By Tara Bannow

The Bulletin

DURHAM — Oregon on Friday became the first state in the country to abandon its embattled health insurance exchange and instead move to the federal exchange.

The unanimous vote by Cover Oregon leaders follows Thursday’s recommendation from the exchange’s technology committee. The move leaves open many questions, including whether Oregonians who enrolled in private plans through the exchange will have to re-enroll via the federal exchange to keep their current plans in 2015.

Alex Pettit, the exchange’s interim chief information officer, told reporters after Friday’s meeting there will need to be “some transfer of data” between Oregon’s exchange and the federal exchange to make the transition.

He said he and other Cover Oregon leaders will travel to Washington, D.C., next week to explore options in that and other areas.

Transitioning to the federal exchange will cost the state $4 million to $6 million, far less than the estimated $78 million it would have cost to try to repair the troubled website in time for the start of 2015 open enrollment Nov. 15. Had Cover Oregon gone with that option, Pettit said not all components of the portal would have been ready in time. By going to the federal exchange, however, he said everything will be ready before November.

Cover Oregon has spent $248 million in federal grants to develop its exchange, but Oregon remains the only state in the nation in which people can’t enroll online. Both the U.S. Government Accountability Office and Gov. John Kitzhaber led investigations into what went wrong with Oregon’s exchange, which the state has paid its contractor Oracle more than $130 million to develop.

Clyde Hamstreet, Cover Oregon’s interim executive director, said after Friday’s meeting that Oregon is considering taking legal action against Oracle, but declined to elaborate.

Cover Oregon expects to take in $110 million in 2014, mostly from federal grants, and spend $105 million of that on technology, outreach and compensation among other things, leaving about $5 million, which it will use to make the transition to the federal exchange, Hamstreet said.

Despite that, he said, “We’re not back to square one,” and pointed out there are portions of the site that work, including the portal for insurance agents.

Hamstreet said it’s unclear what Cover Oregon will look like in 2015, but emphasized it would be a hybrid model going forward in which Oregon will salvage what it can from what it’s already built and use that alongside the federal technology.

“This is new ground for both Washington and for Oregon,” he told reporters after the meeting, “and we’re both going to have to work our way together to feel out what the new hybrid is going to look like.”

The Oregon Health Authority will take over enrollment and eligibility determinations for the state’s Medicaid program, known as the Oregon Health Plan, which Pettit said will require “significant work.” The health authority will maintain a consumer website and application center, along with outreach and education about the program.

“What we’ve always done we’ll continue to do,” Tina Edlund, the health authority’s executive director and a Cover Oregon board member, said at the meeting.

Officials don’t yet have an estimate of what it will cost the OHA to take over Oregon Health Plan enrollment, but Hamstreet cited the example of Texas, which spent $35 million to build its own Medicaid enrollment program.

If that process were to cost the same amount in Oregon, the OHA would only need to spend an estimated $3 million to $5 million from its general fund because the federal government would match most of the cost, Edlund said. The health authority has been paying Cover Oregon to process OHP applications, and it would be able to use that money as well, she said.

Although about half of enrollments into OHP have come from Cover Oregon, Edlund said the OHA maintains records of each enrollee.

The move to the federal exchange has significant implications for insurance carriers as well. Although 11 out of the 16 insurers on Cover Oregon already have developed interfaces with the federal exchange, the five that don’t will need to develop those components, which Pettit said Thursday is “no small body of work.” He said it’s up to those companies to decide whether they’ll make that decision.

The federal exchange imposes a slightly higher commission on plans compared with Cover Oregon — about 3.5 percent compared with 2.5 percent, Hamstreet said. The difference will amount to less than $4 per person a month, he said.

Despite the exchange’s shortcomings, more than 242,000 Oregonians have enrolled in plans through Cover Oregon; roughly 70,000 into private plans and another roughly 172,000 into OHP.

As other Cover Oregon leaders, board member George Brown, CEO of Legacy Health System, told reporters the move is not a federal takeover. Rather, it’s making use of federal technology.

“Of course we’re very disappointed,” he said, “and I think disappointment really describes it well. People worked very hard to make this work, and I think there has been significant success as we look at the numbers of people who enrolled through qualified health plans as well as Medicaid.”

— Reporter: 541-383-0304,