Month: November 2013

It’s Time for Renewable Energy to Stand on Its Own Legs

The Energy Trust of Oregon (ETO) is a non-profit organization that carries out energy efficiency activities on behalf of PGE, Pacific Power, NW Natural Gas, and Cascade Natural Gas. ETO also subsidizes the above-market cost of small, renewable energy projects. For 2014, ETO proposes to spend $178.9 million while taking in revenues of $163 million. Revenues are derived from monthly surcharges on the bills of utility ratepayers. The state legislature authorized the imposition of these surcharges (ranging from 3% to roughly 6%, depending on the utility and the year) in legislation adopted in 1999.

ETO’s budget is available for public review and comment ( through the end of November 27, 2013 and will be approved by the ETO board in December. Cascade President John A. Charles, Jr. filed the following comments with with Margie Harris, Executive Director of the Energy Trust of Oregon, on November 27:

Dear Margie,

I have listened to your budget presentation twice and also attended the most recent Renewable Energy Advisory Committee (REAC) meeting. Based on those observations I have one suggestion for the 2014 budget/action plan:

Consider shifting the emphasis for renewable energy subsidies away from intermittent sources. Since 2003, ETO has supported the development of 5,217 renewable energy projects of 20 MW or less. Almost all of these projects―99.6%―have been solar and wind, the two most expensive categories. Yet, because these technologies fail to produce any electricity most of the time, wind and solar projects have only accounted for 40.5% of the power generated by all ETO projects.

Not only has the ETO renewable program had high costs with low power output, most of the alleged social benefits of these sources don’t exist because the random failure of wind and solar means that the system operator for the regional grid has to maintain ever-growing amounts of spinning reserve. These back-up sources have adverse environmental effects that are not accounted for by the recipients of ETO subsidies. In essence, wind/solar project owners internalize the benefits of ETO subsidies while externalizing the costs of grid reliability.

In your 2014 draft budget, you propose to spend $9.9 million on solar projects to get 0.9 aMW of power, at a levelized cost of 10.4 cents/kwh. This is roughly triple the cost of your other renewable projects. I don’t think this is a good deal for ratepayers, and it’s not a good deal for the grid.

The “final frontier” for ETO should be to invest in renewable projects that produce reliable, dispatchable electricity. The regional grid craves stability; wind and solar create volatility. This is a fundamental system conflict, and ETO should strive to be part of the solution by terminating future subsidies for intermittent sources.

At the last REAC meeting, someone on your staff noted that solar projects are proceeding even without the Business Energy Tax Credit (BETC) [repealed by the Oregon legislature in 2012] due to declining solar costs of some 40% over the past 4 years. This should not be surprising if you understand the term “co-dependent.” In technological development as well as human interaction, when we stop rescuing people from their own failures, they tend to become self-reliant a lot faster. I’d suggest that after subsidizing 5,000 solar projects, it’s time for ETO to declare victory and move on, allowing this industry to stand on its own legs.


John A. Charles, Jr.

Cascade Policy Institute

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Story Behind Thanksgiving That Every Elected Representative Should Know

The quintessential American holiday, Thanksgiving evolved from the Pilgrims’ celebrations to thank God for the harvests that saved Plymouth Colony. What most people didn’t learn in school is that nearly half the Mayflower Pilgrims died of starvation because many refused to work in the fields.

Plymouth Colony originally had a socialist economy. Land and crops were held in common. In the words of Governor William Bradford, “the young men who were most able objected to being forced to spend their time and strength working for other men’s wives and children without any recompense.” Collectivism incentivized colonists needlessly to rely on the efforts of others. Realizing this, Governor Bradford assigned each household its own plot of land. Families could keep what they produced or trade for things they needed. The result was a bountiful harvest in 1623.

