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Preventing One Last Obamacare Rip-Off of Taxpayers

Congress needs to audit state spending on failed Obamacare exchanges and ensure remaining funds are returned to taxpayers.

This Aug. 21, 2014, file photo shows health care tax forms 8962, 1095-A, and 8965, in Washington. Several million people hit with new federal fines for going without health insurance will get a second chance to sign up starting Sunday, March 15, 2015, and that could ease the sting of rising penalties for being uninsured. (AP Photo/Carolyn Kaster)

The full costs of Obamcare's ill-advised takeover of the health care system – whether measured in dollars or lives – are still being tallied. But one last thumb in the eye of taxpayers could come from the numerous state Obamacare exchanges that have unceremoniously flopped. Without Congressional actions, states will be allowed to keep federal tax dollars intended for use building exchanges even after failing to deliver on their end.

Image source: AP/Don Ryan

Over $5.5 billion in federal grants were awarded to the states to create Obamacare exchanges. A large portion of these funds have been wasted on vague expenses like "education" and "outreach," and many exchanges have suffered embarrassing failures. Defunct exchanges in Oregon, Hawaii, Nevada and New Mexico alone received a combined $733 million. The House of Representatives even made a criminal referral regarding Oregon's exchange.

Almost none of these lost funds have been returned.

It would be easy to assume that all of the money has already been spent and thus it is too late to recoup any of the funds sent to the states, but that's not the case. Much of the funds remain, though the federal government is going to have to step in and prevent states with failed exchanges from pocketing whatever they have left.

The acting administrator at the Centers for Medicare and Medicaid, Andy Slavitt, promised that the federal government would "recover its fair portion" from the failed exchanges, but a House panel later found his testimony misleading. He claimed last year that $200 million has been recouped, but federal officials recently were only able to point to $21 million that they prevented from being spent.

This ambiguity needs to be resolved with a transparent audit to determine exactly what happened, where the funds went, and what remains to be recouped. Rep. Rick Allen's (R-Ga.) Transparency and Accountability of Failed Exchanges Act (H.R. 4262), which currently has 63 cosponsors, would initiate such an audit as its first step and then require failed exchanges to return any unused funds to federal taxpayers.

When Maryland took a few of its contractors to court to recover some of its own misspent grant funds, Slavitt inexplicably let the state keep $13 million of the $45 million settlement, even though all the funds originally came from the federal government. Whatever the motivation, it had the whiff of a political payoff to a state that went along with the president's signature agenda item. No more such payments should be allowed.

Americans are increasingly losing faith in their government, and Obamacare's gross mismanagement and botched implementation, on top of its controversial enactment and questionable legality, are a large reason why. Allen's legislation would provide at least a small step in the right direction by holding state governments accountable, while benefiting taxpayers and reducing waste.

Andrew F. Quinlan is the co-founder and president of the Center for Freedom and Prosperity (@cfandp).

TheBlaze contributor channel supports an open discourse on a range of views. The opinions expressed in this channel are solely those of each individual author.

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