CMS Admits Federal Funds Improperly Spent by State Obamacare Exchange

Federal funds improperly spent on Arkansas Obamacare exchange
Federal funds improperly spent on Arkansas Obamacare exchange

The state-based Obamacare exchange in Arkansas has been found improperly spending one million in federal funds for state-based exchanges. Sen. John Cornyn (R-TX) has sent a letter to the federal agency overseeing the Affordable Healthcare Act, seeking answers about the spending of $3.2 billion in federal funds on the state-based exchanges.

In his response to Sen. Cornyn, Andrew Slavitt, the Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), wrote, “as part of CMS’s routine federal oversight of (exchanges), CMS found that the Arkansas SBM spent approximately $1 million of the state’s federal grant funding for activities that are not allowed under regulations.”

Several state-based Obamacare exchanges have failed, including most notably the Cover Oregon exchange in that state, and the exchange in Maryland. Maryland reached a court settlement with Noridian Healthcare Solutions, the IT firm involved in the development of that state-based exchange, involving paying back $45 million in federal taxpayer funds spent on the Maryland exchange.

In Slavitt’s letter to Sen. Cornyn, it was revealed that $13 million of the $45 million to be paid by Noridian will be going to the state of Maryland as a result of the settlement. The remaining $32 million will go to the federal CMS, which is where the funds were allocated from originally. There has been no explanation for why $13 million of those funds are being awarded to the state of Maryland nor a reason for those federal funds to be sent to Maryland rather than all $45 million recovered being sent to CMS. This has given rise to criticisms that failed state-based exchanges could lead to “slush funds” for those states.

Slavitt has claimed that all the federal funds spent on the state-based exchanges has been accounted for but that is not the case at all. Several Senators and members of Congress have questions CMS and Slavitt on the spending of federal funds on the state-based exchanges and many of those questions have not been answered.

Numerous weakness and inadequate security have been found in the Colorado Obamacare exchange, according to a report from the Inspector General of the Department of Health and Human Services. The report found that personal information could have been compromised via the Colorado state-based exchange on which more than $184 million in federal funds were spent. The exchange failed last year, leaving more than 80,000 state residents without health insurance coverage.

A 2014 report from the Inspector General found that 22 of the 23 state-based Obamacare exchanges lost money during that year. The state-based exchanges have failed in more than one dozen states as Obamacare itself continues to prove to be an epic failure. More than $3.2 billion of nearly five billion allocated to the exchanges has been spent while very little of those federal funds have been recovered by CMS. While Slavitt has been questioned on these issues, due to having been appointed to become Administrator of CMS, few questions have been sufficiently answered and very little of the billions in federal taxpayer funds spent on the failed exchanges has been recovered.

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