Learning from Obamacare’s Spectacular State Failures
UPDATE May 11, 2015: The FBI is now investigating the Massachusetts Obamacare exchange. This is the second open FBI investigation into a state exchange, with the Oregon probe ongoing. It's a start.
By Phil Kerpen
Federal taxpayers spent a shocking total of $5.4 billion – with a B – on grants to establish what ended up being just 13 state Obamacare exchanges. In some states the failures have been spectacular enough to embarrass officials and imperil political careers, and in far too many places, Republicans who should have known better went along. It’s an object lesson in keeping your fingerprints off the other party’s very bad ideas, and should be front of mind not just if the Supreme Court decision in King v. Burwell sparks new Obamacare exchange fights in state capitals, but also as states decide whether to cooperate with the Obama administration’s equally misguided global warming regulations. In both cases, the playbook is the same.
So how hard can it be to build a website when you have access to vast grants of federal taxpayer dollars? Very, it turns out, when the website has to comply with and implement the thicket of rules and regulations in the Obamacare law.
Massachusetts, which had a perfectly functional health exchange built by then-Governor Romney for a total of about $3.5 million, received $225 million from federal taxpayers for “upgrades” that broke the site so badly its director broke down in tears.
Tiny Vermont got $200 million and built a site so bad that they may pull the plug later this summer. Minnesota is also considering shutting down; they got $189 million.
Hawaii’s site is hemorrhaging cash, despite getting $205 million from the feds, and is likely to shut down if state legislators say no to an emergency $28 million bailout request.
Maryland’s exchange wasted $190 million from federal taxpayers and another $20 million or so from state taxpayers on their first site before they gave up and started over on a different technology platform. They will likely request another big bailout from the governor this summer.
Republican governors in New Mexico and Nevada accepted $123 million and $101 million in federal funds with nothing to show for it; both states have shut down and moved into the federal exchange.
Even California, supposedly the “success story” among state exchanges, doesn’t have much to show for a cost to federal taxpayers of precisely $1,065,683,056. Its 2015 goal was to boost enrollment by 500,000 people – it actually added just 7,098. Total enrollment has stalled at just 40% of potential. And the site has a miserable one-star Yelp rating. Not exactly the greatest results for a billion-dollar website.
Then there is Oregon, the disaster so astonishingly spectacular that it almost makes the rest look quaint. With $305 million of federal tax dollars flushed and not a single person ever signed up, Oregon would be a scandal simply for the scale of its failure. But it’s much worse. A blockbuster report by Wilmette Week found that the whole Cover Oregon debacle was run by now-disgraced former Governor John Kitzhaber’s reelection campaign, based entirely on politics. Specifically, they found that the site was being run by a political consultant named Patricia McCaig, who calls herself “the Princess of Darkness.”
“By her own admission, Patricia McCaig knew virtually nothing about health care reform or the reasons Cover Oregon had crashed,” according to Wilmette Week. “Her primary mission was not to save a beleaguered state program but to get Kitzhaber re-elected.”
With such an albatross, it might be surprising that Oregon saw Democratic gains last year while Republicans were winning everywhere else. But it’s probably because the state Obamacare exchange law passed with overwhelming bipartisan support. In fact, Kitzhaber’s Republican opponent for governor, Dennis Richardson, voted for it.
There is a vitally important lesson here. A bad policy idea must be opposed, full stop. There is no good way to implement Obamacare; states can’t do it any better than the feds, but they can discredit themselves badly by trying. If the Supreme Court rules that subsidies can flow only through state exchanges, states should be smart enough to demand Congress step up with reforms that will give them much greater flexibility before they move forward with any new health care program.
The same lesson applies to energy policy. The Obama administration is using the exact same playbook, demanding states implement cap-and-trade and other power sector rules under section 111(d) of the Clean Air Act – with a threat that if they don’t the EPA will do it themselves. Well, let them try. Any state tempted to play along under the theory that they can implement a bad idea in a less damaging way than the feds should look at what happened in Obamacare states and instead stand and fight.