Can Taxpayers Recover Hundreds of Millions of Dollars from Obamacare Exchanges?

The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services has just released a report on the contracts issued to private vendors to set up the federal pieces of Obamacare’s disastrous health-insurance exchanges. This is only the first of a series of reports, and it limits itself to describing the extent of the problem, not recommending solutions.

The OIG identified 60 contracts that started between January 2009 and January 2014. (That start date is a little mysterious, because Obamacare was not signed into law until March 2010.) The total estimated value of the contracts, when they were signed, was $1.7 billion.

However, only $800 million has been obligated, and $500 million spent. This reckoning goes up only to February 2014, so much more money has surely been spent. What is also shocking is how much money the Obama administration committed after the exchanges were known to be failing. Accenture, for example, won a contract for $90 million in January 2014. As of the end of February, $45 million was “obligated.” In April it was reported as spent.

How can taxpayers recover this money? Obamacare needs to be repealed. Nevertheless, even with Obamacare, no taxpayer funding whatsoever had to be spent on customer-facing government websites. That’s right: Zero, nada, nicht.

“Web-based entities” (as the regulations call them), such as eHealthInsurance.com and GetInsured.com are online health-insurance marketplaces that have existed for years. They were allowed to enroll people in Obamacare and were eager to do so. They were more successful than government websites at enrolling young and healthy beneficiaries.

Bipartisan reform to Obamacare would simply shut down healthcare.gov, seek to recover unspent obligations to private vendors, and hand the whole thing over to online health-insurance marketplaces.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.