Obamacare Waste Continues to Pile Up

Justin Haskins Heartland Institute
Published September 16, 2015

Consumer Power Report #473

When President Barack Obama was working to “sell” the Affordable Care Act (ACA), also known as Obamacare, one of the primary claims he made was that the costs associated with providing some 30 million Americans with health insurance could be offset by reducing government mismanagement and fraud. But the more time Americans have had to experience the health care reform legislation first-hand, the more obvious it has become that, like virtually all government-controlled social experiments, Obamacare’s waste of taxpayers’ money has grown to epic levels. And there’s no sign the poorly managed program is improving.

According to Whitehouse.gov, an official website of the Obamacare administration, ACA “reduces health care costs” in part “by … cracking down on waste, fraud, and abuse.”

A new government audit of the Centers for Medicare and Medicaid Services’ (CMS) management of contracts made with eight companies that helped build the Healthcare.gov website shows the 20 contracts “most critical to the website’s operation” – worth roughly $600 million in total – were incredibly mismanaged. According to the report, millions were wasted in cost overruns, shoddy work, and poor business practices.

John Tozzi of Bloomberg Business reports the primary reason for the mismanagement is that government employees managing the contracts were completely unprepared for the responsibilities given to them.

“In January 2012, for example, new federal rules required employees overseeing contracts worth more than $10 million to undergo 96 hours of training meant to prepare them to manage complex projects,” reported Tozzi. “CMS disregarded this requirement and allowed less qualified employees to oversee contracts worth as much as $50 million, according to the audit. One employee, who isn’t named in the report, oversaw a $130 million contract for at least 15 months without even the lower-level certification that the government requires for managing contracts worth more than $25,000.”

The reckless treatment of taxpayers’ hard-earned money is hardly a novel problem for government or Obamacare. Estimates released in 2014 found the failing state health insurance exchanges in Maryland, Massachusetts, Nevada, and Oregon wasted $474 million. Phil Kerpen at The Federalist says the figure should be much closer to $1.2 billion.

Vermont wasted millions of federal and state tax dollars trying to build a single-payer health insurance system, dubbed Green Mountain Care, but after years of heated debate, even the far-left lawmakers of deep-blue Vermont couldn’t justify the massive tax increases that would have been needed to cover the program’s costs. Vermont Gov. Peter Shumlin (D) pulled the plug indefinitely on the program in December 2014, and there’s no clear sign the flat-lining Green Mountain Care will recover.

It would be easy to point to all of these examples of waste and accuse the Obama administration and Democrats of devising a terrible government program, but the reality is whenever government gets involved in the free market, there will be waste, fraud, and corruption. Some programs are worse than others of course, but as a general rule, the more power the government is entrusted with, the more taxpayers end up paying in unnecessary costs.

Politicians often say, as Obama did in 2009 when he was running around the country desperately trying to convince Americans to support the Affordable Care Act, government can pay for additional services and programs by cutting fraud and waste. History has proven over and over this is almost never the case. Government may clean up waste in one area, but whenever a new program is implemented, more waste is sure to follow.

The free market will always operate more efficiently than government-created programs because free-market businesses must be more efficient to survive. Unlike the national government, private businesses and entrepreneurs cannot simply print their own money when things don’t go as planned, and they certainly can’t go to China and other foreign powers to beg for billions of dollars, as the United States has done countless times over the past decade to cover growing costs.

Businesses have to budget their costs and make difficult decisions to keep spending from getting out of control. If they don’t, they go bankrupt. If the national government fails to make smart business decisions, they just take more money from the American people.

This unsustainable strategy must stop. A good place to start that process would be repealing and replacing Obamacare with common-sense and compassionate reforms, such as allowing customers to purchase health insurance across state lines, giving more power to the states to manage Medicaid and other government health programs, and increasing the number of doctors. These solutions, and many more, empower consumers and businesses alike to make smart, cost-effective decisions that benefit everyone while providing quality medical care.

— Justin Haskins



Like other Republican presidential candidates, Gov. John Kasich has promised to repeal and replace Obamacare if elected, begging the question: With what?

He has yet to offer a proposal with enough detail to analyze how well it might work.

But Kasich’s team in state government has developed a plan for Ohio that he says could be applied to the entire country. …

He would push to repeal the parts of the Affordable Care Act he doesn’t like and keep the things he does, most notably Medicaid expansion, which he supports on moral grounds.

