Rep. Tim Murphy Leads Charge Investigating $5.5 Billion in Obamacare Waste

by Alexander Hendrie, Americans for Tax Reform, September 29, 2015

Earlier today, Chairman Tim Murphy (R-Pa.) and the House Energy and Commerce Oversight Subcommittee held a hearing examining Obamacare state exchanges. An investigation into this issue is long overdue, and Chairman Murphy and the Oversight Subcommittee should be applauded for their leadership on this issue.

According to GAO, $5.51 billion in federal funds have been spent on the planning and construction of these exchanges, yet very little oversight has been conducted over the use of these funds. Unsurprisingly, it appears that a large percentage of these funds were wasted. In addition, exchanges across the country have encountered numerous operational difficulties since launch including poor user functionality and lack of scale.

Witnesses from six states - California, Connecticut, Hawaii, Massachusetts, Minnesota, and Oregon – attended the hearing. Combined, these states received over $2 billion in funds.

Illustrating the near-limitless freedom that states received and the absence of federal oversight, only one of the six witnesses could say how much was spent on construction per enrollee. That state, Hawaii spent close to $50,000 according to the witness.

Even though this hearing is a good first step, questions remain regarding the federal government's oversight over state exchanges, particularly now that many exchanges are beginning to encounter fatal operational problems and may soon abandon ship to join the federal exchange.

Chairman Murphy best summed up the situation when he concluded “it was not rainbows and unicorns. It was a mess.”

As has been well documented, many of the exchanges that were called to testify have mismanaged the hundreds of millions of dollars they received:

• Oregon received $305 million in grants but could not produce a workable website months after launch forcing customers to fax a 20 page document to enroll. Since then, the state has come under investigation over allegations the exchange was run by the Governor’s reelection campaign and decisions were made based on political calculations.

• Massachusetts was required to upgrade their working exchange due to new Obamacare regulations. But $233 million later, the state broke its system, displacing 300,000 individuals on Medicaid and leaving the state with over $1 billion in costs.

• California was awarded $1.1 billion in grants, but now faces an $80 million budget deficit for fiscal year 2015-2016. Despite often being referenced as a “successful” exchange, the system has been plagued with enrollment and tax-related errors. In some cases, this has prevented consumers from receiving healthcare for months.

• Hawaii received $205 million and constructed a workable exchange only for state officials to realize they had no way to pay for day-to-day costs. The exchange is now transitioning to the federal system.

​Watch the full hearing below:

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HMSA 50% Obamacare Rate hike is #1 in USA

Star-Adv: Kissel testified that nearly 40,000 Hawaii residents have enrolled in Obamacare,but the insurer needed 70,000 to generate the $12 million a year it required to be self-sufficient.

Gov. David Ige announced in May the administration would shut down Hawaii’s exchange, shift operations to the state and rely on the federal healthcare.gov website to re-enroll existing members for 2016. He acknowledged at the time that Hawaii was out of compliance with the ACA because of its low enrollment and at risk of losing $1 billion in Medicaid funds if the situation wasn’t remedied.

The Connector has committed or spent roughly $140 million of $205 million in federal grants awarded to establish the exchange, which has struggled since its launch in October 2013 to meet enrollment targets, provide satisfactory service and raise enough money to be self-sustaining.

In his testimony, Kissel said a “lack of planning, unclear business processes and utterly inadequate program management” were to blame for “both excessive spending and delays in delivering these important services to the people who needed them most in our state.” ...

Among the successes of the ACA, Kissel said, Hawaii has made significant progress in reducing its uninsured population, which is down to 3 percent from 10 percent prior to Obamacare.

But that has come at a cost. The Hawaii Medical Service Association, the state’s largest health insurer, is boosting premiums by nearly 50 percent for members who purchased coverage on the exchange.  HMSA’s proposed monthly premiums for individuals who purchased coverage through the Connector will rise to an average $413.81.

That’s the highest rate increase among the states, Kissel said.

“When the Affordable Care Act policies were introduced, the insurance companies experienced a lot of negative selection,” he told the committee. “The sickest people enrolled first.”

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