Twelve days before Minnesota unveiled its $100 million health insurance exchange known as MNsure, a grim meeting was held at Gov. Mark Dayton’s residence in St. Paul.

April Todd-Malmlov, who had led the project, delivered a warning to the governor and his top advisers: No one was certain the new website built to help thousands of uninsured Minnesotans get health coverage would actually work.

The number of computer bugs in the system had recently surged from 237 to 270. And one-third of them were so severe that no stopgap fixes were possible.

The warning was one of many to surface in a hurried rollout that led to frequent website crashes and ongoing errors that have angered thousands of would-be enrollees, a Star Tribune examination of internal project reports, external audits and hundreds of state government e-mails show.

Managers and auditors said for months that the project was falling woefully behind and that critical system tests came too late or had to be curtailed. Among the Star Tribune’s findings:

• Auditors revealed dozens of major problems that were not fixed before the website was launched, state records show, contradicting public statements from MNsure officials that such issues were being handled promptly. Last July, for instance, auditors noted the MNsure website wouldn’t work with some Internet browsers, an issue that lingered through December.

• MNsure didn’t have plans to address website failures, forcing officials to scramble when the system broke down, state records and e-mails show.

• MNsure board members said they were not told about critical audit findings, and were unaware of meetings during which staff members discussed postponing the launch.

• Minnesota officials, who said the federal government’s Oct. 1 deadline to launch the website was “inflexible,” did not know that online enrollment could be postponed without penalty, an option federal officials disclosed in response to Star Tribune inquiries.

Minnesota’s only legal obligation on Oct. 1 was to make sure residents could buy coverage from the insurers who were participating in the exchange, according to the Centers for Medicare and Medicaid Services. That could have been accomplished through paper applications.

“I lament that I didn’t ask the simple question: Do we really have to do all of this by Oct. 1?” said MNsure Board Member Thompson Aderinkomi. “I should have asked.”

MNsure officials acknowledge the rollout has been difficult, but they note the agency has signed up more than 175,000 people as of Friday, well above a conservative projection of 135,000 in mid-October. They also said the agency has aggressively addressed technical problems and boosted staff where needed, including in MNsure’s understaffed call center.

Still, problems with the website continue to bedevil the agency, which will spend the next several months retroactively enrolling thousands who couldn’t get insurance online last week because of delays at the state and federal level.

The messy aftermath of the state health exchange’s troubled start also looms as an election-year issue for Dayton and other DFLers, as critics question why the online exchange was launched with so many unresolved problems.

For months last year, Todd-Malmlov had reassured the governor and MNsure board members that no serious obstacles would impede the launch. Dayton said her blunt alarm about the problems plaguing the site “came as a shock” during the Sept. 19 meeting at his residence.

“We didn’t have a Plan B,” Dayton recalled during a recent interview, adding that he “strongly urged them to fix the problems.”

Dayton said he was reassured in the days that followed that MNsure’s website would be “good enough to go,” but he left the final call to Todd-Malmlov, a health care policy specialist who served as MNsure’s executive director.

Todd-Malmlov, in her first interview since resigning under pressure in December, said the decision to launch was made jointly with Lucinda Jesson, commissioner of the Minnesota Department of Human Services. Todd-Malmlov said she also consulted with the governor’s office and top officials at MN-IT, Minnesota’s technology department.

“It was definitely a shared decision,” Todd-Malmlov said.

Jesson said she regularly consulted with Todd-Malmlov and agreed to go live with online enrollment.

By November, the website was crashing regularly, and frustrated customers overwhelmed the state’s call center, waiting as long as two hours to speak to a representative.

“It was a very complex project and there was never enough time,” Dayton said. “I don’t know of anybody who wasn’t operating with good intentions and trying their utmost to make this as good as possible.”

‘We have a problem’

The first red flag emerged in September 2012, just two months after Minnesota hired four companies to build the online exchange.

In a monthly progress report for Human Services, Assistant Commissioner Scott Leitz reported that “schedule status has turned to red because of the slippage and the very tight deadlines.” Leitz is now interim CEO of MNsure.

Five state agencies were involved in the project, and they weren’t always working together. The contractors also were having trouble coordinating efforts, “putting the project at risk,” according to a December 2012 e-mail from MN-IT Chief Information Officer Tom Baden, who was overseeing the vendors’ work.

“Those items need to be addressed within a week or [Houston], we have a problem,” Baden said in his e-mail, sent to Todd-Malmlov and another state official.

E-mails and internal reports show a lack of coordination among various groups throughout 2013. Program managers openly fretted about not catching major problems quickly enough.

In May 2013, the first outside audit was delivered, revealing MNsure was below standard on most of the 135 tasks under review. Only one category earned a passing grade — project cost. At the same time, federal officials found dozens of problems, concluding the state had “underestimated” the scope of the work.

