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House Bill Would Recover Unspent Obamacare Funds from Failed State Exchanges

September 26, 2016

States that took federal funds to build Obamacare exchanges, and failed, would have to give Congress a reckoning and taxpayers a refund.

A pending bill in the U.S. House of Representatives would require states with failed Obamacare exchanges to submit documents and reports explaining how they spent taxpayer dollars allocated for the exchanges and why their state exchanges collapsed.

House Resolution 4262, the Transparency and Accountability of Failed Exchanges Act, would also mandate states return to the U.S. Treasury any unused federal taxpayer dollars awarded to help a state set up its failed exchange, in addition to any property acquired with those funds.

The bill would authorize the U.S. attorney general to take legal action against states that fail to comply.

Auditing the Exchanges

Madison Fox, press secretary to Rep. Rick Allen (R-GA), the bill’s sponsor, says the legislation would provide essential government oversight and protect the interests of taxpayers.

“States were awarded with federal grant money to set up an Obamacare exchange, and then they were terminated or failed,” Fox told Health Care News. “[The bill] would provide for an audit of the use of those grant funds. Any leftover money would be returned to the federal government for deficit reduction.”

Allen introduced the legislation after his attempts to account for the federal funds were frustrated, Fox said.

“Congressman [Allen] took a meeting at the end of last year about this very issue, which led him to question: Where was an audit of how they spent their money?” Fox said. “Where was the money, if any, left over from first establishing? And where was the equipment no longer in use?”

The Oregon Fail

The Transparency and Accountability of Failed Exchanges Act would protect taxpayers from eating the cost of multiple state exchanges poised to collapse as Oregon’s did, Fox says. 

“[About] $300 million was spent building Cover Oregon, making it the third-most expensive exchange buildout, behind New York and California,” Fox said. “Ultimately, Oregon killed their state exchange, opting for the federal exchange—$300 million down the drain. Oregon should not be the norm, but sadly, Oregon is not an isolated event.”

Alex Hendrie, federal affairs manager at Americans for Tax Reform, says states owe taxpayers a positive return on the federal government’s investment in the exchanges or a refund.

Hendrie said, “$5.5 billion was given to states for the construction of Obamacare state exchanges, and many have either failed or are barely working years after they were supposed to be completed. Four state exchanges—Oregon, Hawaii, New Mexico, and Nevada—have collapsed completely, leaving more than $700 million in taxpayer dollars lost.”

Bigger Than Obamacare

Hendrie says the legislation should attract widespread support because it ensures Obamacare funds are achieving the goals of Obamacare.

“HR 4262 is not about Obamacare,” Hendrie said. “It is about the federal government responsibly spending taxpayer dollars, so if brought to a vote it should be supported by all members of Congress. It is only reasonable that these funds are recovered and those responsible are held to account, and HR 4262 is the way to ensure this happens.”

The bill has gained 63 Republican cosponsors and no Democrat sponsors since being referred to the House Energy and Commerce Subcommittee on Health in December 2015.

“The next logical step in regular order is for the committee to vote on the legislation so that it can then be considered on the House floor,” Hendrie said.

Jordan Finney (jordanlfinney@gmail.com) writes from Boise, Idaho.

Internet Info:

Matthew Glans, “State ACA Exchanges an Expensive Failure,” Research & Commentary, The Heartland Institute, August 1, 2016.

Leo Pusateri, “House Oversight Committee Investigates Obamacare Exchange Collapses,” The Heartland Institute, February 23, 2016.

Author
Jordan Finney writes from Boise, Idaho.
jordanlfinney@gmail.com