Government Watchdog: Billions in Funding for Obamacare's Exchanges Not Tracked Well, Many Functions Remain Incomplete

Draft GAO report details troubles with financial oversight even as questions loom about the legality of health exchange spending.



The federal government spent billions on creating Obamacare's exchanges, but didn't track the money well—and many of the state-run exchanges funded under the law still aren't working properly, according to a draft Government Accountability Office report obtained by reason.

Most states running their own exchanges under the law have yet to complete work on some critical exchange functionality, such as verifying eligibility for subsidies, paying insurers, and reporting data to the Internal Revenue Service (IRS).

The report, still in draft form and dated July 2015, says that several states "lacked comprehensive and detailed information to show how their marketplace grant funding had been used for IT projects supporting their marketplaces" between September 2010 and March 2015. Neither select states examined by the GAO nor the federal government tracked how much of $2.78 billion in Medicaid matching funds were used to fund exchange operations or development. (The law required states to connect Medicaid programs, which are run by states and jointly funded by states and the federal government, to a federal data hub.)

The uncertainty exists because Centers for Medicare and Medicaid Services (CMS) did not require states to track spending on specific product categories, nor to report on how Medicaid matching funds were used. As a result of the lack of reporting requirements for Medicaid, the report charges that CMS, which oversaw the exchange development process, "is not in a position to account for all federal funds that went toward the establishment and support of marketplace [health insurance exchange] IT systems."

Rather than require states to report spending on specific products, CMS required states running their own exchanges to report spending on five general categories—IT contracts, IT consultants, IT personnel, IT equipment, and IT supplies. The vast majority of the grant money went to contracts for services like "systems integration, project management, and independent validation and verifications."

But in many cases, work on core exchange functionality remained incomplete. Of the 14 state-based marketplaces, for example, only eight were "fully operational" and "operating without service interruptions" in their enrollment functions as of February 2015. The other six were categorized as partially operational, meaning that although there was some functionality they "did not work as intended and may have required manual processes to supplement automated functionality"—workarounds such as using paper copies or human data entry.

The 14 states running their own exchanges had made even less progress developing functionality related to financial management, subsidy verification, and communication of data with the IRS.

Most state exchanges also had trouble with connecting systems used to validate eligibility for subsidies under the law. Only one of the state-based exchanges, Kentucky, had completed "development of hub services functions such as verifying an individual's identity and citizenship, and retrieving tax information for evaluating taxpayer eligibility for insurance affordability program." In the other 13, work or testing on identity and eligibility functionality remained incomplete.

Only Vermont had finished work on technology to send data to the IRS, such as information on premium tax credits. Another 10 states were partially complete, according to the draft report, and two states, Hawaii and Minnesota, had performed no testing at all on the systems. 

(Coordinating with the IRS has proved troublesome; in California this year, about 100,000 Obamacare enrollees were sent error-ridden tax forms regarding the subsidies they recieved for coverage, leading to delays for many tax filers.) 

Work on financial management systems that collect premiums, calculate reinsurance payments, and send money to insurers is incomplete in most state-based exchanges as well. Four states had completed work, while eight remain partially eligible, with workarounds in place. Two other states elected to leave that work to health insurers.

States running their own exchanges weren't the only ones with ongoing problems. Seven states working through the federal exchange could not transfer applications between state Medicaid systems and the federal data hub, according to the report. 

The report comes just months after the CMS Inspector General sent a cautionary letter warning that states may have used exchange funds illegally. The law authorized states to use the money for developing the exchanges, but not for most ongoing operational costs. Many of the states running their own exchanges are having trouble generating enough funding, however, and several reports indicate that states have used exchange grants from CMS to fund regular operations. Six states running their own exchanges cited lack of adequate funding as a major challenge in a survey, according to the draft GAO report.

The report is the latest in a series of reports to find ongoing problems with Obamacare's exchange technology. In February, Politico reported that the back end of the federal exchange, which coordinates with insurers, "still isn't properly wired to the health insurance companies," meaning that insurers are paid based on estimates which may eventually have to be revised.

And in a separate report last week, the GAO said that fraudulent Obamacare accounts created in a GAO sting operation had been renewed by the system, and in some cases given even larger subsidies. The federal system's document processor "is not required to seek to detect fraud," a GAO official said, and contractors "do not perform antifraud duties." 

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  1. Scams within scams within scams.

