Maryland Gov. Martin O’Malley (D) announced Tuesday that the state will replace nearly all of its troubled online health insurance exchange with technology borrowed from Connecticut, which has had one of the most successful exchanges in the country.
The new system will be completed by November, officials say, in time for residents to enroll in private plans for 2015. Here are questions, and answers, about Maryland’s decision and the impact it will have on citizens seeking to benefit from the 2010 Affordable Care Act.
1. What happened to Maryland’s online exchange, and why is it switching?
The state’s first stab at creating an online marketplace was, as the governor puts it, a failure. It crashed on its first day and has limped along ever since, despite hundreds of technical fixes.
The remaining problems are far graver than just annoying glitches — these are serious architectural flaws that would take at least a year and $66 million to fix. Even then, it’s doubtful that the system would work as needed.
On Tuesday, as soon as the first enrollment period was over, Maryland’s exchange board voted on to hire Deloitte Consulting to completely overhaul the current system.
Officials hope to salvage at least $8 million worth of hardware and software from the current system, but most of the rest will go. Deloitte will take coding from Connecticut’s highly successful exchange — coding which the federal government technically owns and is giving to Maryland for free — and build a new exchange for Maryland.
The new exchange will look and act very much like the Connecticut exchange, as officials will not have time to retrofit it. While some might describe such a process as a replacement or overhaul of the current exchange, O’Malley and his administration like to call it an “upgrade.”
2. How much will this cost?
Development of the new exchange is estimated to cost $40 million to $50 million, plus some hardware and software licensing costs. State officials could not provide a more precise figure Tuesday.
Joshua M. Sharfstein, Maryland’s secretary of health and mental hygiene, said he expects the federal government to foot most of that bill. Federal authorities have not yet approved Maryland’s plan, Sharfstein said, but they are expected to do so.
He did not know if the cost would be covered by the federal grant money that Maryland already has on hand or if the state would need additional funding. Maryland is kicking off the project with $3 million of its own money, Sharfstein said, and it could “repurpose a lot of funds” to get the bills paid.
3. How much has Maryland already spent on its exchange?
More than $125.5 million, according to an exchange spokeswoman — most of it covered by federal grant money. That’s the total for building and operating the current system, and it includes the nearly $65 million Maryland paid its previous exchange-builder, Noridian Healthcare Solutions.
Officials have been hinting for months that they might try to recover money from some or all of the companies that worked on the first exchange. O’Malley was less coy Tuesday night and said he plans to see at least one company in court.
4. Did the flawed exchange hurt enrollment?
Depends who you ask. O’Malley points out that despite the problems, Maryland exceeded its overall enrollment goal of 260,000. As of Tuesday night, that number had hit 295,077. It includes people who have enrolled in private plans (which has dramatically lagged expectations) and Medicaid (which has exceeded expectations).
But a driving force behind building an exchange was getting Marylanders enrolled in private plans, and the state’s original goal for that was at least 150,000. Brown once floated an even higher number: 180,000. State officials no longer embrace that goal — and have repeatedly criticized reporters for using it — even though the federal government uses private plan enrollment numbers as its chief measure of progress for its marketplace.
Sharfstein said in late February that he a more accurate projection is 75,000 to 100,000 private enrollees.
As of Tuesday evening, there were 63,002, with hundreds or thousands more expected to finish their applications in coming weeks.
5. Who is to blame for problems with the first exchange?
A Washington Post investigation published in January found that more than a year before the exchange launched, senior state officials failed to heed warnings of grave and growing problems. A full accounting has yet to happen.
The exchange’s original director, Rebecca Pearce, resigned under pressure in December. There have been some staffing changes, and the state’s secretary of information technology, Isabel FitzGerald, was put in charge of evaluating the system and suggesting a solution.
State officials at first targeted a subcontractor that was fired soon after the launch. The state axed the primary contractor, Noridian, in late February. On Tuesday, O’Malley took a swing at IBM, whose software Maryland used.
“We take responsibility for fixing this, and we’ll see IBM in court,” O’Malley said.
6) What about Lt. Gov. Anthony G. Brown?
O’Malley put Brown in charge of implementing health-care reform in Maryland. Brown says that it was his job to establish a legislative framework in which the exchange was created, but that he had no responsibility for day-to-day oversight of the exchange. He testified to lawmakers in January that he had not been warned of the gravity of brewing problems with the exchange and was surprised when it flopped.
But his role is drawing lots of attention from his rivals in the race to succeed O’Malley as governor in 2015.
7) Was this “Connecticut option” the only one Maryland considered?
Connecticut has long been a fan favorite, and Sharfstein has been gushing about it for months. But state officials say they fully vetted a range of options, including keeping what they have, using all or part of the federal marketplace, and joining a state consortium.
Only three of the options — Connecticut, the current system and using part of the federal exchange — were presented to the exchange board.
In a presentation, FitzGerald said that using Connecticut’s technology is the best option for Maryland, as it can be implemented most quickly and is slightly less expensive than the other two options.
State lawmakers were largely not involved with the decision-making.