Covered California issues $184M in no-bid contracts

It’s good work if you can get it. There may be plenty of problems related to the state exchanges under Obamacare, but if you’re in the business of working on the web sites, opportunities abound. This is particularly true if you happen to have ties to health insurance exchange Executive Director Peter Lee.

California’s health insurance exchange has awarded $184 million in contracts without the competitive bidding and oversight that is standard practice across state government, including deals that sent millions of dollars to a firm whose employees have long-standing ties to the agency’s executive director…

Several of those contracts worth a total of $4.2 million went to a consulting firm, The Tori Group, whose founder has strong professional ties to agency Executive Director Peter Lee, while others were awarded to a subsidiary of a health care company he once headed.

There was, initially, a theoretical reason for Covered California to issue some no-bid contracts. They were under the gun to meet a deadline imposed by the federal government which was fast approaching and the work involved some highly specialized, niche skills. But the system has been up and “running” (to be generous) for some time now. States are supposed to eschew no-bid contracts to avoid exactly what appears to be going on here. Open bidding not only gives the taxpayer at least the hope of getting a better deal for their dollar, but also leaves the process open for public inspection ahead of time. This can, when handled properly, reduce the chances of insider deals and impropriety.

Covered California, however, seems to be staying in emergency response mode and Peter Lee’s cronies look to be benefiting from it in spades.

The no-bid contracts represent nearly $2 of every $10 awarded to outside companies by the agency and were among roughly $1 billion in agreements disclosed to AP that the exchange executed from late 2010 through July, according to the records.

Through its first year of operation, Covered California was funded almost entirely by federal grant money.

The founder of The Tori Group, Leesa Tori, worked under Lee when she was a senior executive at Pacific Health Advantage, a small business insurance exchange that failed in 2006. Lee was a longtime chief executive of Pacific Business Group on Health, which managed Pacific Health Advantage, and Tori also worked with him at the parent company.

Long before it opened its doors to the public last fall, Covered California awarded a small contract to Tori for her advice on designing a program to sell insurance to small companies. The $4,900 agreement in late 2011 was executed without rival bids…

Yolanda Richardson, Covered California’s chief deputy executive director who reports directly to Lee, was a vice president at Pacific Health Advantage. Before she was hired on staff, she received a 10-month, $176,500 no-bid consulting contract from the agency in 2011, about a month before Lee came on board, according to the records.

Any time you have this amount of money amassing in one place with insufficient light shining on the pile, hands will appear to make a grab at it. The result, in terms of value delivered for the taxpayer, is rarely a good one. On a related note, we had a discussion this weekend of how you wouldn’t be able to find out your Obamacare rates until after the election. Thanks to one of our readers, it seems that some of that information actually is showing up, though you have to do some digging to find it. Out in Ohio, some rate information is on their web site.

Average premiums will increase by 12 percent for individuals and 12 percent for small businesses in 2015 according to approved rates submitted by Ohio health insurance companies.

The average premium for the 16 companies approved to sell plans on the federal exchange in the individual market is $372.86 per month compared to $332.58 per month for the same coverage last year representing a 12.1 percent increase. For the small group market, the eight companies approved to sell plans had average premiums of $448.55 compared to $401.99 in 2014 representing an 11.58 percent increase.

Based on enrollment information used to develop the rates, the weighted average for the 16 companies selling on the individual exchange in 2015 is $379.80. For the eight companies selling exchange plans in the small group market, the weighted average is $507.51.

So your rates are supposed to be going down under Obamacare. No… wait. They’re supposed to be going up more slowly. If double digit rate increases each ear qualify as “more slowly” I’d hate to see what it would cost without government control.