Could the failed Obamacare exchanges have been merely an excuse to direct payola to safely Democratic states? Based on a new report from the Government Accountability Office, and the actions of acting head of the Center for Medicare and Medicaid Studies (CMS) Andrew Slavitt, the answer may well be yes.
Let’s start with the report. Americans for Tax Reform summarized its findings:
In all likelihood, officials were aware of the issues facing these states before exchanges launched. According to GAO, CMS conducted reviews on 15 state-based exchanges in August and September of 2013. […]
Even though these tests found multiple issues related to the functionality of state exchanges, CMS passed all states. GAO’s report notes several examples where CMS found a state to have severe operational deficiencies ahead of launch, yet officials ultimately ignored these findings. GAO found documentation revealing that officials were aware that Maryland’s exchange had 100 “outstanding high-priority defects” and almost 500 defects in total, while Massachusetts had reported 1,170 defects.
As the report concludes, these problems were so severe in four states (Massachusetts, Maryland, Nevada, and Oregon) that these exchanges had to rely on alternative ways to enroll customers during the first enrollment season.[…]
While several exchanges have already defaulted back to the federal system, and many others have been characterized by severe operational problems and inept management, GAO reports that just over $1 million of the $4.5 billion of taxpayer money [spent on exchange grants] has been returned to the federal government.
Got that? The Federal government spent $4.5 billion on grants to states building their exchange programs. And despite some states demonstrably failing to use that money, like Maryland ($125 million price tag) and Oregon (over $300 million price tag), the Federal government has only managed to recover $1 million of it.
Under any other circumstances, it would be easy to chalk this up to traditional Obama-administration style incompetence. However, to do so would be to miss the details of how the Obama administration has conducted recouping its funds. As David Catron at The American Spectator reports:
When Maryland’s Attorney General announced last summer that his office had negotiated a settlement whereby $45 million would be recouped from the IT contractor that botched the state’s Obamacare exchange, it was widely reported as good news for taxpayers. It appeared that their investment in the mismanaged project would not be a dead loss. But the AG’s statement included this curious passage: “The agreement… will lead to the recovery of funds for both Maryland and the federal Centers for Medicare and Medicaid Services [CMS].” What’s so odd about that? Well, the state didn’t contribute any money to the project.[…]
There is, of course, no legitimate argument that Slavitt could make that would justify giving recouped federal grants to any state.
Combine this with the news earlier this year that Maryland not only failed to set up its exchange, but actually overcharged the government for what an exchange would cost, and the fact that the most spectacularly failed exchanges were in Massachusetts, Oregon, Nevada, and Maryland (all relatively blue states), and a very ugly picture starts to form.
One can’t know without further investigation from the House Oversight Committee (which is currently looking into the Oregon debacle), but given the scale of corruption in that state alone, something like the following may have happened: Obama administration officials, knowing that Democrats’ backs were up against the wall over the failure of Obamacare even in blue states like Oregon and Maryland, may well have allowed money to be sent to those states under the guise of grants for the exchanges, when really, they were only intended as easy money for the states’ embattled Democrat-led governments. Nevada is an exception to this last point, but given that it’s the home of former Sen. Majority Leader Harry Reid and had its governorship up for grabs in 2014, the logic still would’ve held.
Ironically, if this blatant payola laundering scheme did happen, it clearly didn’t help, seeing as Maryland and Massachusetts recently gained Republican governors, Nevada has retained Brian Sandoval, also a Republican, and John Kitzhaber of Oregon has been forced to resign. Nevertheless, the question remains whether pure incompetence of political malfeasance are at the root of the federal government’s apparent inability to recoup its own investments in failed Obamacare exchange schemes.
And one way or another, it’s time that Congress did something to answer that question.