The Magazine

Obamacare in the Blue States

The great coverup.

Jun 9, 2014, Vol. 19, No. 37 • By MICHAEL ASTRUE
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One of the ironies of the Affordable Care Act is that many of the governors who zealously supported the bill failed spectacularly in its implementation. Oregon, Maryland, and Minnesota are among the most prominent failures. The Massachusetts exchange, the primary inspiration for the ACA exchanges, collapsed entirely, and state officials lack a plan for fixing it in time for this fall’s enrollments.

David Clark

David Clark

After the passage of the ACA, the Centers for Medicare & Medicaid Services (CMS) instituted a management process to ensure accountability among states that chose to build their own exchanges instead of participating in HealthCare.gov. It involved “gate reviews,” a periodic assessment of progress in seven areas; CMS designed the process to ensure that continued federal funding would lead to secure and functional exchanges. 

Several of the seven areas for the gate reviews required a state official to make critically important representations about the readiness of the state exchange. Those representations allowed CMS to determine whether an exchange should continue to receive massive amounts of federal funding. Law enforcement officials in Oregon and Maryland are asking whether state officials misrepresented their progress in order to keep the funding spigot open, and that is a question which needs to be asked in other states as well.

President Obama’s response to mounting concerns about potentially criminal misconduct may become a defining moment of his second term. He should start by reviewing the performance of the key law enforcement official, Health and Human Services inspector general Daniel Levinson, who slumbered through the gate reviews in the same way he slumbered through the disastrous launch of HealthCare.gov. 

In Oregon, complaints by a state representative concerning $300 million in squandered taxpayer money finally provoked the FBI, the HHS inspector general, and the Government Accountability Office to open investigations into many issues, including whether Cover Oregon officials had misrepresented their progress in gate reviews to CMS officials. Knowingly making false statements to a federal official in this context is a federal felony, and we should know before long whether misrepresentations during the gate reviews turned the program into “Coverup Oregon.”

The story is similar, albeit on a slightly slower track, in Maryland, where calls for an investigation by Democratic attorney general Douglas Gansler and Republican congressman Andy Harris have prodded Inspector General Levinson into investigating another $300 million of squandered taxpayer money. It is an investigation that has an inherent credibility problem because, as I pointed out last year in these pages, Inspector General Levinson has repeatedly shirked his duties in order to be a good ACA team player. 

Sylvia Mathews Burwell, whose confirmation as secretary of HHS appears to be imminent, declared during her confirmation hearing that she would use “the full extent of the law” to recover misspent health exchange funding. That pledge requires her, as soon as she takes her oath of office, to follow the precedent established in Oregon and to insist that Attorney General Holder send the FBI into Maryland to babysit Levinson’s see-no-evil employees; any action less than that will strongly suggest that the fix is in.

The most spectacular failure in the country occurred on the watch of Massachusetts governor Deval Patrick. The Massachusetts website still does not allow residents to obtain insurance as the ACA requires, and state officials will not decide until late July whether to rebuild the site or use HealthCare.gov—even though we are now less than six months away from the next round of health exchange enrollments. In other words, the health exchange train wreck continues in Massachusetts.

Governor Patrick has stonewalled attempts by his heavily Democratic legislature to obtain an accounting of where the money went, but it appears that the state that once served as a model for the Affordable Care Act has already spent over half a billion dollars. In addition, as part of his chaotic implementation of the ACA, Patrick placed as many as 200,000 applicants who requested financial assistance onto Medicaid—whether they qualified for Medicaid or not. The state is just beginning to weed out the ineligible from the eligible, and it lacks the data to come clean with the public and CMS as to how many hundreds of millions of dollars will be spent on Medicaid payments for people ineligible for Medicaid. Where was CMS and where was the inspector general?

The self-declared consumer watchdogs of the Massachusetts congressional delegation and state attorney general Martha Coakley have been studiously silent about evidence of possible criminal activity in Massachusetts, which includes untrue statements made to obtain funding as well as multiple cases of no-bid contracts going to entities paid to oversee themselves. They need to raise their voices to ensure that federal and state law enforcement officials step in immediately. 

Patrick’s pattern of behavior has an increasingly Nixonian flavor, thus it is overdue to ask, “What did he know and when did he know it?” His stonewalling of financial data that other states have disclosed is the first indicator of a problem. The second sign is that there is simply no credible explanation—other than outright misrepresentation—for how Massachusetts slipped through the CMS gate reviews without having even a marginally functional beta version of its exchange. Tellingly, members of the state oversight board for the Massachusetts exchange have complained about their own staff’s failure to inform them promptly that the system had failed. Minutes of advisory board meetings on the exchange’s website document this failure. 

The third, and perhaps the most critical, sign of misconduct is that Patrick has stripped the executive director of the state exchange of her program management and contracting responsibilities. He has placed functional control of the state’s exchange in the hands of his trusted former deputy chief of staff for cabinet affairs, a labor lawyer who is totally lacking in the technical expertise or experience necessary to turn around the failed exchange. Desperate damage control is trumping transparency and competence. 

The collapse of the Minnesota’s MNsure website mirrors the Massachusetts meltdown. Again, an arrogant and inexperienced executive director withheld critically important information from her board, the public, and even the insurance companies that needed to plug into the system. Again, ill-advised software contracts compounded timeline failures produced primarily by poor planning and execution. Somehow, Minnesota also miraculously passed the CMS gate reviews even though, as in Massachusetts, it could not test a beta system before its failed launch. We need to know how CMS could have possibly found adequate progress for functionality and security in light of this disarray, and law enforcement needs to know too.

President Obama is setting up his new HHS secretary for failure if he hesitates to hold his appointees accountable. As the VA scandals demonstrate, we cannot rely on investigations by an inspector general who has been a significant and longstanding part of the problem he is investigating. President Obama should fire Inspector General Levinson, and he should do so immediately. Next, he should direct Attorney General Holder to appoint a special counsel with broad powers to oversee an investigation into all the failed state exchanges in order to determine whether federal and state officials committed felonies. Finally, Congress needs to ask whether partisan considerations—or personal relationships such as the friendship between President Obama and Governor Patrick—influenced decisions by CMS officials to continue funding completely nonfunctional systems.

As a student of American history and a scholar of constitutional law, President Obama should be well aware of how hesitation in the coming weeks could taint his legacy.

Michael Astrue is a former commissioner of Social Security and general counsel of the U.S. Department of Health and Human Services.

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