    1. Waste, fraud and abuse? I haven’t been this shocked since that time I discovered Liberace was gay.

      1. The government’s scam-fu is weak in many ways, yet still inexorable.

  2. Solution? More money.

    1. And more power to the Feds! Don’t forget moar governmental power!!!!

      1. You know, as far as libertarian moments go, this one sucks ass.

        1. The libertarian moment is like sequestration. It’s not about arresting the descent, it’s about slowing down the rate of change. We’re still going to hit the bottom.

          1. All I see is more state power, more out-of-control spending, more contempt for the very idea of limited government. If the government decides to stop prosecuting people for a few things, so what? We’re only freer in prescribed ways at the whim of an organization that can do whatever the fuck it wants to do.

            1. but think of how bad it WOULD have been without the libertarian moment standing in the way!

              1. Ah, the Lion-Repelling Rock of Libertarianism.

        2. I know. The EU even got wind of our Libertopia Lease plants and decided it was cheaper to give away billions of more dollars.

        3. At least you are free to suck ass. For now.

          1. I’m disappointed that many libertarians think that victory and the somewhat lowered level of enforcement in the WoD means anything. The government is operating without much restraint at all now, and any improvement in liberties is solely at the government’s discretion. We’re not winning anything until that changes.

    2. And keep using the same techniques and programs: They really do work, it’s just you’re not trying hard enough or the right people aren’t in charge.

      1. Well what happened was…..the Fed Gov didn’t give the State Gov enough money to keep up with and account for the money it gave them in the first place. So the obvious solution is for the Fed Gov to give more money to State Gov so that it can afford to account for all the wasted money it was first given.

        See ? Utopia !

  3. Democracy . . only lasts . . raiding treasury . . blah blah bla

    1. Old document… parchment and quills… outdated language… some old white French guy.

      1. Slave. Don’t forget Slaves. Slaves and Indians, errh Native Americans.

        Slaves and Native Americans for 800 Alex.



    1. /ButtPlug

  5. such as verifying eligibility for subsidies

    Oh phooey, you glibertarians want women and children to die in the streets. I mean, what, it’s not your money anyway, it’s government money!

    1. It’s the UBER wealthy corporations that are paying for it anyway. Why should you care?

  6. A majority of Americans are deeply unsatisfied with the ACA, it’s one of the few winning issues for the GOP, and it’s tied like an anchor around Democrats’ necks.

    So of course the GOP is running on immigration.

    1. It’s truly mind-boggling.

      1. Obamacare is making a lot of people money at our expense. Those people donate to the GOP too.

        1. I would actually be happier if I was sure that the ACA was top to bottom simple graft. At least then I’d know that the crooks would spend the money wisely.

          Instead, I fear that most of the money is just being blown purely by incompetence. Maybe there isn’t anyone overtly scamming the system. Maybe it is a complete waste of resources.

          1. Think Hanlon’s (or Heinlein’s) Razor:

            “Never attribute to malice that which can be adequately explained by stupidity. But don’t rule out malice”.

        2. JB for the win.

          Remember how Boner sent a message to Obama that he wanted to come over and talk to Obama about how to make Congress immune to Obamacare ? He suggested to Obama that Obama claim that Boner was being summoned before the throne to receive a tongue lashing about something or other as cover for the real mission. Republican Congressmen and women don’t care if Americans are saddled with Obamacare as long as they personally don’t feel it’s pain.

          Fucking Bastards all.

      2. I am coming around to the notion that, with the possible exception of the candidates themselves, nobody in the Republican establishment is all that interested in holding the White House. It’s just a source of abuse by a schizophrenic public and hostile media, and a great way to lose seats in Congress. On the other hand a Democrat-controlled White House drum up support for a conservative Congress and they can always join hands to push for more cronyism.

        1. Yes, this is what I have come to realize as well.

          This is why Trump is doing so well.

          The GOP base has noticed that the Democratic base gets actual red meat policies occasionally enacted, but the GOP establishment merely tempts with red meat, always “saving the issue for the next election.”

          Look at how badly the GOP has managed to do this year, their first of two years in charge of all of Congress. They have the budget to Harry Reid, didn’t punish him for the fillibuster, funded Obama’s immigration plans, and then gave up the Iran deal approval.

          We may very well get

      3. Racists gonna race…

    2. They’re not just running on immigration, they’re working on legislation to “fix” the ACA and make sure its got greasy Repub fingerprints all over it, ensuring the Dems will never pay a political price for it.

