- - Tuesday, April 5, 2016

ANALYSIS/OPINION:

Despite spending $5.5 billion in taxpayer funds, the federal government has failed to conduct oversight of Obamacare’s state exchanges.

Many of these billions have gone to states with failed or failing systems, including Oregon, Vermont, Minnesota, Hawaii, Maryland, Massachusetts, Nevada and New Mexico. This failure has led to a new lawsuit calling for the Centers for Medicare and Medicaid Services (CMS) — the agency in charge of overseeing key parts of Obamacare — to conduct mandatory oversight of these exchanges.

The absence of oversight has real consequences for millions of individuals who used one of the exchanges to purchase Obamacare insurance. Users have experienced systems built around defunct or glitch-filled technology, encountered incorrect billing, received improper tax credits, and have been forced to pay the government back as a result of the confusing system. In some cases, users have been told they do not have insurance even after they signed up, while others have not been able to enroll at all.

Oversight of government programs is an important responsibility. The Government Accountability Office (GAO) saved taxpayers $134 for every dollar spent through implementation of recommendations borne of its oversight. In addition, there are 78 inspector general offices across the federal bureaucracy whose job it is to conduct independent analyses of government programs and combat waste, fraud and abuse.

But when it comes to scrutinizing funds spent on state exchange construction, the feds have done nothing. They have even refused to act in the face of congressional hearings under the leadership of Oversight Energy and Commerce Subcommittee Chairman Tim Murphy, Pennsylvania Republican.

In one hearing, Obamacare chief Andy Slavitt was unable to say whether struggling exchanges would collapse, and what contingency plans were in place. When responding to questions over why Maryland was allowed to keep federal funds resulting from a settlement with a vendor, Mr. Slavitt could only say the federal government will “recover its fair portion” of funds from failed state exchanges.

The abdication of responsibility has forced tech company Oracle, a stakeholder in the failed Oregon exchange, to file a lawsuit over the failure to conduct mandatory oversight of failed state exchanges. While this absence of oversight can be seen in many states, the $305 million Cover Oregon exchange stands alone as the poster child for this failure.

The project started as an ambitious venture, with officials hoping to build a “no wrong door approach,” allowing residents to access many or all government programs through one Web portal. The problem was that a project of this magnitude had never been tried before. The state never even bothered to conduct a cost-benefit analysis, but this did not stop federal funds flowing to the project.

In the year before launch, the state’s quality-control contractor rated the overall health of the exchange as “high risk” every single month. Despite these warnings, the federal government awarded the state $226 million in early 2013. By July, documents show officials panicking that deadlines could not possibly be met, but no one stopped a $21 million ad campaign being rolled out. Unsurprisingly, launch date came and went and the system did not work, forcing the state to frantically install dozens of fax lines to allow manual enrollment.

Internal documentation uncovered since has confirmed that control over the exchange was then given to trusted political aides working for Gov. John Kitzhaber, with Cover Oregon officials reduced to an “advisory board.” When the exchange was shuttered several months later, it was believed to be close to 90 percent complete and the decision to move to the federal system was based solely on Mr. Kitzhaber’s re-election prospects.

Shockingly, the state is now considering constructing a second exchange, less than three years after state officials broke the first one. Even now, Oregon has not returned any funds to the federal government, according to a recent GAO report. Clearly, there is little federal interest in holding states accountable, even after they have cost taxpayers billions and much remains unknown.

It shouldn’t take a lawsuit for the administration to do its job and crack down on waste, fraud and abuse. But when it comes to Obamacare state exchanges, the federal government continues to refuse to do its job to ensure that billions were spent responsibly and wasted funds are recovered.

• Alexander Hendrie is federal affairs manager at Americans for Tax Reform.

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