By Lily Raff McCaulou and Elon Glucklich

The Bulletin

Cover Oregon’s failure was caused by weak oversight from the state, a lack of accountability and poor performance by the lead contractor, Oracle, according to a report released Thursday.

Gov. John Kitzhaber in January commissioned a $228,000 independent investigation into what went wrong with the state’s online health insurance exchange. Oregon is the only state that still does not have a way for individuals to compare, apply for and purchase insurance online in one sitting.

Kitzhaber summarized the new findings in a news conference Thursday, slinging his sharpest arrows at Oracle, the software company to which the state has paid $132 million to develop the still-not-functioning website.

Kitzhaber said he has met with Oregon Attorney General Ellen Rosenblum, and the state is considering its legal options to recover money paid to Oracle. The state had to pay these bills because it did not yet “own the code” that Oracle had produced, Kitzhaber said, and did not want to jeopardize the thousands of Oregonians who were in the process of signing up for insurance coverage.

So far, Cover Oregon has hand-processed the health insurance applications of about 150,000 Oregonians.

Director resigns

Kitzhaber also announced that Dr. Bruce Goldberg, director of the Oregon Health Authority and acting executive director of Cover Oregon, offered his letter of resignation in response to the report.

“I accepted it. I think it was the right decision,” Kitzhaber said.

Goldberg will continue to run Cover Oregon until a new leader has been hired, possibly by the end of April. He ran the Oregon Health Authority until December, when Kitzhaber tapped him to temporarily fill in for Rocky King, who cited health reasons when he resigned last year as executive director of Cover Oregon.

Kitzhaber said Tina Edlund, the acting director of the Oregon Health Authority, probably will become that agency’s permanent leader.

Dr. George Brown, president and CEO of Legacy Health and a Cover Oregon board member, is overseeing the search process for a new executive director for the exchange.

Also in the news conference, Kitzhaber said he is talking with U.S. Secretary of Health and Human Services Kathleen Sebelius about how to help more Oregonians get signed up for insurance coverage.

The state has asked the federal government to extend the March 31 enrollment deadline. Most individuals who do not have insurance coverage by that date will face a tax penalty. Kitzhaber said Thursday that he expects to have an announcement as soon as next week. One option could be some sort of tax penalty relief for Oregonians who tried to get insurance coverage before the March 31 deadline but couldn’t because of Cover Oregon’s technology failures.

Another option, he said, could be to scrap Oregon’s website altogether and direct Oregonians to the federal exchange, That site got off to a rocky start, too, but is now working smoothly.

The report released Thursday raised several concerns about the quality of work performed by Oracle, including failed adherence to industry standards and poor estimates of the amount of work required to build the website. Investigators asked to interview six Oracle employees who worked on the project, but Oracle denied the requests and instead sent the company’s chief corporate architect, who only became involved with the Cover Oregon project in November. The Oracle employee passed blame on to the Oregon Health Authority and Cover Oregon, according to the report.

Ongoing reports

A private contractor, Maximus, was hired to perform regular audits for quality assurance. In monthly reports, the company questioned whether the website’s various components could be integrated and noted a history of missed deadlines.

One reason the state failed to heed these warnings, according to the new report, is that there was no single point of accountability. Instead, the project was overseen by Cover Oregon, the Oregon Health Authority and the Oregon Department of Human Services. Those agencies sometimes had competing interests and conflicts, according to the report.

The report raised concerns about the state’s oversight of Cover Oregon. Several members of the Legislative Oversight Committee, for example, were completely unaware that Maximus was conducting regular audits. These committee members had not read the monthly reports that raised concerns about the project. Instead, they relied on monthly briefings by King, who told them the website was on track to go live Oct. 1.

Kitzhaber said Thursday that he does not believe he was lied to about the project, but instead blamed a poor flow of information.

The governor knew about the Maximus reports and was informed that the reports were assigned a status color — green, yellow or red, depending on the severity of the warnings. But he said he was told that because of the nature of the project, all reports would have a red status until the project was launched.

When asked what he personally wishes he’d done differently, he said that in hindsight, he would go back and “look at the Maximus reports sequentially, rather than individually.”

Republican response

State Republican lawmakers slammed Kitzhaber for not keeping closer tabs on Oracle’s failures. Central Oregon lawmakers said they wanted Kitzhaber to hold himself accountable for Cover Oregon’s website, which was launched with $300 million in federal funds.

“Oracle is a convenient scapegoat for the governor and all of those who failed to manage and execute on the state exchange,” said State Rep. Mike McLane, R-Powell Butte.

Rep. Greg Walden, R-Ore., and other federal lawmakers last month asked the Government Accountability Office to audit Cover Oregon. The GAO said it would perform the audit and look at other state-run health care exchanges set up by the Affordable Care Act.

Local lawmakers said they hoped Thursday’s review and the GAO audit would build opposition to the federal health care law.

“Clearly, Oregonians should be angry and disappointed,” state Sen. Tim Knopp, R-Bend, said Thursday of Cover Oregon’s failures. “What I’d like the federal government to do is repeal and replace (the Affordable Care Act). But barring that, allow states to completely sever themselves from the federal system and let us set up our own health care system in more of a free market way.”

Looking forward

Kitzhaber said he has convened a team of experts in health-related technology, including officers from major insurance companies in Oregon, to advise Cover Oregon going forward. He also praised three new bills passed by the Legislature last month, to strengthen state oversight of similar projects in the future. And he has requested an inventory of all IT projects in the state, the first step, he said, toward better tracking such projects.

Also in the report:

• King, Goldberg and Carolyn Lawson were identified as “the key project decision makers.” Lawson, a former IT manager for the Oregon Health Authority, resigned late last year and has since said she was a scapegoat.

• Lawson is criticized for her decision not to hire what is typically a key position in big projects like this one, called a “system integrator.” Her decision goes against the IT industry’s accepted best practices, the report said. Further, Maximus raised concerns about Lawson’s decision nearly two years before the anticipated launch date. A Maximus report dated Nov. 3, 2011, stated, “The approach will require the State to act as the prime contractor and assume more of the overall project risk.”

• The scope of the project was never clearly defined and several earlier, related projects were rolled into the exchange, leading to a project that King described as having the most robust scope of any exchange in the nation.

To read the full report, visit

This not the last formal inquiry into the Cover Oregon debacle.

—Reporter: 541-410-9207;

—Reporter: 541-617-7820;