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Sean Gallagher - May 8, 2014 9:44 pm UTC

Nevada, Maryland, Massachusetts, Minnesota, and Oregon are members of a club that no one wants to join—all of these states have largely failed at getting their electronic health insurance exchange sites to work properly (or, in some cases, at all). Given the legislatively mandated deadline, the delays in delivery of requirements by the federal government, and the scale of the task that faced states developing their own healthcare exchange sites under the Affordable Care Act, people familiar with government information technology projects might tell you that it’s surprising that any of the websites worked at all.

But if any state had a greater shot at success, it was Massachusetts—the state that served as the model upon which the Affordable Care Act was based. Now, Massachusetts' health exchange has decided to shutter its own site at least temporarily, switching to the federal exchange to buy time for a better fix.

States running their own exchanges need to be ready by November 15 for the next round of open enrollment for health plans. That has put a number of states with floundering exchange sites in a pinch. Oregon was the first state with its own exchange to completely abandon its own website after spending more than $300 million in federal grants on the project.

Oregon officials have publicly blamed the database giant Oracle, the state’s primary contractor for the site, for its failure. In March, the Government Accountability Office announced that it would conduct an investigation of the Cover Oregon exchange project; last week, The Wall Street Journal reported that the FBI is now conducting its own investigation.

In an official statement in April, an Oracle spokesperson said that “Oracle looks forward to providing any assistance the state needs in moving parts of Oregon's health care exchange to the Federal system if it ultimately decides to do so.” Last week, the board of the exchange voted to move to the federal exchange.

Minnesota and Nevada are both soldiering on with their own systems for now, using the end of the first open enrollment period as an opportunity to put fixes in place for the next. But Massachusetts has decided that it would cost more to fix its system than it would to buy an entirely new one, so it's pulling the plug.

Massachusetts’ site failure was not nearly as costly as Oregon's, but the failure of its Commonwealth Health Connector site is still an embarrassment. Massachusetts’ system was originally built to run the state’s own health insurance exchange after then-Governor Mitt Romney signed his own state healthcare reform law in 2006. But it ran into trouble when the state began modifying it to comply with the Affordable Care Act and to integrate with federal systems.

Massachusetts’ system was built and operated by the same company responsible for many of the problems with the federal Healthcare.gov exchange—CGI. The Obama administration fired CGI in January; Massachusetts announced in March that it would terminate CGI’s $68 million contract after it fell far behind on its schedule to fix the site. The state is currently negotiating how much the company will be paid of the contract total (so far, it has paid only $15 million).

Estimates on the cost of getting Massachusetts’ existing site to work properly exceed $300 million. Instead, the state is taking a two-pronged approach: enrolling temporarily in the federal exchange and simultaneously implementing a new site based on software from Virginia-based hCentive, the company that built Colorado’s exchange site. In an interview with the Boston Globe, Sarah Iselin, a Blue Cross Blue Shield of Massachusetts executive appointed to coordinate fixes to the Health Connector site, said that the cost of the new strategy is expected to be around $100 million through 2015.

Massachusetts isn’t alone in picking another state’s exchange software after its own system failed. Maryland fired its contractor Noridian in March, and it has decided to buy a system built by Deloitte consulting for Connecticut at a cost of approximately $50 million.

But Maryland had already spent $125 million in mostly federal money for its failed site, and it’s not certain that the new contract will get any funding from federal grants because of the apparent mismanagement of the original project by the state. According to an audit by the state’s Department of Legislative Services, there was no “clear indication of the oversight and governance structure that may have existed to oversee and steer the (exchange) development process.” The project is currently under investigation by the Department of Health and Human Services’ Office of the Inspector General.

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