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CATHERINE RICHERT: Leaders of the state's troubled health insurance marketplace unveil a new long-term plan for MNsure in the coming weeks. Agency officials say the $100 million website is performing better now, but MNsure has had serious long running technical problems that have made it difficult, if not impossible, for many people to use.

Minnesota Public Radio News has interviewed some of the key players and reviewed numerous state documents to determine how MNsure went so wrong. The picture that emerges reveals crucial delays, ill-equipped management, and a lack of oversight. Elizabeth Stawicki has our report.

ELIZABETH STAWICKI: Tom Baden remembers the time and place the fear hit. The state's IT leader and the MNsure project was meeting with representatives from three vendors in his office.

It was the end of July and there were only about two months left before MNsure had to go live, and they were still waiting for one more piece of software to be delivered.

TOM BADEN: And it being so close to October 1 and looking at our ability to get it in, get it installed, test it, and go live 10-1. If there was a moment where I didn't sleep a wink that night, that was my night.

ELIZABETH STAWICKI: The Obama administration sold state insurance exchanges, like MNsure, as simple and easy to use, like booking a hotel or plane ticket, the president said.

On October 1, MNsure's executive director, April Todd-Malmlov, tapped a series of keystrokes to launch the site, but many consumers couldn't create accounts. The site would throw them off or lock up.

And it wasn't just consumers who were running into problems, Becky Fink, Executive Director of Nucleus Clinic in Coon Rapids who had undergone specialized MNsure training to help others connect, also couldn't get through.

BECKY FINK: It never worked for me. I tried, I tried many, many times, many times. There was always a barrier.

ELIZABETH STAWICKI: Because she was listed as a so-called navigator, Fink started getting calls from people who weren't patients at the clinic she ran. So she set up a day for five of them to come to her clinic so she could sign them up one at a time. After trying for about 12 hours, she was able to get coverage for only one of them. She had no luck with the other four.

BECKY FINK: It was hard to know that I had done my best and gone through the training and always read what I was supposed to read and not be very competent. The people that I had said come in, I'm a navigator, I can help you do this. And then we would sit together and I couldn't get past the first page.

ELIZABETH STAWICKI: Fink's experience was common. Eventually, the Dayton administration revealed 2,600 insurance applications had disappeared in MNsure.

But the extent of MNsure's problems was hidden from the public for months. Three weeks into the website's bumpy rollout, the agency's executive director April Todd-Malmlov declared all was well.

APRIL TODD-MALMLOV: At this stage, I think the website is doing a very good job. Does that mean that it has everything in it that we ultimately want it to have? No. Our goal is to continuously improve it over time.

ELIZABETH STAWICKI: But behind the scenes, an independent review found Todd-Malmlov and other MNsure leaders were in crisis mode. The site was buckling technologically under the massive onslaught of traffic, and it only seemed to get worse.

Consumers flooded the call center, which wasn't designed to serve as an IT help desk, as well as answer insurance questions. Hour long waits were the norm. Even though the site had been tested in some respects, it hadn't been tested on the people who would use it before it went live, actual consumers.

MICHAEL KRIGSMAN: That's so screwed up. You can quote me on that.

ELIZABETH STAWICKI: Michael Krigsman is a consultant who specializes in diagnosing and preventing IT project failures. He says testing is key.

MICHAEL KRIGSMAN: This is one of these things that's so foundational. It's like, why do we need to breathe the air?

ELIZABETH STAWICKI: By mid-December, mounting problems with the website's underlying software prompted Governor Mark Dayton to blast IBM for a product with significant defects. A few days later, MNsure's executive director Todd-Malmlov resigned.

MNsure leaders blamed tight timelines and evolving federal requirements for MNsure's problems, but internal MNsure documents and interviews with insurance company officials, county workers, and other stakeholders reveal a more complicated picture.

