The state's $45 million settlement with the primary contractor responsible for its botched health insurance exchange appears to be a good deal for the taxpayers. It only covers about 60 percent of the state and federal funds Maryland provided to Noridian Healthcare Solutions, but it comes with a guarantee of payment from Noridian's parent company that the state might not have gotten if it had pursued a bigger judgment through litigation. Both Gov. Larry Hogan and Attorney General Brian E. Frosh are right to say that the certainty of this settlement makes it attractive, and we're glad to see the two working together in the state's interests despite their different political parties.
If there is one unsatisfying element of this development, though, it is the agreement of both the state and Noridian not to admit fault. In a video posted on his YouTube page, Mr. Frosh says the size of the settlement tells you what you need to know regarding liability, but we can't help but find ourselves in agreement with Rep. Andy Harris, who notes, "Someone at the state was supposed to be overseeing Noridian. I still would like to know who was asleep at the switch." Politically, that may seem a less urgent question, since the O'Malley administration's point person for health care reform, former Lt. Gov. Anthony G. Brown, lost November's election. (He is running for Congress, but his management ability is less a concern in that context.) But it does have implications for how the state handles procurement and execution for future information technology projects.
Some critics have cast blame on the freedom the health insurance exchange was given from regular procurement rules, but we're not convinced that's where things went wrong. Noridian was selected in a competitive bidding process, and though the contract did not have to be approved by the Board of Public Works, it's impossible to know whether that extra layer of review would have made a difference. It's easy to say in retrospect that entrusting such a big information technology project to a relatively new offshoot of a North Dakota health insurance company was a mistake, but it's also worth remembering that Noridian was relying on software developed by IBM — not exactly a new or untested player in the IT world — and it didn't work as advertised either.
The bigger questions revolve around whether the state's specifications for the exchange software were realistic, how well state officials oversaw Noridian's work and why the state went ahead with its site launch despite some major warning signs.
There was doubtless some hubris involved in Maryland's debacle. Generally speaking, states that aimed for relatively simple, straightforward exchanges had more successful launches than those that were more ambitious, and Maryland's plan, which envisioned the exchange as eventually becoming a hub connecting users to a variety of programs and services, was definitely on the ambitious end of the spectrum. The exchange's original director testified at one point that the project had suffered from Maryland's effort to be at the forefront of Affordable Care Act implementation because it pressed ahead before some federal regulations were finalized. Perhaps out of the same desire to be seen as an early adopter, then-Gov. Martin O'Malley chose to launch the site on time on Oct. 1 even though key contractors had been feuding for weeks, the site flunked a key test in August and a Sept. 13 test found the system to be "extremely unstable."
The O'Malley administration did much better in its reboot of the exchange than in the initial execution. Thanks to various labor-intensive (and expensive) work-arounds, the state met its enrollment goals for the first year, and thanks to the decision to scrap the original system entirely and instead modify Connecticut's successful software, the exchange's second open enrollment period went smoothly.
But thanks to the turnover in the governor's mansion, whatever lessons were learned from the website's failure risk being lost and forgotten. Taking the state's case against Noridian to trial may not have been in the immediate financial interests of the taxpayers, but it likely would have peeled back the curtain on what went wrong and how. We may still get the opportunity for that; the state has not settled its disputes with IBM over the performance of its software, and it's possible that Mr. Harris' requests for federal investigations into what went wrong will still result in more public disclosures.
It is in some sense to his credit that Mr. Hogan has not used his new position to release whatever embarrassing and damaging information he can find about the O'Malley administration's handling of the exchange's development and launch. After all, he need not maintain his predecessor's claim of executive privilege to keep things hidden from public view. But there is legitimate value in a more comprehensive accounting than we have gotten so far. This won't be the last complicated information technology project Maryland undertakes, and we need to make sure we don't make the same mistakes twice.