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Current Events & Hot Topics Current Events & Hot Topics

$474M for 4 failed Obamacare exchanges

Posted by on May. 11, 2014 at 5:13 PM
  • 1 Replies

Nearly half a billion dollars in federal money has been spent developing four state Obamacare exchanges that are now in shambles — and the final price tag for salvaging them may go sharply higher.

Each of the states — Massachusetts, Oregon, Nevada and Maryland — embraced Obamacare, and each underperformed. All have come under scathing criticism and now face months of uncertainty as they rush to rebuild their systems or transition to the federal exchange.

The federal government is caught between writing still more exorbitant checks to give them a second chance at creating viable exchanges of their own or, for a lesser although not inexpensive sum, adding still more states to HealthCare.gov. The federal system is already serving 36 states, far more than originally anticipated.

(Also on POLITICO: Massachusetts ditches RomneyCare health exchange)

As for the contractors involved, which have borne most of the blame for the exchange debacles, a few continue to insist that fixes are possible. Others are braced for possible legal action or waiting to hear if now-tainted contracts will be terminated.

The $474 million spent by these four states includes the cost that officials have publicly detailed to date. It climbs further if states like Minnesota and Hawaii, which have suffered similarly dysfunctional exchanges, are added.

Their totals are just a fraction of the $4.698 billion that the nonpartisan Kaiser Family Foundation calculates the federal government has approved for states since 2011 to help them determine whether to create their own exchanges and to assist in doing so. Still, the amount of money that now appears wasted is prompting calls for far greater accountability.

(CARTOONS: Matt Wuerker on Obamacare)

Where has that funding left the four most troubled states?

Nevada, for one, is still trying to figure out its future. Oregon has decided to switch to HealthCare.gov. Maryland wants to fix its own exchange, maybe by incorporating what worked in Connecticut. Massachusetts actually wants to do both — build a portal from scratch while planning a move to the federal exchange as a backup.

Massachusetts’ dual-track approach could require more than $120 million on top of the $170 million it already has been awarded. That cost is nearly twice as much as if the state were to simply bail on its Connector, but officials seem to be banking in part on the Obama administration’s greater interest in helping the Massachusetts exchange — the once-pioneering model for Obamacare — survive.

Josh Archambault, a senior fellow with the right-leaning Foundation for Government Accountability, argued that the state’s efforts to salvage its exchange are just a face-saving exercise.

(Also on POLITICO: Full health care policy coverage)

“Instead of a quixotic sprint to rebuild the whole site in five months, state officials should instead pivot quickly to utilize the federal exchange, saving taxpayers tens of millions of dollars in the process,” he said.

State officials have warned that most of what is left of their initial federal award may be needed to end their contract with CGI, the vendor that built the Connector. They acknowledged Thursday they have no guarantees of additional federal funding.

“You have two choices,” Rep. Stephen Lynch (D-Mass.) said last week. “One is to expend even greater amounts of money on something that had limited success thus far or going to the federal exchange. … There’s simplicity in that, and I think that may be where some within the commonwealth would like to go.”



Read more: http://www.politico.com/story/2014/05/obamacare-cost-failed-exchanges-106535.html#ixzz31RZvNEhi

by on May. 11, 2014 at 5:13 PM
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jcrew6
by Platinum Member on May. 11, 2014 at 5:14 PM

Plus...

Insurance CEO: Shut down Hawaii health exchange

Insurance CEO: Shut down Hawaii health exchange, act now to get waiver from federal government

Associated Press 

HONOLULU (AP) -- The chief executive of Hawaii's largest health insurance company is calling on Hawaii to shut down its beleaguered health insurance exchange, which was set up as part of President Barack Obama's signature health care law.

Michael Gold, president and CEO of Hawaii Medical Services Association, says the state shouldn't keep spending money on the Hawaii Health Connector, a system that he says is financially unsustainable and does not work.

"I think there's an alternative that Hawaii needs to pursue immediately," Gold said in an interview with The Associated Press.

Hawaii should ask the federal government for an exception to the part of the Affordable Care Act that requires states to set up and run their own insurance exchanges, Gold said. He thinks businesses should buy approved plans directly from insurance companies, as they have done in the past. Individuals would do the same, or the federal government could take over that part of the exchange, he said.

Lawmakers on Friday were outraged at Gold's assertion that the state hasn't already pursued flexibility from federal requirements. Rep. Angus McKelvey of West Maui said they sought waivers from the federal government and were told they had to wait until 2017.

"We tried. We aggressively pursued that," McKelvey said. "The federal government says there's only one route to go."

The state already is pursuing ways to streamline the exchange by removing it as the middle-man between employers and insurers, and seeking waivers from the federal government, said Beth Giesting, health care transformation coordinator for Gov. Neil Abercrombie.

"It is a simplified role for the Connector, rather than no role for the Connector," Giesting said.

The Legislature also passed a bill setting up a task force to pursue the waiver.

The rollout of Hawaii's health exchange was delayed and plagued with technical problems. The Connector was awarded more than $200 million in federal funds. It has used about $100 million. It signed up 9,217 individuals, plus 628 employees and dependents. To date, the Connector has raised only $40,350 in user fees, according to Nathan Hokama, the exchange's spokesman.

Sherry Menor-McNamara, chairwoman of the Hawaii Health Connector, said lawmakers and exchange officials have been talking about making the exchange more responsive and efficient.

The exchange has to make deep cuts and renegotiate contracts to survive, Tom Matsuda, interim director of the Hawaii Health Connector, has said. Lawmakers sent a bill approving $1.5 million in state support — far less than what the exchange asked for — to Gov. Neil Abercrombie.

Gold said trying to sustain the exchange is the wrong approach because it would cost the public too much, either through fees on insurance companies or taxes.

"The real question is how do you, in a sense, get out from under the Connector, and use the assets that Hawaii has already to get to the aims of the Affordable Care Act?" Gold said.

Hawaii already had a relatively low number of uninsured people because of its Prepaid Health Care Act, which requires employers to provide subsidized insurance to workers. Because of that 1974 law, Hawaii can argue it already was meeting the Affordable Care Act's goals, Gold said.

Gold said insurance companies can manage tax credits, one part of the exchange that had big problems during open enrollment.

The Hawaii Medical Services Association serves nearly 733,000 members, spokesman Floyd Takeuchi said. The company also is on the Board of Directors for the Hawaii Health Connector, and in that role participated in building the exchange. But the Legislature passed a bill last week that directs the Connector to remove insurance companies from its board.

"It's very funny how when this bill removing insurers is going to the governor that all of a sudden now, HMSA, who sat on this exchange, is calling for its dismantle," McKelvey said.

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