Instituting private property and respecting the autonomy of the family unit caused Plymouth to survive. Collectivism and central planning produce scarcity. Private property, free markets, and personal responsibility lead to prosperity and plenty. And a healthy economy, with strong and independent families, enables a community to help those who genuinely need assistance. All are important lessons for America today from William Bradford’s first Thanksgiving.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Portland Streetcar: Time to Reset the Vision

If some Portlanders are confused about why we have a 19th century trolley operating in a 21st century city, they are not alone. City leaders are confused as well.

According to the Streetcar Concept Plan adopted by the Portland City Council in 2009, there are three primary policy goals related to streetcar expansion: (1) help the city achieve its peak oil and sustainability strategies; (2) provide an organizing structure and catalyst for the city’s future growth along streetcar corridors; and (3) integrate streetcar corridors into the city’s existing neighborhoods.

Oddly, providing transit service is not an explicit priority, even though that’s the primary reason people ride. Instead we have a mishmash of peak oil mania―now a quaint artifact due to the shale oil and gas booms, coupled with advanced technology―and vague references to real estate development. Given that this plan was estimated to cost $750 million and the city is broke, perhaps we should rethink the objectives.

First, the fundamental purpose of any transit program is to move people. On this criterion, the trolley is a weak performer. It’s slow, it doesn’t go many places, and each car only has 30 seats. It has high costs and low capacity, when what we need is the exact opposite.

If a secondary purpose of the streetcar is to encourage development, there are much better ways to do so. Subsidizing the streetcar means that most property owners will never benefit, because the system is tiny―seven route-miles after two decades of planning. If the city were simply to streamline the permitting process and lower System Development Charges, we would incentivize far more development in all sectors of the city compared to laying another mile of track.

Advocates claim that streetcar lines are “permanent” and provide stability for nearby development, but thousands of miles of streetcar tracks in the United States were paved over when they became obsolete 80 years ago. More recently, the streetcar tracks in South Waterfront along Moody Avenue have been torn up three separate times since 2011 to accommodate light rail. Nothing is really permanent; and when change is needed, it’s a lot easier moving a bus line than it is ripping up streetcar tracks.

A Better Way

We should insist that the streetcar be treated as a transit expenditure and evaluated on those terms. If we do this, it’s clear that rubber-tired vehicles traveling on the existing road network make much more sense.

Of the bus options I’ve examined, the best one is the Metro Rapid in Los Angeles. This system relies on distinctive, low-floor CNG buses with red stripes providing fast, reliable transit service. It operates in general purpose traffic lanes and achieves relatively high speeds by having stops spaced 0.75 miles apart, on average.

Also, the Metro Rapid buses have the technical capacity to shorten a red light or extend a green light at intersections to improve travel time.

A summary of the key characteristics of this system compared with the Portland Streetcar is shown below:

LA Metro Rapid Bus

Portland Streetcar

Year opened



Annual boardings

72 million

4.1 million

System length

400 miles

7 miles

Capital cost/mile

$0.35 million

$29 million

Peak frequency of service

Every 3-10 minutes

Every 14-19 minutes

Average speed

14-30 MPH

7-12 MPH

The Portland Streetcar is 83 times more expensive to build than the Rapid Bus alternative. Is it 83 times better? No. In fact, it is not superior by a single metric. The Rapid Bus is cheaper, twice as fast, and has much greater coverage throughout the city. It’s an actual transit system, not a Disneyland ride.

We should stop further expansion of the streetcar and shift public resources to low-cost, higher-speed bus transit.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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AP: Cover Oregon Is ObamaCare’s “Biggest Failure”

Seven weeks after launch, Oregon’s online health insurance exchange Cover Oregon still hasn’t enrolled one person, surprising out-of-state onlookers who would have voted Oregon “most likely to succeed.” An Associated Press story puts it this way:

“With all the problems facing the rollout of President Barack Obama’s health care overhaul, nowhere is the situation worse or more surprising than in Oregon, a progressive state that has enthusiastically embraced the federal law but has so far failed to enroll a single person in coverage through the state’s insurance exchange.”

