A top Obamacare official tried to reassure skeptical Republicans Tuesday that the federal government is recouping, or trying to recoup, millions of federal dollars that states spent on insurance marketplaces that stumbled or ultimately failed.
In a charged oversight hearing focused on the new Obamacare marketplaces, Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt said his agency is requiring Maryland to pay back dollars it either misspent or no longer needs and is working on collecting money from three other states spent on their failed exchanges. And CMS has recovered $200 million from states so far, he said.
"If we find any money has either been misspent or we have granted money that we believe the state no longer needs, we control the purse strings and have the right to collect money back, and we in fact have done that," Slavitt told the House Energy and Commerce Oversight Subcommittee.
But Slavitt was facing a panel of skeptical Republicans who say the Obama administration allowed states to waste federal money on technically troubled or nonfunctional marketplaces without sufficient oversight. The grants were intended to help states get their marketplaces up and running before becoming self-sustaining.
"They failed but they spent all this money and then said 'gee sorry, it didn't work out,'" said Chairman Tim Murphy, R-Pa. "Is that acceptable?"
The Obama administration awarded about $5.5 billion to more than 15 states and the District of Columbia to set up their own insurance marketplaces where low-income Americans can collect subsidies to buy health plans. States that have abandoned their own marketplaces were given hundreds of millions of taxpayer dollars to set them up.
Republicans have jumped on the failed exchanges to raise questions about whether there's adequate oversight of the federal grant money, using the marketplace failures to help build their case against the Affordable Care Act. Other recent challenges, including the failure of half its nonprofit insurance cooperatives and the threatened exit of a major insurer, have put the Obama administration on the defense.
Slavitt defended the ability of states to switch from a state-run marketplace to healthcare.gov at their own discretion, saying they "have the right to change their mind for a variety of reasons including technical or otherwise." But he also said CMS is placing a high priority on collecting some grant money from the states with failed marketplaces and insisted the agency has sufficient oversight procedures in place.
"We can provide you with an accouting of every dollar that has been spent," Slavitt said. "And we're in the process in many cases of pulling that money back."
A CMS spokesman later told the Washington Examiner that when Slavitt mentioned Maryland, he was referring to the recovery of funds from a settlement with the state's former contractor, Noridian.
As in many past congressional hearings on the Affordable Care Act, Democrats and Republicans appeared sharply divided over the law overall, with Democrats accusing Republicans of trying to undermine it rather than help fix its problems.
"I think this could be the committee where we have these hearings and then we sit down to think about how we can improve the Affordable Care Act…but frankly, I don't have much hope," said Rep. Diana DeGette, D-Colo.
But Republicans pointed to a recommendation by the Government Accountability Office in September that the federal government should improve oversight of states' information technology projects supporting their marketplaces. When the watchdog agency evaluted the state-run marketplaces in four categories, none was deemed to be fully operational in all the categories.
"The GAO says none of the state exchanges are functional, said Rep. Marsha Blackburn, R-Tenn. "Mr. Slavitt, that means it ain't workin'."
Slavitt has filled in as CMS administrator since the departure of Marilyn Tavenner earlier this year. He is awaiting confirmation by the Senate, although it's not clear if that will happen before President Obama leaves office next year and the administration shifts hands.