Federal government announces Cover Oregon investigation

Federal government announces Cover Oregon investigation »Play Video
This is a still image from one of the Cover Oregon television ads running on local TV stations. According to the ad agency that created the commercials, the two most well-known ads cost between $100,000 and $160,000 to make.

PORTLAND, Ore. – The problems with the Cover Oregon website are going federal.

A spokesperson for Rep. Greg Walden, R-Ore., told the On Your Side Investigators on Wednesday morning that the Government Accountability Office will proceed with a review of the website.

Walden, who first called for the review on Feb. 12 at a press conference in Medford, told KATU he wants an independent, transparent report.

"I think it’s the biggest investment failure the state’s ever seen, in terms of $300 million allocated for a website that still doesn’t work," he said. "We need answers; we need to get to the truth; we need to get to the facts. This is an incredible expenditure of money with not much to show for it."

Cover Oregon spokesman Michael Cox said, "Certainly we’re not where we want to be today and we’ve been quite candid about that."

"We’re aware of the request and now that the decision has come down, we will participate fully with the GAO as they conduct their work," Cox continued.

He went on to say that Cover Oregon was prepared for the audit since several members of Congress - both Democrats and Republicans - joined in on the request for a federal probe. However, Cox would not elaborate.

"I really don’t want to pre-judge their work," Cox said. "We’re going to let that process play out."

This is the second probe into the troubled website. In January, Gov. John Kitzhaber ordered an investigation by a company called First Data.

The state has said that parts of that investigation will not be made available to the public.

"We need (the GAO investigation)," said Rep. Dennis Richardson, R-Central Point, who is running for governor to challenge Kitzhaber in this fall's election. "It needs to put to rest the suspicion so we know what we are actually dealing with, so we can see if there’s been mere incompetence or maybe even criminal neglect.

"What happened to the more than $170 million that was spent on a website that is not functioning? We would not be able to figure that out from an audit ordered by the governor's office," he continued. "The First Data investigation is with a company that was retained by the governor. It is costing at least $227,000 and contains provisions that say they don’t have to release the info they find. That puts the whole report into a suspicious mind at the outset, with the cloud of secrecy that was contained in the first contract."

Cover Oregon has been earmarked for more than $300 million in funding, much of which has come from the federal government.

Walden asked investigators to look into whether an estimated $100 million of the federal money not yet spent can be recovered.

Other questions Walden and his congressional colleagues submitted to investigators include:

  • What capability does the federal government have to reclaim those funds if Oregon abandons the state-run exchange and joins the federal one?
  • What other costs has Oregon incurred because of the website's failure?
  • Did Cover Oregon's status as a state organization play a role in its failure?


Sen. Jeff Merkley, D-Ore., and Sen. Ron Wyden, D-Ore., sent a joint letter to the GAO the day after Walden's announcement doubling down on the call for an investigation.

“GAO accepts your request as work that is within the scope of its authority and, as agreed with your staff, will undertake this work as part of a broader study planned to examine states’ health exchange websites,” read a letter to political officials from a GAO spokesperson on Wednesday.

“It is great news that the GAO has responded to our request to carefully examine what has gone wrong with the Cover Oregon website," Merkley wrote in an email to KATU. "I look forward to reading their recommendations about how to fix the system and avoid this happening in the future.”

While most of the money spent so far has been from the federal government, the state has also spent money on the project. Much of that has been on the paper process that's been installed in place of online enrollment.

The On Your Side Investigators have detailed how the state failed to listen to an independent quality assessment firm that raised accurate red flags throughout the project; how Kitzhaber overlooked warnings from legislators; and how a former state representative went to the FBI with allegations that project managers presented fraudulent progress reports to the federal government.

Richardson said he's not sure how much of the grant money remains unspent, or if there will be an attempt to recover any of that money.

The GAO has received hundreds of requests to investigate state exchanges, but Oregon is the first state to be individually investigated, said GAO spokesperson Chuck Young.

"We have accepted the requests from Congressman Walden, Upton, and several other members of the House, and senators Wyden and Merkley, to examine Cover Oregon," Young told KATU. "We will do so as part of a broader look at state exchanges. The exact scope of what we will cover and the time frames will be determined as the work goes forward."

The investigation will be part of a larger look into other states' exchanges, though exactly which states those will be has yet to be determined.

Walden said that, because it's part of a larger investigation, results will come more quickly. He said it could take a few months or longer.

"Certainly it’s a failure of colossal proportion with extraordinary amounts of money being spent, and we still don’t have a working website for the public to use," Walden said. "This is unbelievable, frankly. And it’s not the first time the state’s been down this path."

Waiting for Health Insurance

Meanwhile, hundreds if not thousands of Oregonians are still trying to sign up for health insurance through Cover Oregon who have not been able to because of technical glitches, delays and other problems related to the website.

No one has any clue when the site will be working and just this week, Gov. John Kitzhaber expressed pessimism about the ability for Cover Oregon to get its website fully functioning before the March 31 open enrollment deadline under the federal health care law.

In a statement Monday, Kitzhaber says "It has become increasingly clear that we may not be able to have the public portion of the website operational for the current enrollment period."

Dan Silver told the On Your Side Investigators on Wednesday that he faxed his application to Cover Oregon Dec. 5. A few weeks later, when he went to check the progress of the application, Silver said Cover Oregon staffers told him that only half of his FAX went through.

"I called again a few more times in February and early March and each time I was on the phone for about 45 minutes to an hour waiting before I could talk to anybody," Silver said.

Silver said he reached out to KATU for help, which emailed Cover Oregon on his behalf. After that email, Silver said Cover Oregon called him to help finish his application. But that success wouldn't last.

Ten days later, Silver said a Cover Oregon staffer called him back to say he'd never finished his application. He had to fill it out all over again.

"She said 'sir, we have no record of it,'" Silver said.

 Silver believed Cover Oregon let him down when he needed the coverage the most.

"I had a stroke in mid-December and then follow-up surgery this year that the Cover Oregon plan would have covered," Silver said.

Ultimately, Silver said Cover Oregon admitted its mistake.

"They told me this has nothing to do with my – it’s not my fault, it’s not my application. The problem was on their end," he said.

Silver said he was promised he would be covered starting April 1, but he said he'll have to pay a $6,000 medical bill for the surgery if Cover doesn't backdate his insurance.

"When I heard about the federal government auditing Cover Oregon I was relieved because I’m hopeful that we’ll get to the bottom of some of these answers," Silver said.

He hopes the audit will expose if funds were misused.

Governor's response:

The On Your Side Investigators reached out to Gov. Kitzhaber for comment. A spokeswoman at his office, Nkenge Harmon Johnson, said he was unavailable but she sent this statement to KATU:

"No one is angrier than the Governor about the issues with our insurance exchange website. No one wants to get to the bottom of it more than he does. That's why he called upon First Data to do an independent review about what went wrong and how. We look forward to receiving that report later this month. In the meantime, the Governor continues to take actions to ensure that more Oregonians will receive the health care insurance that protects them and their families.

Congress will do what Congress will, just as long as it does not get in the way of enrolling Oregonians for health insurance. To date we have enrolled more than 252,000 Oregonians in quality, affordable health care coverage."

KATU On Your Side Chelsea Kopta contributed to this report.


Full coverage of the troubled Cover Oregon website: