When Democrat Martin O’Malley announced his presidential bid, the media billed him as part of a new generation of talented technocrats. The former Maryland governor, as one outlet put it, “helped pioneer a data-driven approach that made government more efficient.” These people have evidently forgotten the spectacular failure of Maryland’s online Obamacare exchange, which crashed moments after launch because O’Malley and his administration studiously ignored ominous data provided by its technical experts. In other words, O’Malley’s “data-driven approach” didn’t involve looking at actual data. It consisted primarily of telling the media that Maryland’s exchange would be a “model for the nation.”
Meanwhile, the danger signs mounted. As the Washington Post reported at the time, “More than a year before Maryland launched its health insurance exchange, senior state officials failed to heed warnings that no one was ultimately accountable for the $170 million project and that the state lacked a plausible plan for how it would be ready.” And these concerns continued to be ignored right up to the go-live date. Even when the top information technology official resigned, O’Malley and his people somehow failed to get the message. This avoidable debacle culminated last week in a settlement requiring the IT firm Noridian Healthcare Solutions to refund $45 million of the $73 million it was paid to bungle the project.
But the moral of this tale transcends O’Malley’s obvious limitations and even the multifarious flaws of Obamacare. The meltdown of Maryland’s exchange will help to explode the myth that a new breed of technocrats can deliver good government where mere politicians encumbered by inconvenient laws cannot. It was this fallacy that motivated the Democrat-controlled Congress that created Obamacare to cede much of its power to executive branch bureaucrats, and it is behind many of the illegal executive orders issued by the President. O’Malley’s pratfalls are a useful reminder the hyper-competent technocrat is a myth. And the other state-run exchanges provide an equally telling catalogue of incompetence and waste.
Despite having received billions of taxpayer dollars in federal planning grants, early innovator grants, and establishment grants, most of the states that elected to set up Obamacare exchanges have failed to get them completely up-and-running. As Reason points out, a draft report by the Government Accountability Office (GAO) says most state-run exchanges are still unable to perform certain essential tasks: “Most states running their own exchanges under the law have yet to complete work on some critical exchange functionality, such as verifying eligibility for subsidies, paying insurers, and reporting data to the Internal Revenue Service.” For this mess the taxpayers have paid out about $5 billion in start-up grants.
Even worse, the states that received all this grant money have not been able tell the federal government where it was spent. How can that be? Because the regulations set forth by the Centers for Medicare and Medicaid Services (CMS) haven’t required them to keep track of it with any real specificity: “Rather than require states to report spending on specific products, CMS required states running their own exchanges to report spending on five general categories—IT contracts, IT consultants, IT personnel, IT equipment, and IT supplies.” In other words, the states that “cooperated” with the Obama administration in setting up Obamacare exchanges quite literally don’t know where the money went.
One of the worst exchange disasters occurred in Hawaii, where Democrat Governor David Ige has been so closely identified with the word “technocrat” in the media that it is practically part of his name. Ige’s fingerprints are all over the failed Hawaii Health Connector, which he co-sponsored as a state senator and that he helped make a reality by working closely with then Governor Neil Abercrombie. The fruit of Ige’s labor was an exchange that swallowed up $130 million of $205 million in federal grants to produce an incredibly glitch-prone Obamacare exchange that enrolled only 37,000 people between 2013 launch and Ige’s move from the state Senate to the Governor’s mansion in January of this year.
One of Ige’s first actions upon becoming governor was to initiate negotiations with the federal government for the release of more taxpayer cash from the remaining $75 million in grants that not yet been squandered on the Hawaii Health Connector. Instead of more money, however, what the Governor got was a decision by the GAO to investigate the exchange’s finances in an effort to find out what happened to the other money it received. Meanwhile, having failed to secure more grant money, Ige has decided to abandon the exchange: “The state is walking away from a $130 million investment in the Hawaii Health Connector and permanently moving the insurance exchange to the federal Obamacare program.”
For the rest of the state-based exchanges, the story is pretty much the same. Due to technocratic hubris, or old-fashioned corruption, they are either bankrupt or in serious financial trouble. The worst cases are in Oregon, which officially deep-sixed its exchange in March, Colorado, Massachusetts, Minnesota, New York and California. Moreover, some states are being investigated for using establishment grant money for regular operations. Even those state exchanges that remain more or less solvent are spending absurd amounts of money per enrollee. Such is the handiwork of the hyper-competent technocrat. Like Martin O’Malley, they inevitably make a pig’s breakfast of everything they touch.