Between 2010 and 2014, the Centers for Medicare and Medicaid Services (CMS) awarded $4.6 billion in Obamacare start-up grants to 16 Democrat-controlled states and the District of Columbia. $1.4 billion of this taxpayer largesse was spent on exchanges, many of which imploded upon launch or operated so inefficiently that enrollees have been left to the tender mercies of Obamacare.gov. The rest of these states also appear likely to abandon their exchanges in favor of federal “marketplaces.” Yet, according to the Government Accountability Office (GAO), they have kept all but $1 million of the grants. Where’s the rest of our money?
What happened to the remaining $3.2 billion in taxpayer-funded grant money remains unknown, despite the valiant efforts of the GAO to solve the mystery. The nonpartisan agency released a report at the end of last month revealing that CMS oversight of the Obamacare grant process has been so inept that it is virtually impossible to gain more than a tenuous grasp on the expenditure amounts, much less where the money actually went. As the GAO points out, it was only able to get spending data through March 12, 2015. And even that stale information was woefully incomplete: “According to CMS… some states were two or more months late in reporting.”
The stout-hearted reader able to wade through the turgid prose of the GAO report will be rewarded with some startling revelations. Not the least being that, of the $4.6 billion awarded to these 17 Democrat strongholds, the GAO was only able to glean enough data to identify about $3 billion in the “amount drawn down… from CMS’s account to the state’s account.” In other words, the reporting delays mean that the transfer totals reported by the GAO are of necessity far less than the actual total siphoned from CMS coffers. Thus, when the GAO reports that the “amount drawn down” by California was $709 million, the actual figure could well be $1 billion.
And it gets worse. Neither the states nor CMS have been able to provide adequate information concerning where and on what the money was spent. CMS permitted these states to report spending in terms of vague categories such as “contracts, consultants, personnel, equipment, and supplies.” Thus, 89 percent of the money spent was reported to CMS as having been paid for nebulous services such as “systems integration, project management, and independent validation and verifications.” One hardly needs to be a criminal genius to see that such a sloppily run system of doling out cash to state politicians offers all manner of opportunities for graft.
Moreover, considering the general lawlessness of the Obama administration and the Democrats in general, it’s probably not a coincidence that most of the Obamacare grants went to “blue” states. CMS awarded a total of $5.5 billion in start-up grants for the creation of exchanges, and Democrat-controlled states received about 85 percent of that federal loot. It is, of course, true that some Republican-controlled states initially applied for grants, and some of that money was actually spent before the GOP realized that state-run exchanges were a mug’s game. Oddly enough, 99 percent of the grant money that has been returned to CMS has come from those red states.
Which brings us back to the $3.2 billion in grants that was never returned, even by states that abandoned their own exchanges. The poster child for this scenario is, of course, Oregon. The Beaver State was awarded $305 million in Planning, Early Innovator, and Establishment grants and, drew down at least $293 million from CMS, yet never made a serious attempt to launch its exchange. Oregon spent only about $78 million on IT contracts, according to the GAO report, but thus far has failed to return a penny to CMS. But Oregon is by no means alone among these states in its reluctance to return unspent grants to CMS, as the following table illustrates (**):
Spent on IT
Only three of these Democrat strongholds bothered to return any money to CMS, and the amounts returned by two of these states are so small that they amount to little more than rounding errors. The funds returned by California and Rhode Island amount to far less than 1 percent of the grant money they received. The amount returned by Kentucky comes to a little more than 18 percent, presumably because its state legislature still contains a few Republicans. The remaining 13 states and D.C. haven’t bothered to return a dime. CMS claims that these figures are understated but that their records were not up to date due to a “manual entry process” (not verified by GAO).
But even if the discrepancy is as much as $200 million, it makes little difference. The refund due to the taxpayers is still $3 billion. The grants were handed out so that these states would have the resources to plan and implement their exchanges. Obamacare was launched two years ago. And, despite the breathtaking ineptitude with which that launch was managed at both the state and federal level, and “reform’s” numerous subsequent pratfalls, its apologists still insist that the perversely titled “Affordable Care Act” has been a smashing success. If we take them at their word, it means that the Democrats who run these states have no further use for start-up grants, right?
So, again, where’s the rest of our money? Have the states been illegally using the money for operations? Have Democrat officials diverted it to their campaign funds? Have crooked pols, like Oregon’s John Kitzhaber, moved it to their legal defense funds? Did state bureaucrats simply steal it and use it buy new houses and cars? If not, then where the hell is it?
** Source: GAO Report, Appendix II