Report Finds Hawaii’s Obamacare Exchange Wasted At Least $11 Million

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Posted by Mireille Olivo on Thursday, September 17th, 2015, 4:09 PM PERMALINK

Hawaii’s Obamacare state exchange misused at least $11 million in federal taxpayer funds due to insufficient oversight of a $21.6 million contract, according to a recent report by the State Auditors office. As the report notes, Hawaii’s exchange, known as Hawaii Health Connector failed to select the most qualified vendor for the best price, awarded a flawed, poorly written contract, and failed to monitor the contract:

“We found that instead of taking steps to ensure it [Hawaii Health Connector] selected the most qualified vendor at the best price, the Connector awarded Mansha a multi-million dollar contract based on personal recommendations…The Connector also failed to sufficiently analyze Mansha’s proposed fees to ensure contract amounts were reasonable, as required by federal procurement standards. Furthermore, the Connector executed vague, poorly written contracts with flawed terms and conditions that prevented it from effectively monitoring and evaluating Mansha’s performance.”​

Since 2011, the Obama administration has given almost $5.4 billion in taxpayer funds attempting to plan and create the foundation of state exchanges across the United States. Although Hawaii received $205 million, the system ultimately failed because it was unable to raise enough funds to meet expenses. 

This was not the first time that the State Auditors office raised concerns with the project. An audit released in January reported similar findings. Though Hawaii Health Connector was provided a variety of solutions, nothing had changed, as the report notes:

“During our previous Audit of the Hawai‘i Health Connector (Report No. 15-01), we encountered an area of concern that we were unable to follow up on and which warranted further study. Specifically, we could not determine whether or not fees paid to Mansha Consulting LLC (Mansha) were reasonable because the Hawai‘i Health Connector was unable or unwilling to provide requested information for these contracts, which totaled $21.6 million.”

Since 2010, multiple states including Oregon have misused funds and failed to create a working state exchange program.  According to the House Committee on Oversight and Government Reform, Oregon received over $305 million in federal grant money.  Similar to Hawaii, the state run exchange failed due to the misuse of public funds and oversight of contracts.

By next year Hawaii Health Connector will cease to exist and the state will rely on the federal health system. When the dust settles, it is likely that far more than $11 million will be wasted. But the findings in the report demonstrate the ineptness of state officials. Given their repeated failure to manage an important contract for their exchange, it should come as no surprise that the exchange ultimately failed.

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