      1. Kill it. Kill it with fire. Deregulate the whole mess, remove the barriers to entry, allow interstate competition, get government out of the delivery of medical services, establish a free market in insurance and in healthcare. I’ve got more.

        1. we don’t even need insurance really.

          1. Maybe, but that’s no one’s decision. Let the market work it out.

    3. Whenever I want to get more than a quick “how dya do” from my doctor, all I have to do is mention trial lawyers or the ACA and he’ll give me a 15 minute rant.

      This time is was the ACA, and how it and medicare/medicaid payments are driving docs into concierge practice. Plus something he asserted but I didn’t check: more females are going to med school than males, because ambitious men don’t see medicine as having enough financial reward for the risks and the debt and having no life until your 30s.

  7. This was really just a matter of time.


    1. I thought this had something to do with Ryan Reynolds.

    2. Something, drought, water supply, Jake, Chinatown, something….

      1. What does this have to do with dusty incest?

  8. (Coordinating with the IRS has proved troublesome; in California this year, about 100,000 Obamacare enrollees were sent error-ridden tax forms regarding the subsidies they recieved for coverage, leading to delays for many tax filers.)

    Have they considered outsourcing the job to a Chinese firm? I hear the State Department has a lead.

  9. I remember back when Reagan was president, the left actually cared about government waste, now they cheer it on.

    1. “I remember back when Reagan was president, the left actually cared about government waste, now they cheer it on.”

      Let me fix that.
      I remember back when Reagan

      1. Shit. I has a clever thing where I changed Reagan to Team A and the left to Team B- you know, to show that it’s really about opposing OTHER party spending… and then I screwed it all up with an HTML SNAFU.


    2. It’s money that’s not going to the corporations and increasing inequality, so it is good and wonderful.

      1. Except the insurers whose products are being pimped by this bill, but now that their points of sale were given a facelift and called “exchanges,” the left loves them.

        1. by products you mean services, right?

          They don’t actually have a product.

          1. Well, its sort of industry jargon to refer to various policy offerings as “products”.

        2. Yes, but the lefties in the bureaucracies are bought off with consultancies so that’s good capitalism.

    3. They “cared” (complained) then because their guys weren’t benefiting from it.

  10. The federal government spent billions on creating Obamacare’s exchanges, but didn’t track the money well

    So what’s the problem?

    1. stimulous?

    2. Good point. We should be thanking the gods that we don’t get all the government we pay for.

    3. The system worked as designed.

  11. Its almost like the point of this whole exercise was to put billions of dollars in the right pockets. Getting a working exchange was secondary, at most.

  12. Yeah, but it hasn’t totally crashed the economy yet, so it’s really good!

  13. Remember when shit like this used to get people fired?

    Pepperidge Farm remembers.

    Now, it’s a lot of “Well, what are you going to do? Mistakes happen.”

  14. In other surprising ACA news – Medicaid expansion:


    1. Medicaid (for practical purposes) is only good for free drugs and blood tests.

      When I go to hospitals, half the fun is finding out what it WON’T pay for.

  15. Free markets tend towards spontaneous order, while government bureaucracy tend towards entropy.

  16. Why would we expect the accounting “wizards” at GAO/etc. to perform any differently than the cyber-security folks at OPM.
    After all, if they screw up, who’s going to fire them?

  17. “Billions in Funding for Obamacare’s Exchanges Not Tracked Well”

    Feature, not bug

  18. I heard that the progressive communist solution is what they call ‘single payer,’ which, they say, is equivalent to the VA system, which works so well, or not.

    In any event, the progressive communist solution, surprise, more government, more taxes, and fees, more rules, and more regulation. And mandates must have mandates.

  19. I’m more depressed by this set of considerations: (1) are the only people who notice this here in this comments section? That would be depressing, but not as bad as (2) what if everyone knows about this – the entire American populace – and no one gives a shit enough to change it? We’re just too fucking docile/apathetic/indolent to hold anyone to account for it, ever.

    I can’t decide which is more depressing., but I’m leaning toward (2).

  20. Quit ur fucking complaining or you’ll get healthcare 70’s Cambodian style.

    1. Hahaha.
      “Yes, Citizen Comrade. Thank you for the pleasant reminder of the great benefits of membership in the Peaceful People’s Party. May I have some more gruel, please?”

  21. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,.,.,.,.,.,,,


  22. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

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