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.
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.
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.
“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.”