The Oregonian has reported on numerous reasons for the delays, including last-minute federal rulemaking that set back Oregon’s website programming. Even so, Oregon received $245 million in federal money to build its online exchange, only to be processing 18,000 paper applications by hand three weeks into November.

It’s safe to say that dysfunction on this level would not be tolerated anywhere outside government: Imagine if your financial institutions were offline and nonresponsive for two months. The stunning failures of Cover Oregon and the federal website illustrate graphically how handing government vast control over important aspects of our personal and family lives results in even more loss of personal freedom than was foreseen when the Affordable Care Act was passed. Incompetence without accountability will have real consequences for those who, through no fault of their own, may find themselves without insurance on January 1.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Cascade in the Capitol: Testimony in Support of the Oregon Department of State Lands’ Proposal for the Elliott State Forest

The Oregon Department of State Lands (DSL) is proposing that the Oregon State Land Board―comprised of the Governor, the Secretary of State, and the Oregon Treasurer―sell off 2,700 acres of the Elliott State Forest. The Elliott is a 93,000-acre state forest located on the southern Oregon coast. Most of the forest is required by state law to be managed to generate revenue for the Common School Fund, an endowment for public schools. Due to environmental litigation, timber harvesting has plummeted on the Elliott, making it impossible to fulfill the mission of providing income for the Common School Fund. Therefore, the DSL is proposing to sell three small tracts in order to generate funds.

Cascade President and CEO John A. Charles, Jr. submitted testimony earlier this week in support of the sale:

“I am writing in support of the proposed sale of three parcels within the Elliott State Forest―the Adams Ridge, Benson Ridge, and East Hakki Ridge Tracts. Sale of these parcels is consistent with the Constitutional and statutory directives to the Land Board that it maximize revenue over the long term from Common School Trust Lands.

“Clearly the annual returns on the Common School Fund over the past 20 years have been far superior to the returns from timber harvesting on the ESF, as noted in the Department’s Real Estate Asset Management Plan. Given that the returns on timber harvesting have been declining and will likely decline even more in the near future due to environmental litigation, public schools that rely on the twice-annual distributions from the CSF would be better served with the sale of timberland from the ESF, with the proceeds placed under the management of the Oregon Investment Council.”

Cascade has long supported the lease or sale of Common School Trust Lands, and welcomes the move by the SLB to sell off small parts of the Elliott State Forest. The Land Board will consider the matter at its upcoming meeting in Salem on December 10.

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Press Release: Cascade Policy Institute Responds to Challenges from the Center for Media and Democracy

November 14, 2013

For immediate release

Contact: John A. Charles, Jr.

(503) 242-0900

 Cascade Policy Institute Responds to Challenges from the Center for Media and Democracy

PORTLAND, ORE. – A self-described “progressive watchdog group” has launched a questionable campaign to discredit limited government, free-market oriented public policy research groups across the country, including Oregon’s own Cascade Policy Institute.

Taking a page out of the late Chicago community organizer Saul Alinsky’s book, Rules for Radicals, the Center for Media and Democracy (CMD) is personally attacking both those who work for and those who help fund these organizations.

Two of the Rules for Radicals state: “Ridicule is man’s most potent weapon” and “Pick the target, freeze it, personalize it, and polarize it.” CMD is following both these rules by posting supposedly inflammatory information and accusations on its derisively named website,

Oregonian senior political reporter Jeff Mapes wrote a story yesterday about CMD’s claim that Cascade Policy Institute “…and dozens of like-minded think tanks around the country receive major funding from secretive national donors to push a conservative agenda.”

Cascade’s president, John A. Charles, Jr. responded, saying, “It is ludicrous to think that Cascade is operating in lockstep with other organizations to promote any specific policy agenda. As a free-market think tank, we don’t believe in central planning, either in government or in the non-profit sector.”

Charles continued, “We set our own research agenda, approved by an Oregon-based board of trustees, which promotes individual liberty, economic opportunity, and personal responsibility.”