MNsure's story began nearly four years ago when the Affordable Care Act took effect. But Minnesota didn't get started on developing an exchange until some nine months later when DFLer Mark Dayton replaced Republican Tim Pawlenty in the governor's office.

By the spring of 2012, two years after the ACA's passage, the state still lacked a contractor to build MNsure. The state had abandoned one strategy for building the site because it was too expensive.

Two companies remained as options, Maximus and Deloitte. But the state also wanted IBM Curam, which had experience in government health care programs to build a critical component of the exchange.

Deloitte didn't want to be responsible for Curam's work and insisted there be a separate contract between the state and Curam. General counsel Michael Turpin says, he doesn't know why Deloitte balked, but--

MICHAEL TURPIN: They certainly said that they felt that there was a level of risk that they weren't willing to accept.

ELIZABETH STAWICKI: Curam's software prompted Dayton's scathing letter to IBM. Meanwhile, Deloitte came in $20 million over budget. So the contract went to Maximus in July of 2012. At that point, Turpin says the contract negotiations cost time.

MICHAEL TURPIN: Every week, every month that extended where we were in negotiations meant that we were not doing work on the ground to actually build the technology.

ELIZABETH STAWICKI: When the contracts were signed, there was less than a year and a half to build MNsure systems and make sure they worked. Not enough time in the eyes of many, including the state's IT expert on the project, Tom Baden.

TOM BADEN: I've been around projects for 30 years and this project was at such an accelerated pace that the thing that you give up against time is you give up that time to test.

ELIZABETH STAWICKI: Not only was the timeline tight, Minnesota had one of the nation's most ambitious plans, requiring the site to evaluate an applicant's eligibility for three different kinds of coverage.

In early 2013, the Feds issued a set of 70 operational requirements that had to be completed by July. IT chief Tom Baden says that forced a major change. Maximus had been focused on developing MNsure's business processes, which he says was important, but--

TOM BADEN: What it wasn't allowing us to accomplish was the development of the system, and we had at that point the focus like a laser to get the system built.

ELIZABETH STAWICKI: Baden says his team put in a heroic effort. But within weeks of the go-live date, internal documents show the project was in trouble.

MNsure had commissioned independent progress reports. The first last spring rated 5 out of 9 quality assurance tasks as unsatisfactory. Six months later, four of those quality assurance tasks were still unsatisfactory.

MICHAEL KRIGSMAN: These are extremely basic. So what they're saying is that the quality assurance is really screwed up.

ELIZABETH STAWICKI: Again, consultant Michael Krigsman, he says the project reports have a clear theme.

MICHAEL KRIGSMAN: What you see is that there are lots and lots of problems related to how the project is being managed.

ELIZABETH STAWICKI: MNsure has spent nearly $400,000 on those progress reports, but Brian Beutner, MNsure's board chair, was only vaguely familiar with them at the end of last month. Beutner says he also didn't know of the problems detailed in the reports.

BRIAN BEUTNER: Why did I not know that management was a concern? I'm not seeing the reports. It's not being brought up. And part of that is you rely on management to make the judgment call.

ELIZABETH STAWICKI: Beutner says he and the board were comfortable with Todd-Malmlov only delivering reports orally before the board. But he also says she was known for being correct, but not necessarily clear. Todd-Malmlov has not responded to interview requests for this report.

Last week board members, such as Phil Norgaard, started openly questioning the quality of information management was providing them.

PHIL NORGAARD: What members got were assurances, well-scripted assurances that it was all going to be magnificent and marvelous. We were just ready to fly this thing because it was going to be so fantastic.

ELIZABETH STAWICKI: Despite a continuing chorus of complaints from unhappy MNsure users, the depth of the site's technical problems remained hidden until January. That's when the Dayton administration released the governor's letter to IBM. He said the product had significant defects that seriously harmed Minnesota consumers.

IT leader Tom Baden says there were dozens of problems with Curam's product as early as May and that an IBM senior vice president came into the state on a regular basis from that time on.

