As part of its big assist to States preparing for the October 2013 launch of Obamacare, the Federal government cumulatively spent close to $3.5 billion in order to help craft websites and their underpinning database structures for State-operated health insurance exchanges. By the end of 2015, that figure will have risen to at least $4.9 billion.
A report out this month by the Congressional Research Service (CRS) shows a series of massive payouts since President Barack Obama signed the Affordable Care Act in 2010, with an indefinite amount yet to come.
“Indefinite?” Yes. It’s an open-checkbook provision for the Department of Health and Human Services (HHS) to continue doling Federal site-building grants to States at its discretion through the end of the year. It’s one of those significant details embedded in the law that, infamously, no one read until it had been passed (and probably, in many cases, not even afterward). The CRS report explains:
The ACA provided an indefinite appropriation for HHS grants to states to support the planning and establishment of exchanges. For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants. No grant may be awarded after January 1, 2015.
There are three different types of exchange grants. First, planning grants were awarded to 49 states and DC. These grants of about $1 million each were intended to provide resources to states to help them plan their health insurance exchanges. Second, there have been multiple rounds of exchange establishment grants. There are two levels of exchange establishment grants: level one establishment grants are awarded to states that have made some progress using their planning funds, and level two establishment grants are designed to provide funding to states that are farther along in the establishment of an exchange. Finally, HHS awarded seven early innovator grants to states (including one award to a consortium of New England states) to support the design and implementation of the information technology systems needed to operate the exchanges. To date, HHS has awarded a total of more than $4.8 billion to states and DC in planning, establishment, and early innovator grants.
As you likely have read here and elsewhere, many of the State websites have problems that dwarf even those bundled in with the Federal government’s catch-all Healthcare.gov site. As for Healthcare.gov itself, Obama pushed an on-time deployment despite urgent warnings from auditors in the tech field who noted it wasn’t even capable of remaining stable when 500 people visited at one time.
But what about those seven “early innovator grants” awarded to States that were to use the additional funds to create the Obamacare Web systems that would set the bar for other States to emulate — the States that, according to HHS, “are leading the way on building a better health insurance marketplace, one that allows individuals and small-business owners to pool their purchasing power to negotiate lower rates?”
The three most spectacular State-level Obamacare failures have taken place in States that received the early innovator grants.
There’s Oregon, the undisputed poster child for Obamacare embarrassment. There’s Maryland, a close second. And then there’s Massachusetts, which managed to transform Romneycare, under Obamacare, into a nightmare.
“Using these new funds, the Early Innovator states will develop Exchange IT models that can be adopted and tailored by other states,” HHS had boasted at the time the grants were announced. “Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin, and a multi-state consortium led by the University of Massachusetts Medical School will receive a total of approximately $241 million.”
For all States — including those that elected not to set up their own exchanges — the Federal government initially radiated $456 million for “exchange operations” during the 2010-2012 preparation phase, then shelled out $1.5 billion more in 2013 as the exchanges readied for launch. For 2014, HHS projects it will send out $1.390 billion, and another $1.8 billion in 2015.