How Much Has Been Wasted on Obamacare Insurance Exchanges?

Yesterday, the Oversight and Investigations Subcommittee of the House Energy & Commerce Committee held a hearing on the implementation of state health insurance exchanges under Obamacare. This is an issue of great importance to taxpayers, as the federal government provided over $5.5 billion to states to establish these systems and the result has been mostly an unmitigated disaster. While some Obamacare defenders would love to sweep this issue under the rug, Congress must provide appropriate oversight to figure out how and why federal dollars were misspent and wasted.

Already, Oregon, which received approximately $305 million to establish its exchange, has pulled the plug and opted to use the federal system. Hawaii, which received $205 million, might soon follow suit. Other states are facing similar struggles, as described in the Committee’s background memo, which provides some disturbing detail.

For instance, as the memo notes, “California received over $1 billion in Federal grant dollars to establish its exchange, Covered California. California’s exchange suffered from early call center and website failures.  At one point, more than half of all callers could not get through and abandoned their calls.”

Massachusetts, which had its own functioning (though hardly ideal) state insurance exchange long before the passage of Obamacare, was given roughly $234 million by the federal government to make their system compliant with the federal law. As the Committee’s memo describes, the system update was an absolute mess:

The site had problems determining whether applicants were eligible for Federal subsidies. Tens of thousands of applications had to be processed by hand. Due to exchange’s inability to complete eligibility determinations and fully process applications, CMS granted Massachusetts use of Federal Medicaid funds for approximately 100,000 to 200,000 individuals who have applied for coverage, but whose final coverage had not been adjudicated in the Medicaid program. In fact, almost 300,000 temporarily were placed in Massachusetts’ Medicaid program, regardless of income. The Massachusetts Health Connector’s struggles contributed to the State’s health care costs spiking 4.8 percent in 2014, doubling the rate of growth from 2013. Thousands of State exchange customers also will face higher premiums, co-pays, and deductibles next year.

These are but a few examples. It’s possible that hundreds of millions or even billions of taxpayer dollars were wasted or misspent. The Subcommittee’s hearing is an important first step to fully understanding what went wrong. A great deal of additional work needs to be done to ensure that those who acted wrongly are held responsible and, to the greatest extent possible, taxpayer money is recovered and returned.