- - Monday, August 10, 2015

When I was in high school, I shared a car with my dad. He took it to work during the day; I drove it to my newspaper job for my shift at night.

It was a terrific arrangement until one night, I tried to leave an unpaved parking lot (don’t even think of asking how) and scraped off the muffler. My friend who was studying to become a welder offered to make me his first patient, but it didn’t work.

So I had to not only tell my dad what happened, I had to ask him to float the cost of the repair until I got paid again.

Decades later, my dad and I can laugh about this story, but only because he was able to step up and pay for the repair, and I did indeed make good on payday.

But they’re not laughing about this on Capitol Hill. At least five states took federal money to build Obamacare state exchanges, then had to close or abandon the exchanges when they failed to work. And now, as some of the contractors responsible for those failures are being forced to make good, the states want some of that money.

Oregon is right now paying $650 per hour to a law firm with connections to former Gov. John Kitzhaber, who resigned in disgrace partially over the state’s health exchange debacle, to pursue a lawsuit against Oracle its own attorneys say it has little chance of winning. Why? Because Oregon thinks it can get some of those dollars should they start to flow.

Maryland failed so badly at its attempt to establish an exchange that Democrat Anthony Brown, who presided over the project as lieutenant governor under now-presidential candidate Martin O’Malley, lost his bid to become governor in a state that is 2:1 Democrat. But now, Maryland has reached an out-of-court settlement with its contractor that will net $125 million, of which the state is set to receive some proceeds.

This is nuts. It’s as if I demanded my dad pay some percentage of the muffler repair bill to me to do with as I please as a reward for messing up the car in the first place.

The federal government paid out the money — $193 million in the case of Maryland, more than $300 million in the case of Oregon — and every penny that flows back from failed contractors should go to the federal government. And this should be made abundantly clear as quickly as possible so Oregon and others thinking similarly will stop pursuing frivolous lawsuits just for a piece of the settlement pie.

There is no settlement pie to divvy up. The federal government made all the investments; the federal government — the taxpayers in the 36 states that wisely chose not to establish their own exchanges — should receive all proceeds.

Congress sees the same con taking shape. Earlier this month, Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee, along with fellow Republican Sens. Charles Grassley of Iowa and John Barrasso of Wyoming, sent a letter to Andrew Slavitt, the new head of the Centers for Medicare and Medicaid Services, demanding information on what is happening with the settlement dollars.

The senators noted the administration’s policies have not been consistent. Mr. Slavitt’s predecessor had indicated recovering the funds was a state matter; but Sylvia Matthews Burwell, secretary of health and human services, had assured Congress it was a federal matter, only to have Mr. Slavitt indicate states could keep at least some of the money.

They have demanded Mr. Slavitt clarify his position and ensure the federal government receives all recovered funds.

“The failure of these [state-based exchanges] to use federal grant money efficiently and effectively has led to the waste of more than $1 billion in taxpayer dollars,” the senators wrote. “These wasted dollars originally flowed from the federal treasury, which is where they should return when they are recouped from contractors.”

This is a no-brainer. Nowhere in the Affordable Care Act does it even give the person in Mr. Slavitt’s position the legal authority to determine where the settlement money should go. Instead of looking to reward states for their failure to establish exchanges, Mr. Slavitt should work to address the other questions the senators posed in their letter: Will the federal government work to recover the funds for the failed exchanges? If so, will it give any to the states? Was what the states did after their exchanges failed the most effective approach? How much more will it cost federal taxpayers to fix all these failed exchanges?

Whatever it costs, let this be a lesson to all of us in why government bureaucracies should not be put in charge of important things such as health insurance. Let it further be a lesson that when you break something, you don’t get to keep the money to repair it.

If we truly want to be effective, let it further be made clear to Mr. Slavitt that any attempt by him or the Centers for Medicare and Medicaid Services to redirect settlement funds to the states will be met with the fiercest of resistance.

Brian McNicoll is a conservative columnist and freelance writer based in Alexandria, Va. He is a former senior writer for the Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.

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