As to the charge that some of Cascade’s funding comes from a group of “secretive donors,” Charles notes that the IRS allows anonymity for donors to non-profit 501(c)(3) organizations, including charities, schools, churches, think tanks, and others.

“We respect the privacy of our donors, whether they are large national funders or the individual Oregonians that make up the bulk of Cascade’s supporters. Contrary to the mistaken belief of CMD, we don’t promote the agenda of our donors; they voluntarily choose to support our agenda of personal and economic freedom.”

Charles noted in conclusion, “The timing of this attack is almost comical given the disastrous rollout of ObamaCare. Now more than ever, the country needs public policies that respect the dignity of individuals to run their own lives. Cascade will continue to be the leading voice for self-governance in Oregon, and we welcome financial support from donors regardless of where they live.”


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Which Is the Monster? Tax limitations, or the taxes they limit

A City Club of Portland research panel has concluded that property tax limitation Ballot Measures 5, 47, and 50 have created a “Frankentax” monster that is “slowly but surely wreaking havoc upon its creators and their communities in ways they might not yet realize.”

Before we buy such arguments and repeal these taxpayer protections, let’s see what good has come from limiting property taxes:

So-called government revenue “losses” from property tax limitations are also “gains” to taxpayers who pay less than they otherwise would―in some cases enough less to keep from losing their homes.

Before Measure 5 was enacted in 1991, as a percentage of our income, Oregonians had on average the 5th highest property tax burden among all states. In 2010, that burden had dropped to 20th.*  In the first ten years Measure 5 was in effect, Oregonians saved over $5 billion.**

An Oregonian editorial about the City Club report points out: “The monster metaphor is worth pursuing because the perception of monstrosity goes both ways.” “Voters approved Measures 5 and 47/50, creating a ‘Frankentax’ system, because they wanted to protect themselves from a government-friendly system that behaved like The Blob, always consuming and expanding. The system that exists now, for all its faults, is designed to protect taxpayers at the expense of government, not government at the expense of taxpayers.”

Knowing the father of Measure 5, the late Don McIntire, as I did, I’m confident he would relish the opportunity to engage those who want to kill his creation. Far from being a Frankenstein, Don was one of the taxpayer’s best friends.

* “2013 Public Finance: Basic Facts,” Legislative Revenue Office,

** “Halfway There: Measure 5 and the Road Ahead, Jamie Voykto, Cascade Policy Institute, December, 2003,

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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ObamaCare Unraveling―And It Gets Worse in 2014

By Sally C. Pipes

With ObamaCare’s health insurance exchanges unraveling (especially, the federally run portal for the 36 states that decided not to set up their own exchanges), it’s safe to say that President Obama’s effort to expand coverage isn’t going well.

It’s about to get worse. Once the calendar flips to 2014, ObamaCare intends to expand Medicaid—the joint federal-state health insurance program for low-income Americans—to an additional 8.7 million people. But Medicaid isn’t working for the 62 million Americans it currently covers.

Taxpayers are struggling to shoulder the program’s $400-billion-plus price tag. Beneficiaries, meanwhile, are finding that doctors won’t accept their coverage. Expanding the program will only exacerbate both problems. Fortunately, some states are experimenting with reforms that inject private-sector discipline into Medicaid, thereby improving access to care and reducing costs. Other states should take note and adopt similar reforms.

At present, states largely determine who qualifies for Medicaid. Next year, ObamaCare will instruct them to cover everyone earning less than 138% of the poverty level. To entice states to follow through, the feds will cover the cost of the expansion for new enrollees for the first three years. States will have to share in the cost thereafter. Nevertheless, over half the states are refusing to follow ObamaCare’s dictates and not taking federal funds, exercising the right the U.S. Supreme Court gave them in June 2012 to do so.

Many states are wary of expanding Medicaid because those already in the program struggle to secure care. Between 2011 and 2012, about a third of primary care physicians weren’t accepting new Medicaid patients. A study from 2011 found that two-thirds of children on Medicaid couldn’t get an appointment with a specialist.

