The WasteWatcher: The Staff Blog of Citizens Against Government Waste

A Very Good Beginning

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing today.  The title of the hearing said it all, “An Overdue Checkup: Examining the ACA’s State Insurance Marketplaces."  Citizens Against Government Waste (CAGW) hopes it will be the first hearing of many, not only in the House of Representatives, but in the Senate, as well.  Taxpayers need to know how their tax dollars were utilized in creating ObamaCare exchanges in the states.

Most people already know about the problems with Healthcare.gov, the federally-facilitated exchange that cost more than $2 billion to create and is still not functioning completely.  According to reports, the “back end” of the website, the part that communicates and transfers information to insurance companies, was still not finished early this year and questions remain whether it will be ready for open season this November.  This hearing's goal was to focus on the numerous and costly problems with the state-based exchanges.

The hearing was kicked off by Chairman Tim Murphy (R-PA).  He said, “The Centers for Medicare and Medicaid Services has awarded $5.51 billion to the states to help them establish their exchanges.  In fact, the states represented on our panel today – California, Connecticut, Hawaii, Massachusetts, Minnesota, and Oregon – were awarded over $2 billion of federal grant dollars.  Notably, Oregon has already pulled the plug on its state exchange and Hawaii is in the process of doing so. The faucet of establishment grant money finally turned off at the end of 2014, when the states’ exchanges were supposed to be self-sustaining. Despite this enormous taxpayer investment, state exchanges are still struggling.”

Witnesses included:

  • Patrick Allen, Director Oregon Department of Consumer and Business Services. Testimony
  • Louis Gutierrez, Executive Director Massachusetts Health Connector. Testimony
  • Jeff Kissle, Chief Executive Officer, Hawai’I Health Connector. Testimony
  • Peter V. Lee, Executive Director, Covered California. Testimony
  • Allison O’Toole, Interim Chief Executive Officer, Minnesota Health Insurance Exchange. Testimony
  • James Wadleigh, Chief Executive Office, Access Health CT. Testimony

Chairman Murphy remarked when he began his questioning that while the witnesses’ testimonies spoke of “rainbows and unicorns,” that the purpose of the hearing was to talk about the severe problems the state websites had, continue to have, and what states are doing to fix them.  He reminded the witnesses that constructing the websites cost taxpayers billions of dollars and for most states, the websites either failed catastrophically or are struggling to survive.

The Democrats’ questions focused around trying to make ObamaCare look good.  They remarked on how the number of uninsured had dropped.  Of course, they did not focus on the fact that Medicaid expansion had a lot to do with dropping the number.  Medicaid is a terrible health insurance program that has gone far beyond its original intent of providing health services to children, poor seniors, and the disabled when it was created in 1965.  Now it also provides sub-quality care to healthy and fit adults.  Health insurance expert Robert Laszewski has also pointed out that the biggest drop in the uninsured came from people getting access to insurance through their employer due to a modest recovery in the economy and not because of the employer mandate.  That mandate has been delayed a couple of years.

The Republicans’ questions focused on the purpose of the hearing: trying to discover how the billions of dollars that were provided in grants were utilized and where the state exchanges stand currently.

In particular, Rep. Greg Walden (R-Ore.) focused on how his state’s website, which received more than $300 million in grants from federal taxpayers, never signed up one person for health insurance, and according to news reports, was shut down more likely due to re-election politics than technical reasons.  Walden stated that more than 90 percent of the website was functioning before it was officially closed, which raises even more questions about how tax dollars were wasted.  CAGW discussed Oregon’s problems in an April op-ed in The Hill.

Rep. Chris Collins (R-NY), discussed how his state’s exchange was investigated by the Department of Health and Human Services Office of the Inspector General (HHS/OIG) during the open enrollment period between October 1, 2013 and March 30 2014.  The IG limited their investigation to the exchanges’ internal controls that verified applicants’ identities, eligibility for insurance affordability programs, and maintaining and updating eligibility.  The IG report found that of the randomly sampled applicants reviewed (45 out of 379,932), there were problems with 28 of the applicants, or 62 percent.  Collins asked the witnesses if they had been audited.  California’s and Connecticut’s witnesses admitted they had been and the others were not sure but all stated they took compliance and eligibility seriously.

We shall soon know if they are right.  According to the Wall Street Journal, the Inspector General is focusing audits on “more than a dozen state exchanges, with New York’s the first to be released.  Other exchanges being audited include those in Colorado, Kentucky, Minnesota, Vermont, Washington state and the District of Columbia.”

The hearing was a good beginning in investigating failed state exchanges, where and how the grant money was utilized, and aptly demonstrated there are far more questions to be asked and discoveries to be made.

You can watch the hearing here.

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