Despite the warnings, Todd-Malmlov was upbeat about the federal review during a June 26 MNsure meeting. “We have frequent reviews with the feds and are receiving feedback that we are on the right track,” she told the board.

By August, the outside auditor found nearly two dozen issues, including design flaws and software compatibility problems, that would make it impossible for some customers to use the website. Important system tests were “no longer feasible” by Oct. 1, making it likely that the website would go live with undetected defects.

While noting glitches were possible, Todd-Malmlov told MNsure board members in September that “red” status indicators were nothing to worry about.

In a recent interview, Todd-Malmlov maintained that she never misled anybody about MNsure’s problems. “We mitigated the things we needed to mitigate,” Todd-Malmlov said. “I always said things are not going to be perfect.”

Jesson was the only MNsure board member who knew the depth of the problems. “I remember talking to MNsure staff at some point in September and saying, ‘You need to make sure other board members know what I know.’ ”

MNsure Board Chairman Brian Beutner said he didn’t know about the audits until January 2014. He said staff members should have shared them with the board when it assumed control over MNsure in August. Still, he says, he’s not sure whether it would have prompted the board to delay the website.

“Are the warnings in there significant? Yes,” Beutner said. “Would we have made a different decision? That is part of the reason why we are demanding much more information now.”

Other board members said they were surprised that they were never informed about the audits. “That is serious stuff,” said Peter Benner, MNsure’s vice chairman. “We clearly should have been told that.”

Todd-Malmlov said it never occurred to her that the board should see the consultants’ findings. “Are there things I would have done differently? Yeah, there are,” she said, declining to elaborate.

Todd-Malmlov and MNsure Chief Operating Officer Erik Larson said they believe they made the right decision to launch on Oct. 1, emphasizing that many website problems have been repaired.

“As hard as it has been on people in general — consumers, employees — I think it was the right thing,” Larson said. “We’re getting people through. We’re getting them enrolled.”

No fallback position

Reflecting on MNsure’s rocky rollout, Beutner said he is struck by the prevalence of “best-case scenario” planning.

“It required everything to go right,” he said.

But project managers were raising questions about contingency planning more than a year ago. In an e-mail from February 2013, a state IT specialist pointed out the “critical importance” of having someone come up with a backup plan. The issue was deferred.

Other states also failed to consider the worst. In Oregon, state officials were recently criticized in an audit for failing to come up with a “Plan B,” when it was obvious that Oregon’s insurance exchange website was not ready to launch.

Without a website, Oregon had to spend about $4 million to hire 400 temporary workers to process tens of thousands of paper applications. As of mid-March, Oregon was ahead of Minnesota enrollment by more than 28,000 people.

Minnesota officials never seriously considered processing a large number of paper applications, even though the state was supposed to offer that option, according to federal officials. Larson said the idea was dismissed as too expensive, but he acknowledged that the staff never analyzed the costs.

In the early weeks after MNsure’s debut, the agency had so little manpower for paper applications that it had to start rejecting many of them. Eventually, persistent problems with the website forced the agency to accept more than 25,000 paper applications. They had to be processed by Human Services staff.

Jesson said launching without a fallback was a mistake. “By November, that was one of my serious concerns. We had to make sure there were contingency plans that were not dependent on an IT fix.”

‘The ball got dropped’

Since January, MNsure’s website has improved significantly, but its error rate continues to hover around 5 percent. That is down from a high of 22 percent in October, though not much better than the federal exchange website when it was at its worst with a 6 percent error rate.

“The problems were bigger than we thought they were going to be,” said Chuck Johnson, a deputy commissioner at Human Services who was deeply involved in the project. “We had a plan, but we got overwhelmed by the problems that came after Oct. 1. … A lot of it is related to not having enough time for testing.”

Several state officials said they can’t understand why federal officials didn’t emphasize that online enrollment could be delayed back in January 2013, when Minnesota and other state officials were brought to Washington, D.C., and given 70 new requirements for their exchanges.

“We were having to do three years of work in a year and a half,” said Baden with MN-IT.

Having another year, he said, could have made a big difference. “Could we have done much more high quality work? Probably. It’s a tough one to swallow. No one was backing away from 10/1.”

Officials with the federal Centers for Medicare and Medicaid Services (CMS) said the flexibility surrounding the Oct. 1 deadline was not broadly communicated. Local officials could find out about it only if they asked.

“As we did with all states, CMS worked in consultation with MNsure to help them prepare for open enrollment,” CMS said in response to written questions. “CMS provided the state with the flexibility to launch their Marketplace in the way that made the best use of its systems capabilities.”

Aderinkomi said the lack of communication on such an important issue has him rethinking future demands. He said the tough lesson of the MNsure rollout is that following rules is less important than making sure Minnesotans get the services they need.

“Somehow, somewhere, the ball got dropped,” Aderinkomi said. “And it was a pretty big ball.”