TOM BADEN: I kind of call him the famous list of 55. We had 55 issues with Curam.

ELIZABETH STAWICKI: Baden says that wasn't out of the ordinary for such a large project. But the end-to-end review of MNsure done last month indicates the volume of problems had only increased.

Consulting firm Optum found Curam had 108 defects, more than double any other MNsure vendor. Instead of alerting consumers about the problems, MNsure kept running Paul Bunyan ads, encouraging people to enroll.

SPEAKER 1: Minnesota land of 10,000 reasons to get health insurance.

SPEAKER 2: Hey, little hope.

SPEAKER 1: Welcome to MNsure.

ELIZABETH STAWICKI: Getting enough people to sign up for insurance is crucial for MNsure, not only for its mission, but because the agency's funding will eventually be tied to the amount of money consumers pay in premiums. MNsure's board chairman Brian Beutner now regrets the agency wasn't more forthcoming about the system.

BRIAN BEUTNER: If I could point to one of the largest failures of MNsure, it's been a communication failure. It's been managing the expectations of what was actually being built, when it was going to be delivered, and what was that functionality.

ELIZABETH STAWICKI: People outside MNsure emphasize other problems that contributed to the site's struggles. Medica's Dannette Coleman served on the governor's initial Health Exchange Task Force. She says one of the problems with the MNsure project is that it was largely directed by people with expertise in health policy, not IT.

DANNETTE COLEMAN: When you look at the leadership of MNsure, their background was all around health policy, incredibly dedicated and committed people who really believed strongly in the work, but they didn't really have the background to understand what it was that it was going to take to get this project done on time, on budget.

ELIZABETH STAWICKI: Julie Brunner with the Minnesota Council of Health Plans agrees. She says the trade group was worried about whether MNsure would be able to transmit customer data to the insurers issuing policies.

JULIE BRUNNER: And we also talked about the need to build a contingency plan for a lot of these different functions so that in the event the testing didn't go well or in the event that when the website was activated we ran into problems, we wanted to have our fallback plans already.

ELIZABETH STAWICKI: Despite all the warning signs, it's unclear whether anyone sounded the alarm and suggested delaying MNsure's October 1 go-live date. Board chairman Brian Beutner doesn't remember anyone raising the idea of delay.

BRIAN BEUTNER: I don't think it happened because the federal government didn't give that as an option. It was very clear from everybody involved that October 1 was a drop dead date. You were going to be up and running.

ELIZABETH STAWICKI: Meanwhile, the MNsure site limped along and sucked up thousands of staff hours fixing problems and developing workarounds. On New Year's Eve, the last day to sign up for coverage that would take effect the next day, Becky Fink called in the four people she'd tried and failed to enroll through the MNsure website.

BECKY FINK: I just felt it was wrong to leave these folks hanging and I kept saying, well, I keep going into the website and it wasn't working.

ELIZABETH STAWICKI: So she gave up on the website and told them to come into her office.

BECKY FINK: And they all came in. I gave them all coffee. And we made copies of the paper applications, and we got them all done and we faxed them in.

ELIZABETH STAWICKI: Faxing paper on New Year's Eve, not the intended outcome. You can see the disappointment in Tom Baden's eyes.

TOM BADEN: It certainly was not a problem of commitment. I watched people work themselves to the bone over weekends, holidays, literally put their lives on hold for those, and I admire them for that effort. But in the end, I look at it and go maybe the time was just not enough.

ELIZABETH STAWICKI: Even critics of MNsure acknowledged the project was a massive undertaking on a tight timeline, but it will likely fall to the Office of Legislative Auditor to judge whether the time was adequate and well-spent.

Last month auditor Jim Noble said 2014 will be the year of MNsure for his office in terms of oversight and accountability. With reporting from Catherine Richert, Elizabeth Stawicki, Minnesota Public Radio News.