Doctors are reluctant to accept Medicaid because the program pays them so little. The entitlement reimburses physicians a little more than half the amount that private insurers do. In some cases, Medicaid’s reimbursements don’t cover the costs doctors incur seeing beneficiaries.

It’s no surprise, then, that the program fails to improve its beneficiaries’ health. A randomized study of Oregon’s Medicaid program published earlier this year in the New England Journal of Medicine concluded that “Medicaid coverage generated no significant improvements in measured physical health outcomes.”

For a failing program, Medicaid costs a lot. States spend more on Medicaid than anything else in their budgets—and collectively shoulder approximately one-third of the program’s more than $400 billion in annual costs.

ObamaCare’s Medicaid expansion will only add to these costs. A new survey of state Medicaid offices shows that, in 2014, spending on the program will increase by 13% in states that have agreed to broaden eligibility in accordance with the law. It’s no wonder that many state leaders are looking to buck the Medicaid status quo.

In September 2013, Arkansas Gov. Mike Beebe secured a waiver enabling his state to use federal funds set aside for Medicaid to provide private coverage to 218,000 residents. The state’s Department of Health reports that more than 56,000 people have asked to participate in the Arkansas Healthcare Independence Program.

Arkansas officials believe they’ll save $670 million over 10 years, thanks to the waiver. Leaders in Indiana, Ohio, Pennsylvania, Iowa, and Tennessee have expressed interest in creating similar “private options.” Arkansas’s approach empowers individuals to shop for insurance that suits their needs, rather than settling for one-size-fits-all policies.

Privately delivered Medicaid also permits state officials and patients to expand the availability of tax-advantaged health savings accounts (HSAs) to low-income families. These accounts give families the ability to shop around for care—and to save tax-free for the future whatever they don’t spend now. Encouraging such consumer-driven behavior in the health care marketplace will be crucial to reducing overall costs.

North Carolina Gov. Pat McCrory has adopted a different approach, proposing that private managed-care firms administer his state’s Medicaid program. Dubbed “Comprehensive Care Entities,” these companies would be tasked with overseeing patient care in a way that improves health outcomes while keeping costs down. They’d also compete against one another, creating an incentive to improve customer service, economic efficiency, and quality of care.

More state leaders should look for ways to use choice and competition to move past Medicaid’s status quo. If they don’t, they’ll simply perpetuate ObamaCare’s strategy of expanding failed programs and calling it progress.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Investors Business Daily.

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Court Says “No” to Forced Insurance Subsidy

The federal government’s website has been nearly useless for a month. Now, millions of Americans are beginning to receive letters informing them of the cancellation of their current health insurance policies―proving the inaccuracy of President Obama’s promise that “if you like your health care plan, you can keep your health care plan.”

But news reports on ObamaCare as the calendar turned to November largely missed another important story. A controversial provision of the Patient Protection and Affordable Care Act (ObamaCare) suffered a judicial setback in the D.C. Circuit Court of Appeals on November 1. Writing on behalf of the court, the judge highlighted an important civil libertarian concept which is also at the heart of many principled objections to the health care law.

In Gilardi v. U.S. Department of Health and Human Services, the D.C. Circuit Court granted the plaintiffs, who own a family business, a preliminary injunction against the imposition of the HHS Mandate requiring inclusion of contraception and abortifacient drugs in employee health insurance plans. The Gilardi family, who are Catholics, contend that the HHS Mandate requiring coverage for contraception, sterilization, and abortion-inducing drugs violates their religious beliefs and that requiring their company to cover employees’ contraception, or else pay a $14 million penalty to the IRS, is unduly burdensome. The court sided 2-1 with the Gilardis. In her ruling, Judge Janice Rogers Brown made a distinction between “noninterference” with a person’s choices and the “compelled subsidization” of those choices by another party.

