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Federal Government Spending Billions on Faulty State Exchanges

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Posted by Michael Smith on Wednesday, March 12th, 2014, 3:08 PM PERMALINK


In November, a month after the disastrous rollout of Obamacare, ATR’s Alyssa Canobbio reported that the Obama Administration Spent $4.5 Billion on State Healthcare Websites. Of the states collecting federal grant money to help build, run, and maintain state exchange websites, five states are responsible for spending at least $1 billion of the total $4.5 billion federal taxpayer dollars. Although the five states received disproportionate federal funding to ensure sites were running properly and on time, their state exchange websites epitomize the shortcomings of the online market place under the Affordable Care Act.  Here is a quick rundown of how each state got themselves into this predicament and where they are now: 

Oregon: Total Federal Grants: $305,206,587

Although Cover Oregon was touted as one of the White House’s favorite health exchanges, reality quickly set in when enrollees were devastatingly low. Now Oregon is forced to consider scrapping the entire website. More troubling is the fact members of Congress have called for a federal investigation into how Cover Oregon managed to spend $305 million on a broken exchange.

Vermont: Total Federal Grants: $208,232,414 

The independently operated Vermont Health Connect used CGI, the former lead contractor for HealthCare.gov, and faced a myriad of issues just like their federal counterpart. The state exchange was not functioning on October 1 and problems with small business insurance options have persisted and remain unfixed today. Like Oregon, Vermont lawmakers are also requesting a federal investigation into the much maligned state-run website.

Hawaii: Total Federal Grants: $205,342,270

Hawaii received gracious federal funding to create an online health exchange, and the state also shelled out an additional $120 million into the Hawaii Health Connector. Problem is, Hawaii has the lowest number of enrollees of all the states, only 4,300.  The low number is less alarming when considering the smaller population, but when federal and state contributions are added together, each enrollee has cost taxpayers roughly $75,500.

Massachusetts: Total Federal Grants: $179,036,455

The Massachusetts online exchange, called the Connector, is labeled  as “America’s Worst-Performing ObamaCare Exchange” by Forbes. According to Forbes, the website has encountered numerous problems of users trying to enroll, and has only enrolled 5,428 people, a mere .02% of the first-year goal. Massachusetts will continue to work with CGI, but has paid technology firm Optum another $10 million to help fix the site.

Maryland: Total Federal Grants: $171,013,111

Leading up to the launch of Maryland’s online exchange, it would have been wise for state officials to listen to warnings about the ill-fated website. Instead, the website launched as scheduled and subsequently has encountered continued technical problems. Earlier this week it was announced that the Maryland Health Benefit Exchange voted to terminate the $193 million contract with its IT contractor, Noridian Healthcare Solutions.

These five exchanges prove that throwing billions of dollars towards the development of online exchanges is pointless if the whole underlying framework is flawed. Taxpayers have funded the underperforming and dysfunctional state exchanges and will continue to suffer unless key issues, both technical and legislative, are properly addressed. 

 

 Photo credit: Shane T. McCoy

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