Last April, the HHS Office of Inspector General issued an alert concerning the misuse of Obamacare start-up grants by certain states. Congress yawned. Later, the Obama administration illegally rewrote the law’s limitations on how these funds could be spent. Our elected representatives remained inert. In August, a few Senators bestirred themselves enough to write to the Acting Administrator of the Centers for Medicare & Medicaid Services (CMS) concerning how he planned to recoup grants from failed exchanges. The House still snored. Even after state skullduggery involving the grants was reported in this space on September 14, and subsequently by other publications, the House slumbered.
That body received its wake-up call from the Government Accountability Office (GAO). The GAO released a report showing that 16 states (all but one secure Democrat strongholds) and the District of Columbia were awarded $4.6 billion in grants to create Obamacare exchanges which cannot account for the vast gulf that exists between the amounts spent on their “marketplaces” and the grant money awarded. Of the $4.6 billion, only about $1.4 billion can be confidently reconciled with specific expenditures. This leaves a gap of $3.2 billion. It gets worse. These 17 exchanges are so far behind in their bookkeeping that every figure reported to the GAO is accompanied by a catalog of caveats.
This finally aroused the House Energy and Commerce Oversight Subcommittee. Chairman Tim Murphy (R-PA). held a hearing on September 29, before which various exchange officials appeared but provided little useful data on the grants. The committee then sent document requests to the 17 exchanges (California, Colorado, Connecticut, D.C., Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington) because “The hearing… did not answer all the committee’s questions nor fully assuaged its concerns that tax dollars have been, and are being, spent inappropriately.”
CMS is responsible for monitoring how the Obamacare start-up grants were spent and Chairman Murphy is clearly as skeptical about that agency’s commitment to proper oversight as he is about the veracity of the exchange officials. As he observed during the hearing, “CMS has seemed more focused on doling out taxpayer dollars rather than overseeing how those dollars are spent.” And the additional information requested by the committee focuses heavily on that agency. The request letter sent to Covered California, for example, not only asks about $355 million in grants still in that state’s coffers but asks: “Did CMS grant permission for the use of these funds? If yes, who, when and how?”
Murphy is clearly concerned that CMS actually encouraged illegal use of grant money, which is why it also requested the following from each exchange: “A list of all meetings between employees or representatives of HHS, CMS… and employees or representatives of the state exchange.” The requests also ask for documentation relating to such meetings, including the following: “All reports, updates, audits, memoranda, presentations, analyses, and other documents provided to HHS, CMS… relating to or referring to the status of the state exchange, including, but not limited to, any federal grants or funds for the building of, operation, or maintenance of the state exchange.”
The key word in this section of the request is “operation.” All state exchanges were required to be fiscally self-sustaining by January 1, 2015. The use of grant money beyond that date for operations is, as noted by the HHS Office of Inspector General in the alert noted above, illegal. Unless CMS issued one or more of these states “No Cost Extensions,” which permit the use of some grant funds to wrap up “establishment” projects, there is no legal way for the states to use the money. If CMS encouraged or even knew about the use of establishment grants for such purposes, its leadership (e.g. Acting Administrator Andrew Slavitt) is guilty of colluding with state Democrats to violate the law.
Would Andrew Slavitt, whom the White House has been trying to get confirmed as CMS administrator since its former head was forced to resign for fudging Obamacare enrollment figures, endanger his nomination by authorizing illegal use of the grants? Apparently so. When Inspector General Daniel Levinson issued his alert concerning the misuse of Obamacare grants, he wrote that states involved “continue to use establishment grant funds for operating expenses after January 1, 2015… contrary to law.” CMS responded to this alert by issuing a clarification that rewrites the law such that the grants can be used for operating expenses after January, including those associated with marketing.
According to this “clarification,” establishment grant money can now be used for ongoing exchange expenditures such as “Outreach and education, including in-person assistance to support increasing total enrollment.” There can be little doubt that Slavitt was well aware of this illegal revision of Obamacare. The Inspector General’s alert was addressed specifically to him, and there isn’t the slightest possibility that any of Slavitt’s CMS underlings would flout such a warning without his approval. It would appear that Rep. Murphy’s oversight committee needs to talk to Slavitt. According to a source familiar with the investigation, they haven’t yet decided whether to summon him to the Hill.
Chairman Murphy may well be temporizing on that decision until he has more information on Slavitt’s role in the Obamacare CO-OP debacle. In addition to its attempt to find the missing exchange money, his subcommittee is conducting a concurrent investigation into the $1.23 billion that Slavitt’s agency squandered on 12 CO-OPs that have gone belly up. To that end, the Murphy subcommittee held its initial hearing on this latest Obamacare disaster on November 5. The purported purpose of these nonprofit CO-OPs was to increase patient choice and promote competition, and it’s pretty difficult to see how they will ever be able to repay any of the taxpayer funds that CMS wasted on them.
CMS was represented at that hearing by Chief of Staff Mandy Cohen, who provided predictable Obama administration talking points. Far more credible was the testimony of the nonpartisan agency that originally warned Andrew Slavitt about the questionable state use of Obamacare establishment grants. The HHS Office of Inspector General testified that one of the most important problems plaguing the CO-OPs was (Surprise!) a lack of proper oversight by CMS: “We continue to urge CMS to fully address OIG’s recommendations related to improving oversight.” Fat chance. Slavitt is, after all, a member of the Obama administration. And therein, with apologies to Shakespeare, lies the rub.
In order to reach the truth about of the missing Obamacare grants and the CO-OP disaster, Congressman Murphy’s oversight committee must penetrate the ramparts of mendacity that have been erected around Obamacare by bureaucrats like Slavitt, the President’s Democrat accomplices, and the legacy “news” media. The committee has received pledges of full cooperation from all 17 exchanges and some of the requested documents have already begun to arrive on Capitol Hill. That’s not a bad sign, but it’s no guarantee that we’ll learn the truth about either until January 20, 2017—if ever.