The Obama Administration has consistently held that the HHS Mandate requiring contraceptive coverage is necessary to protect women’s reproductive and abortion rights. The Administration argues that women’s right to have access to contraception trumps the First Amendment rights of those who object to providing these services on religious or moral grounds. The President has refused to accommodate the conscience objections of policyholders, religious and secular employers, and charitable organizations during ObamaCare rulemaking.*

However, Judge Brown wrote on behalf of the court that “it is clear the government has failed to demonstrate how such a right―whether described as noninterference, privacy, or autonomy―can extend to the compelled subsidization of a woman’s procreative practices.”

The distinction between “noninterference” and “compelled subsidization” is important for reasons broader than conscience objections alone, and it should strike a chord with civil libertarians. The expansion of government programs and entitlements (including medical benefits specifically handpicked by the government) pits the newly created “rights” of some to receive additional products and services, against the rights of other people who may be paying for them in whole or in part (as employers, policyholders, or taxpayers).

Charles Krauthammer recently explained the connection between ObamaCare’s health care entitlements and coercion this way:

“The planners knew all along that if you force insurance buyers to overpay for stuff they don’t need, that money can subsidize other people. Obamacare is the largest transfer of wealth in recent American history. But you can’t say that openly lest you lose elections. So you do it by subterfuge: hidden taxes, penalties, mandates, and coverage requirements that yield a surplus of overpayments. So that your president can promise to cover 30 million uninsured without costing the government a dime. Which from the beginning was the biggest falsehood of them all. And yet the free lunch is the essence of modern liberalism. Free mammograms, free preventative care, free contraceptives for Sandra Fluke. Come and get it.”

Once the government has successfully compelled all Americans to purchase health coverage―even against their will―under ObamaCare’s individual mandate in order to make this wealth transfer possible, it is a short slide into compelling Americans to subsidize other people’s benefits to which they morally object.

To protect Americans’ constitutional rights, and rein in the entitlement culture, the courts need to affirm consistently that not interfering with another person’s choices does not mean forcing others to provide, subsidize, or enable those choices. According to the Becket Fund for Religious Liberty, 77 cases representing 200 plaintiffs have been filed against the HHS Mandate on First Amendment grounds. Regardless of Americans’ disagreements over the ethics of contraception and abortion, the freedom not to be financially complicit in the choices of others to which one morally objects ought to be a value on which many of us can unite. The First Amendment may end up being one of the last legal defenses citizens have against the unfettered expansion of the entitlement state.


* The HHS Mandate has an extremely narrow conscience exemption which does not apply to for-profit businesses or to organizations which may be religious by any common-sense standard but are not run by a church.

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Metro’s War on Single-Family Housing Continues

For more than a decade, the regional government, Metro, has been quietly herding people into high-density neighborhoods. For those unaware of this policy, the recently announced plans for 80 acres of development near the light rail station at Sunset Transit Center should be a wake-up call: The developers plan to build 2,175 new housing units, and none of them will be single-family homes. In order to meet Metro-imposed density requirements, the project will be dominated by mid-rise apartment complexes, along with commercial and retail buildings.

Metro anticipates that virtually all future development projects will be similar. In draft documents for a planning exercise called “Climate Smart Communities,” Metro notes that the current number of Portland-area households in mixed-use neighborhoods is 26%. By 2035, that number likely will rise to at least 36%. No options for reducing density are being studied.

Metro’s vision of ubiquitous apartment bunkers means that the region will slowly become a childfree zone, because few parents wish to raise their children in vertical housing. Portland parents, and those who hope to become parents, should ask hard questions about why the Metro Council thinks this is a great leap forward for livability.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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The ObamaCare Exchanges: Nowhere Near As Competent As the Post Office

By Sally C. Pipes

What was the worst product launch in history? New Coke, perhaps? How about Colgate’s Dinner Entrees, the frozen food packages with a label mimicking that company’s brand of toothpaste? The Santa Dreidel? They’re all marketing masterpieces compared to the rollout of ObamaCare’s health insurance exchanges—particularly those accessible through, the portal operated by the federal government that “serves” 36 states. Though these online marketplaces officially opened October 1, they’ve thus far proven abject failures in their stated mission of expanding the availability of health insurance.

