of the project’s money.

It’s also important to know that state government didn’t misplace the $16 million. It failed to keep good tabs on what it was spending. The money was suddenly gone.

Jim Scherzinger, the chief operating officer for Oregon’s Department of Human Services, investigated what went wrong. He doesn’t describe a governmental paradise of checks and balances and bureaucrats studiously eyeballing every taxpayer penny. What happened sounds more like lurching chaos.

There were several different funding sources coordinated in multiple spots. The federal government — eager to enable Oregon to meet the Oct. 1 deadline — didn’t ask for the same type of accountability it usually does in spending. No individual at the state was accurately tracking all the funding and all the spending. And so, the shortfall was an April ambush.

King insists the impact of the shortfall will be minimal. The shortfall meant Cover Oregon had to take over paying for the programming work by Oracle, a computer technology company, on May 1 instead of July 1. King says negotiations with Oracle were accelerated.

One less than ideal outcome was that the Cover Oregon Board got days to review the contract instead of weeks. Did that time crunch mean the state still got a good deal with Oracle?

King thinks so. The only way to know for sure would be an audit.

Was the $16 million well spent?

The only way to know for sure would be an audit.

The federal government has not promised it will cover any shortfall, though King said it has been supportive. He also says he’s already identified project savings that will account for some $10 million. And Cover Oregon is still on target to launch its website on Oct. 1.

So where’s the harm?

Defenders of Cover Oregon’s launch could retort that this is a first-of-its-kind information technology project. Bad estimates about costs are almost inevitable. And, after all, Oregon is trying to make history in health care reform.

Maybe so, but you can’t dress up sloppy handling of taxpayer money as anything to be proud of.