According to campaign and administration officials, Kasich wants universal health coverage. He likes Obamacare requirements allowing children to stay on their parents’ insurance plans longer, coverage guarantees for those with pre-existing conditions, and subsidies to help lower-income families buy insurance.

However, Kasich would push for less government regulation and offer Ohio’s overhaul of Medicaid as a model for other states on lowering health-care costs in both the public and private markets to make coverage more affordable. …

Kasich’s decision to expand Medicaid two years ago has brought more than 500,000 new beneficiaries to the tax-funded health-coverage program, pushing enrollment to 3 million poor and disabled Ohioans. For now, the federal government is picking up expansion costs, but in the coming years some of that tab will be shifted to states.

SOURCE: By Catherine Candisky, The Columbus Dispatch


Ready or not, the U.S. healthcare industry is poised to flip the switch from the ICD-9 to the ICD-10 diagnostic and procedural coding system on Oct. 1, significantly changing how billions of dollars in medical claims are calculated and billed every day.

Experts predict most large hospitals and health systems and most large physician groups will weather the federally required conversion just fine, though they could experience temporary cash-flow squeezes because of ICD-10-related payment delays.

The organizations most likely to have trouble, however, are smaller providers, particularly smaller physician practices. Some medical groups say problems associated with the conversion could drive some small doctor groups out of business.

A last-minute reprieve is unlikely. After three previous delays of the ICD-10 start date, no one predicts there will be a fourth.

SOURCE: By Joseph Conn, Crain’s Chicago Business


Sen. Bernie Sanders (I-VT) is doubling down on his support for universal healthcare after weeks of mostly shying away from the topic on the campaign trail.

In a speech Monday at Liberty University in Virginia, Sanders blasted the nation’s healthcare system for killing “thousands of Americans” every year who can’t afford insurance. …

Sanders, who is an ardent supporter of creating a single-payer healthcare system, has shifted his talking points on healthcare since his campaign launched this spring.

Instead, he has focused largely on prescription drug costs, an issue with bipartisan support. Over the last few weeks, Sanders has partnered with the top Democrat on the House Oversight Committee to combat high drug prices. The pair will unveil a bill next week.

But at his speech Monday, Sanders stressed universal health insurance as a basic element of the country’s healthcare system.

“I have talked personally to doctors throughout Vermont and to physicians all over this country. And without exception, they tell me there are times when there are patients who walk into their office very, very sick,” Sanders said. “They say, ‘Why didn’t you come in here when you were sick?’ Their answer is, ‘I don’t have any health insurance’ or ‘I have a high deductible.'”

SOURCE: By Sarah Ferris, The Hill


When Kathryn Carlisle, a bookkeeper for Yukon Electric in Anchorage, Alaska, found out she needed a hip replaced in 2012, she was startled that her employer was proposing surgery at Arise Austin Medical Center in Texas. The operation, rehab and a two-week hotel stay would cost her nothing. The benefit would pay for her daughter to go along and even include $1,500 in spending money.

Yukon is in the ranks of employers turning to medical travel within the U.S. as a way to rein in health care costs. Home improvement retailer Lowe’s pioneered the trend in 2010 by partnering with the Cleveland Clinic to provide cardiac procedures for free to any of 200,000 employees (plus their dependents) willing to travel. Boeing has a similar plan with the clinic for over 75,000 U.S. employees. PepsiCo sends workers to Johns Hopkins in Baltimore for cardiac and complex joint replacement surgeries.

Providers, chosen for their excellent outcomes, offer attractive value because they do a large volume of surgeries, and patients avoid costly complications and readmissions. The hospital typically charges a flat amount for a bundle of services instead of billing for each test, pill and specialist. The arrangements save companies up to 40 percent of usual costs. Little wonder they’re happy to sweeten the deal for employees by forgoing copays, waiving deductibles and throwing in travel and caretaker expenses.

SOURCE: By Beth Howard, U.S. News and World Report


While the news frequently reports the number of data breaches in the health care industry, few may realize that the estimated cost for HIPAA breaches since 2009 has reached over 31 billion dollars.

As the volume of healthcare security breaches exponentially increases, so does the need to share this information for secondary uses such as research and analysis that can lead to better treatments, cures and improved care. The following infographic created by Privacy Analytics illustrates some of the research on data breaches by leading organizations, such as Ponemon Institute, Pricewaterhouse Cooper, The Health Data Exploration Project and Gartner. It also demonstrates the industry demand for better standards, and that using HIPAA-compliant, proven de-identification methodologies reduces the risk of re-identification.

SOURCE: HIT Consultant