House Oversight Committee Investigates Obamacare Exchange Collapses

Published February 23, 2016

Members of Congress are demanding more accountability and oversight of how taxpayer funds are disbursed to state governments’ Obamacare exchange programs.

The calls for reform are in response to a number of state implementation agencies’ financial troubles. Since their establishment in 2014, eight of the 14 Obamacare state exchange programs have failed because of various critical financial problems.

Federal investigators are also auditing state-administered Obamacare exchanges in Massachusetts, Maryland, and Oregon to determine whether there has been any illegal financial activity.

Lawmakers on the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations are pressuring Andy Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services (CMS), to increase supervision of how taxpayer funds are used to administer the program.

Alexander Hendrie, a federal affairs manager with Americans for Tax Reform, says taxpayers are being taken to the cleaners by some of these state programs.

“Oregon spent $20 million on an advertising campaign that told people nothing about health insurance or the exchange,” Hendrie said. “At the time, people in the state knew their exchange was not going to work, but [it] went ahead anyway.”


No Consequences for Collapse

Hendrie says state administrators wasted resources because they were playing with other people’s money.

“It seems to me that many states went in with the attitude that they would try to create an exchange,” Hendrie said. “They then took in hundreds of millions in federal dollars and executed a poorly planned strategy to build an exchange. Then, when it didn’t work, they shrugged and either asked for more money or went back to the federal system consequence-free.”

‘Extra Layer of Bureaucracy’

C. Steven Tucker, a principal broker for Health Insurance Matters, an insurance brokerage firm, says the state exchange systems bring little benefit to consumers and lots of extra costs to taxpayers.

“Under the ACA, there was no need for state exchanges anyway, since is a federal exchange and was built to facilitate granting subsidies, whether a state agreed to open a state exchange or not,” Tucker said. “Worse yet, the state exchange does nothing but link to the federal exchange,, … So it’s an extra layer of bureaucracy that was entirely unnecessary.”

Tucker says consumers are poorly served by the state health insurance exchange system.

“If you ask anyone who has had to deal with anyone at, they will tell you that they are incompetent, and if you ask them a question that veers from their prepared ‘caller questions sheet,’ they shut down like a robot,” Tucker said. “They have absolutely no idea what they are doing. Brokers cost the consumer nothing, so who in their right mind would put legislation in place to wipe out most brokers and replace them with unlicensed, inexperienced, and unaccountable taxpayer-funded government workers?”

Leo Pusateri ([email protected]) writes from St. Cloud, Minnesota.