Massachusetts built the model of a state-run exchange in 2006. Mass. ditches RomneyCare exchange

RomneyCare’s pioneering health insurance exchange is headed for the scrap heap.

Bay State officials are taking steps this week to junk central parts of their dysfunctional health insurance exchange — the model for President Barack Obama’s health care law — and merge with the federal enrollment site HealthCare.gov.


The decision is part of an expensive plan that would occur alongside a parallel, last-ditch attempt to still build a working state system.

The state on Monday announced the hiring of hCentive, a Virginia-based contractor that helped construct the Kentucky and Colorado exchanges. The company would rush to build a viable state exchange in time for the next enrollment season, which begins Nov. 15.

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But officials aren’t sure it’s possible to make that happen in less than six months. Given the narrow timeframe, they intend to simultaneously start shifting the Massachusetts exchange, known as the Connector, to HealthCare.gov.

A move by Massachusetts to the federal exchange would represent a symbolic blow for local Obamacare supporters. Massachusetts built the model of a state-run exchange in 2006, a result of the health care reform effort by then-Gov. Mitt Romney. The RomneyCare exchange, which helped the state provide health coverage to more than 97 percent of residents, became the template for the Obamacare version.

Massachusetts is the second state to begin that transition. Late last month, Oregon opted to scrap its $200 million system and join the federal exchange.

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It’s unclear what either option will cost Massachusetts or whether federal officials will cover that expense. Massachusetts has already spent $57 million on a system that never was able to enroll people with subsidies start to finish, and its failure has forced the state to enroll more than 160,000 residents in temporary Medicaid coverage — at an estimated $10 million-a-month cost.

State officials traveled to Washington last week to discuss the future of their exchange with the Obama administration. Their meeting came after a review by the consultant Optum indicated that most of the state’s earlier efforts to build an exchange were not salvageable, the sources said. They added that the state intends to retain Optum to help oversee hCentive’s efforts.

CMS, the federal agency that oversees HealthCare.gov, said Monday that it is “working with Massachusetts” but declined to weigh in on the merits of its plan.

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Massachusetts officials initially declined to comment as they prepared to announce the contours of the new approach. But Monday afternoon, they issued a press release announcing the move and calling it the start of a Connector “turnaround.” The board of the Connector is scheduled to meet Thursday to consider the plan.

“No comment before the meeting on Thursday,” said Jonathan Gruber, a member of the Connector board and also an MIT economist who helped model the state and federal health laws. Only days ago, Gruber had termed the odds of a move to HealthCare.gov as “low.”

Critics of Obamacare quickly characterized the state’s issues as an outgrowth of the “one-size-fits-all” nature of the federal health care law.

“It’s a travesty,” said Ryan Williams, a Republican consultant who worked as an aide to Romney in Massachusetts and on his presidential campaigns. “What we’ve seen is a dismantling of a once-popular and effective system to be replaced with a wildly ineffective and broken program that has brought great shame to Massachusetts.”

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“This will be a problem not only for Democrats in the Bay State but for Democrats across the country. If it can fail in Massachusetts, it can fail anywhere,” Williams added.

In two high-profile races, Republican congressional candidate Richard Tisei and GOP gubernatorial frontrunner Charlie Baker said the move supported their call for a waiver for Massachusetts from Obamacare.

“I can’t think of any more of an embarrassing course of events than what’s occurred with our website,” Tisei said.

In an interview, hCentive CEO Sanjay Singh said that the state’s simultaneous effort to transition to HealthCare.gov and build its own exchange “puts pressure” on the company but that he’s confident it will succeed.

The company will “have to show to the state that there’s enough progress that has been made that they don’t need to rely on [the federal system],” he said. “We’ll work with them and set up some interim milestones and see whether we’re living up to the standards they’ve set.”

Massachusetts officials disclosed in February that they were considering a transition to HealthCare.gov, among other options. Last week, Rep. Stephen Lynch (D-Mass.) said the state should strongly consider joining the federal system.

“You have two choices — one is to expend even greater amounts of money on something that had limited success thus far or going to the federal exchange,” Lynch said. “There’s simplicity in that, and I think that may be where some within the commonwealth would like to go.”

Massachusetts initially contracted with CGI, a massive contractor that gained notoriety for the failed rollout of HealthCare.gov. As the Obama administration did, Massachusetts dropped the company earlier this year when it became clear the Connector was still substantially broken.

In addition to placing thousands of state residents on temporary Medicaid, tens of thousands more who’d expected to transition to the new exchange have been forced to remain on Commonwealth Care. That pre-Obamacare program was set to phase out in January but has been extended through at least June.

Jennifer Haberkorn contributed to this report.