How Mismanagement and Political Interference Squandered $305 Million Federal Taxpayer Dollars

Committee Releases Investigative Report on Cover Oregon

Refers matter for criminal investigation to DOJ and Oregon Attorney General

Today, House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) released a staff report titled, “How Mismanagement and Political Interference Squandered $305 Million Federal Taxpayer Dollars.”  The report details findings from the Committee’s year-long investigation into the collapse of Cover Oregon that included the review of over 170,000 pages of emails and reports.

In light of the report’s findings, the Committee sent letters to U.S. Attorney General Loretta Lynch and Oregon State Attorney General Ellen Rosenblum referring the matter for criminal investigation.

Key findings of the report include:

• There was widespread political interference by former Governor John Kitzhaber’s (D-OR) campaign staffers in official business.
• The former Governor’s official staff and his campaign advisers undermined the work of the Cover Oregon Technology Options Workgroup and manipulated the process toward their preferred outcome of moving to HealthCare.gov. 
• Centers for Medicare and Medicaid Services (CMS) failed to adequately oversee the development and implementation of Cover Oregon. 
• CMS failed to ensure Cover Oregon and the Oregon Health Authority did not misuse federal funds.

In letters to Attorneys General Lynch and Rosenblum, Chairman Chaffetz wrote, “The documents and testimony show Oregon State officials misused $305 million of federal funds and improperly coordinated with former Governor John Kitzhaber’s campaign advisers.  Official decisions were made primarily for political purposes.  Cover Oregon was established as an independent organization by the legislature, and was not intended to be a wholly controlled subsidiary of the Governor’s political apparatus.  Evidence obtained by the Committee shows, however, close coordination between Governor Kitzhaber, his official staff, his campaign advisers, and the supposedly independent Cover Oregon.  The evidence we have uncovered implicates violations of state laws that restrict political activity by public employees.”

Background:

The Patient Protection and Affordable Care Act (PPACA) required every state to operate a health insurance exchange by January 1, 2014, or have the federal government operate one for them.  States needed to have their exchange up and running by the start of the open enrollment period on October 1, 2013.  Oregon opted to set up a state-based exchange and created an independent public corporation called the Oregon Health Insurance Exchange Corporation, later branded as Cover Oregon.  

The PPACA provided funding for the U.S. Department of Health and Human Services to offer grants to support the planning and establishment of state health insurance exchanges. CMS identified Oregon as an “early innovator,” and Oregon received more in federal grants than all but two states—more than $300 million in federal taxpayers’ funds.  Like many state-based exchanges and the federally-facilitated exchange, the exchange in Oregon did not launch successfully on October 1, 2013.