The federal government awarded over $5 billion to help states set up ObamaCare exchanges, with the vast majority – $4.6 billion – going to 16 states and Washington, D.C.
But, according to a recent Government Accountability Office (GAO) report, much of that money has not been accounted for – and yet not returned, either.
So where did those taxpayer dollars go?
That’s the billion-dollar question.
The Patient Protection and Affordable Care Act (PPACA) required the establishment of health insurance exchanges – known as marketplaces – to help small employers and consumers compare and purchase insurance plans. States opted to either develop their own state-based exchanges or hand authority to the Centers for Medicare & Medicaid Services (CMS). And between 2010 and 2014, CMS awarded federal grants mostly to states setting up their own marketplaces, to help them get started.
About $4.6 billion was given to these 17 recipients, including California, New York, Washington state and Kentucky.
But the GAO report found that so far, just $1.4 billion of that has been spent on IT projects, and a total of $3 billion has been “spent or drawn down,” though not all the spending is detailed.
That, then, leaves at least $1.6 billion unaccounted for. Yet only three states returned any portion of the money – a total of just over $1 million was given back.
“[T]he specific amount spent on marketplace-related projects was uncertain, as only a selected number of states reported to GAO that they tracked or estimated this information,” the report said.
Even though states were supposed to set up their marketplaces by the end of last year, they are not yet legally required to return unused funds.
Chuck Young, with the GAO, explained that the grants also could have covered non-IT costs not addressed in the study, and the funding devoted to IT projects will generally remain available for states’ use until December – albeit with restrictions. “CMS said that, since March 2015, states may have spent additional grant funds for IT projects, re-purposed those funds for non-IT costs, or returned funds,” he said, adding that the office expects to conduct a follow-up to this report.
But in an article on the GAO report by the American Spectator, health care adviser and contributor to the publication David Catron highlighted the monetary discrepancy and raised the question of whether Democratic officials improperly diverted or spent more than $3 billion in taxpayer grant money.
“It’s hard to know with any degree of certainty where the money went,” he told FoxNews.com. “So all we know with any confidence is how much was awarded, how much went to IT and what the difference is.”
Catron pointed out that 85 percent of federal funds went to Democrat-controlled states, and that only three states returned any money to CMS while the remaining 13 states and D.C. have yet to return any funds.
The spending is different from state to state. Oregon has withdrawn just over $293 million of its $305 million and spent almost all of the $78.5 million authorized for its IT expenses – but based on the report, has not returned any leftover funds. California was given over $1 billion and spent $709 million. GAO found that less than a half-million dollars has been returned to the federal government.
Representatives for the Department of Health in Oregon told FoxNews.com that the IT funds listed on the report were only one part of setting up the exchange, implying that remaining funding was directed elsewhere. A spokesperson for the ObamaCare marketplace Covered California said that when they released the 2015-2016 budget in June, there was approximately $100 million in federal funds left and carried it over thanks to an extension by the federal government; they now have until the end of December to draw on the funds for the program.
A representative for the U.S. Department of Health and Human Services insisted that if any funds are misallocated the CMS “will work to recover the funds using remedies available under law and regulation.”
“To safeguard taxpayer funds, HHS has also put in place additional program integrity regulations and has implemented, or is in the process of implementing, the GAO’s recommendations,” said HHS senior adviser Meaghan Smith.
In examining how states have used federal funds for IT projects and CMS’s role in overseeing them, the non-partisan GAO found that marketplaces reported spending nearly 89 percent of the funds on “IT contracts,” but that the CMS is still trying to track states’ IT spending in more detail.
The GAO urged CMS to improve its existing oversight roles and responsibilities and ensure that senior executives adequately review and approve funding decisions.
And despite all the money issued to states specifically for IT use, the GAO underscored an array of problems – from poor system performance to software and hardware problems – plaguing the state-based and federally run marketplaces.
According to Dennis Santiago, risk analyst and director of the Bank Monitor Division for Total Bank Solutions, the uncertainty doesn’t necessarily mean the money was misused.
“What is missing is the proof that diversions did or did not occur, and if so where,” he said. “IT costs are only part of the process. It could be legitimate, classic pocket lining at work – or some of both.”