As of October 19, federal officials claimed that 476,000 people had applied online for health coverage. But there’s a big difference between the number of folks who have begun applications—and the number of people who have actually enrolled. According to insurance industry consultant Robert Laszewski, that enrollment figure could be less than five figures. Through its first week, the federal system, which was supposed to work for millions of Americans, had reportedly enrolled about 5,000 people in the 36 states it covers.
Insurers estimate that just one percent of applications submitted through the federal exchange contain sufficient information to actually enroll a person in a health plan. It’s no wonder that the Obama Administration has been mum about official enrollment figures. Visitors have often found that they can’t even log in. A CNN reporter, for instance, couldn’t do so for a whole week. A New York Times researcher failed to log in over 40 separate attempts covering 12 days.

The disastrous rollout of the federal exchange has caused even champions of ObamaCare to train their fire on the president’s team. Washington Post columnist Ezra Klein has said that the Affordable Care Act’s launch this fall has been not been “troubled” or “glitchy” but a “failure.” Robert Gibbs, President Obama’s former press secretary, wants heads to roll, saying, “I hope they fire some people that were in charge of making sure that this thing was supposed to work.”

The Administration has asked the contractors hired to build the system to perform necessary repairs in hopes of re-launching the exchange November 1. But that’s unrealistic, according to the contractors as well as outside experts. One told the New York Times that as many as five million lines of code may need to be rewritten.

Fourteen states and the District of Columbia have set up their own online exchanges. They’re faring little better than the federal exchange. Take Vermont. In the Green Mountain State, 4,300 residents created state insurance accounts. But only 700 were able to apply for insurance—and just 115 of these folks were able to enroll. In Maryland just 1,121 of the 25,781 people who created accounts were able to finish their online applications and get enrolled. That’s less than 5 percent. And the exchanges in Vermont and Maryland are among the better-working ones.

Nine of the 14 states and Washington, D.C. won’t release enrollment data. Oregon admits that its system isn’t fully operational. Hawaii’s exchange launched October 1 but couldn’t enroll anyone for two weeks. Idaho’s and New Mexico’s systems were so hopeless that the states had to turn operations over to the troubled federal system.

Meanwhile, a wide range of experts say that ObamaCare’s online systems are lacking in cyber-security measures and thus invite identity theft. The site’s designers appear not to have included ordinary protections against automated attempts by rogue hackers to falsely log into the system. So cyber criminals can potentially see a user’s social security number, where he lives, how much he makes, and so forth. According to the founder of the McAfee cyber-security company, the exchanges have “no safeguards” and their lack of protection is “outrageous.”

Then there’s the possibility of fraud. The Department of Health and Human Services will not verify the self-reported incomes of all applicants—just those of a sample. Consequently, the federal government could end up doling out millions in unmerited subsidies.

The cause of this mess is not a lack of money. The federal government has spent $634 million on its system—more than the combined cost to design and build LinkedIn and Spotify. That’s nearly seven times the original projected cost. The Obama Administration should have seen this debacle coming. A principal designer of the system, CGI Federal, was fired by the provincial government of Ontario in Canada in September 2012 for botching the province’s online medical registry. The contractor had missed three years of deadlines.

But CGI may have had an impossible task. According to the New York Times, the firm did not begin writing code for the exchange website until the spring of 2013—because the government had been so slow to issue specifications.

One month in, it’s clear that ObamaCare’s exchanges were not ready for primetime, even though Health and Human Services Secretary Kathleen Sebelius repeatedly assured the American public that the marketplaces would launch—and work—as planned. These online marketplaces must function properly if the law is to expand coverage as it promises—and if Americans are to be able to comply with its requirement that they obtain insurance. With each passing day, both are looking less likely.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.

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