$100+ Million and Obamacare Still on the Fritz in Oregon

Oracle CEO Larry Ellison

Too bad Oregon, along with the other 49 states, didn’t just let the markets compete to provide health insurance to its residences. What’s wrong with a robust individual heath insurance market with the ability to buy across state lines and high deductibles? But it’s not to be. Instead, as Wired magazine explains, Oregon has paid over $100 million to Oracle for its botched O’Care site. Oregon not only is stuck with Oracle to make the site work properly, but also is locked into a government contract with Larry E. Oregon’s choices are to continue paying Oracle or scrap the whole project and start anew. As Wired notes here, there’s plenty of blame to go around. Lucky taxpayers!

It’s bad enough that the state of Oregon has paid software giant Oracle over $100 million to build a healthcare exchange site that doesn’t work. But it now appears that Oregon is stuck with Oracle, unable to simply hire another firm to finish the job.

It’s the latest setback for the troubled Obamacare rollout, and it provides a classic example of an old-school IT provider lagging behind the new and more effective way of building massive web operations — the open source approach behind mega-scale websites like Google and Facebook.

Last September, as it became clear that the site wouldn’t be ready for the October 1 launch date, Oregon stopped paying Oracle. The company kept working until last week, when it pulled 100 contractors from the project, demanding $69.5 million for the work it had completed since September. This week, The Oregonian reports, the state agreed to pay $43.9 million of its outstanding bill to get Oracle back to work to finish the project.

You might think that Oregon officials would have been happy to see Oracle go, considering their $100 million site is still on the fritz. But making the service work properly will likely depend on knowledge held only by Oracle’s contractors. Oregon needs Oracle, at least for now. And that’s part of the problem: Oregon, like so many other IT customers over the years, is now locked into a contract with a vendor and has few options other than paying the company more or starting the project over from scratch.

Debbie Young

Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over three decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, and practicing yoga.