Oregon will drop its Obamacare exchange. What now?

After failing to launch a fully functioning Obamacare enrollment Web site, it looks like Oregon's health insurance exchange will be taken over by the Obama administration. It's a sign of how deeply flawed the Oregon enrollment system is despite initial lofty hopes, and a further indication of how much HealthCare.gov has improved since its own awful rollout.

The Oregon exchange board is scheduled to vote on the recommendation Friday, but as my colleague Amy Goldstein reported Thursday, federal officials have strongly encouraged the state's move to HealthCare.gov. That would make Oregon the first state to abandon its enrollment system, presenting some immediate policy questions.

1. Despite its technical problems, Cover Oregon has enrolled about 64,000 in private health plans since October, and enrollment has been extended until the end of the month.

When the next enrollment period opens Nov. 15, will those Oregon customers have to go through the enrollment process all over again? That's not clear, Cover Oregon technology chief Alex Pettit said Thursday. He's scheduled to meet with federal health officials Monday and Tuesday to iron out further details.

2. Another big question: What happens to the state's exchange funding? Cover Oregon is partly financed by a 2.5 percent premium tax on insurers selling in the exchange, while the federal exchanges charge insurers a 3.5 percent premium tax. Pettit said Cover Oregon hasn't figured out the financial implications.

Funding will determine to what extent Oregon can do consumer assistance and outreach activities while the federal government handles the enrollment side of things. "To me, those are really critical questions," said Georgetown University health policy Prof. Sabrina Corlette.

3. Of the 16 insurers selling in Cover Oregon, 11 have technology interfaces that match up with the federal system, Pettit said. That means the other five insurers, if they want to continue selling in the federal insurance marketplace, will have to change their systems.

Pettit said the other 11 insurers will also have make changes to their systems to sell in the federal marketplace. For what it's worth, a February report from Deloitte said the switch to the federal exchange was the easiest and cheapest option for the state.

4. Oregon was touted as an early Obamacare success story by the law's supporters last summer when two insurers asked to lower their proposed rates after they were publicly posted online. This, supporters said, was proof that the state health insurance exchanges fostered competition, as they had predicted.

Even in the shift to the federal marketplace, this success story still could have happened, Corlette figures. That's because states with a federal-run marketplace still regulate their own insurance markets.

5. Not a policy point here, but things in Oregon certainly feel quite different from about nine months ago when the state launched Obamacare's most twee ad campaign. Let's take another look:

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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