Report: it will take $45M and almost two years to ‘fix’ Cover Oregon.

That’s under current conditions (keep the database, keep current vendor Oracle), at least according to the Deloitte Development report that the state of Oregon commissioned on how to get from under the horrible state exchange disaster inflicted on Oregon by Governor John Kitzhaber and his fellow Democrats. Reading the report, it looks like Deloitte’s recommendation would be that Oregon simply cut Cover Oregon loose and join the federal exchange. As the Oregonian noted:

Oregon could hook up to the federal exchange far sooner and for a fraction of the cost, according to the report obtained by The Oregonian. A hybrid solution mixing the federal exchange and an unfinished Oracle-based small-business section of the exchange would also be faster than sticking with the current plan, as well as cheaper.

Couple problems with that, though: both a political and a practical one.  The primary political problem is that while it may be smart for Oregon to just show some moral courage and cut its losses, admitting failure like that is rarely a smart idea in an election year.  Kitzhaber is planning to run for a fourth (nonconsecutive) term this year – and no, that’s not normal for Oregon – so you can expect that his oversight of an utter waste of taxpayer money will already be lovingly described in the attack ads. Actually admitting formally that that money was wasted on Cover Oregon will merely make the ads even more damaging.

And then there’s the practical problem: there is a court case at the DC Court of Appeals right now called Halbig v. Sebelius. The very short version of that case is that the plaintiff claims that the defendant (essentially, the federal government) is actually barred from offering Obamacare subsidies on the federal exchange, given that the language of the so-called ‘Affordable Care Act’ explicitly limits such subsidies to the state exchanges. If the Court of Appeals agrees, then starting in late June a lot of people might end up being told by the federal government that, hey, turns out that they’re not getting those tax subsidies after all, sorry about that, please pay up the difference anyway.

It wasn’t Deloitte’s job to factor any of that into their calculations, of course, but it is Governor Kitzhaber’s. Presumably the case will be instantly appealed to the US Supreme Court, no matter the result; but even the suggestion that Oregonian voters might be smacked with a retroactive tax burden will cause screaming throughout the state. It’s a mug’s game, predicting how the courts will eventually rule – but it’s not the decision that’s the problem here so much as it is that there has to be one. If Oregon chooses to abandon Cover Oregon and instead end up on the federal exchange, it could end up choosing… unwisely.  And just in time for the November elections, too.

So I guess that the practical problem is a political one, too.  Guess the Democrats should have done more to make this whole thing a bipartisan disaster, huh?

Moe Lane (crosspost)