GAO, HHS Inspector General reports on ObamaCare provide damning indictment of Big Government

In October 2013, after 40 months of preparation and a billion dollars of funding, the Department of Health and Human Services and subsidiary agency Centers for Medicare and Medicaid Services (CMS) unveiled the ObamaCare exchange. It turned into a legendary disaster, enrolling only six people on the first day while the system collapsed. State exchanges didn’t do much better; Oregon’s never signed up a single consumer, for instance. At the time, the Obama administration blamed it on the technological hurdles involved, but the Inspector General at HHS found a much different problem — bureaucracies and a blizzard of warnings that went unheeded.

In my column for The Fiscal Times, today, I point out that the “mystery” of the failure is hardly a suspense for those who have had a Clue all along:

More than two years later, the Inspector General of HHS has prepared what it calls a “case study” of the failures with and the 40 months that preceded its rollout. The IG reviewed several thousand internal documents and interviewed dozens of HHS, CMS, and contractor personnel to find the culprit. And it wasn’t the butler who did it or Colonel Mustard with the pipe in the study. The solution is much more elementary, dear Watsons.

It was Big Government, in the bureaucracies, with unaccountability.

That’s not the only indictment for big government from oversight agencies. The GAO took a look at the present state of the system, and found that it lacks oversight where it matters most — subsidy payments. There is no effort being made to correct that situation, either:

According to NBC News, eligibility for subsidies gets determined by information passing through a “data services hub” that accesses systems in “federal agencies such as Social Security, IRS, and Homeland Security to verify their personal details.” CMS has no oversight in place to analyze and track this information even though it authorizes payments of billions of dollars in subsidies.

TFTs Eric Pianin quantifies the potential disaster:

The report doesn’t pinpoint actual fraudulent activities, but it makes it clear that applicants have plenty of opportunities to game the system without fear of getting caught because many agencies routinely fail to verify personal information requested by the insurance markets through the hub.

For example, about 431,000 applications from the 2014 enrollment period still had unresolved inconsistencies as of April 2015, with about $1.7 billion in federal subsidies at stake, according to the GAO’s analysis of CMS data.  Moreover, CMS did not resolve Social Security number inconsistencies for about 35,000 applications or questions about incarceration for about 22,000 applicants. Those 57,000 applications in question involved subsidies totaling $222 million. …

Under the 2010 Affordable Care Act, the government has helped millions of previously uninsured Americans obtain both market-rate and subsidized health care insurance through insurance exchanges created by the federal government or the states. According to the non-partisan Congressional Budget Office, the government has spent $37 billion in fiscal 2015 for subsidies and related spending. The CBO warned that the cost of the subsidies will steadily rise, to as much as $105 billion by 2025, yet CMS appears to be lackadaisical in monitoring for fraudulent activities, or even bothering to connect the dots generated by the hub.

It’s worth noting that just the $222 million identified as questionable subsidy payments in this audit amounts to three times what Barack Obama claims he can save every year by closing Gitmo. So HHS and CMS are all over these cost savings, right? Right? Er … not really:

The bureaucracy “has assumed a passive approach to identifying and preventing fraud,” according to the GAO report. The Obama administration admitted to the problem, two and a half years into paying those subsidies, but that’s all they do. House Energy and Commerce Chair Fred Upton called this response “unsettling … the agency has no urgency or plan to fix these critical errors.”

This is why government should not arrogate itself the role of running private markets:

Any insurer who failed this badly at setting up a web portal for its products, and who two years later still didn’t have anti-fraud protection in place, would be as bankrupt as the Obamacare co-ops that collapsed this year. We have spent hundreds of billions of dollars just to discover that government isn’t terribly good at creating consumer-products marketplaces, and flat-out terrible at running a business and accounting for outcomes, while eliminating any potential competition.

Many of us knew this already in 2009-10, and warned repeatedly about these very outcomes. It didn’t take a Columbo, Ellery Queen, or even an Encyclopedia Brown to deduce the result of ObamaCare, even if some of the media still acts as though failure is a mystery.