Obama Grants Massachusetts Special ObamaCare Deals in the Commonwealth Kickback & Bay State Bailout

After the worst transition to ObamaCare in the country, Massachusetts is still without a functional Exchange website- just 769 people have enrolled in ObamaCare-subsidized plans.  To avoid accountability and political repercussions, Massachusetts Gov. Deval Patrick has cut two special deals with the federal government:  the “Commonwealth Kickback” grants Massachusetts the most generous taxpayer-funded premium subsidies in the entire country, while the “Bay State Bailout” gives a 300,000 MA residents “temporary” Medicaid coverage in 2014, without any verification of their eligibility. These deal are reminiscent of the Obamacare legislation “Cornhusker Kickback” and “Louisiana Purchase.”

How can the Obama administration flood Massachusetts with billions of federal taxpayer dollars through a pre-existing Medicaid Waiver to cover up Patrick administration mismanagement? Continuing its all too common practices, the Obama Administration is favoring one state, Massachusetts, at the expense of others, and blatantly disregarding ObamaCare’s own regulations and guidance to make the Commonwealth Kickback and Bay State Bailout a reality.

Massachusetts’ health care reform, RomneyCare, received a Medicaid Waiver, with the federal government funding 50% of the cost. To implement its transition to ObamaCare, Massachusetts submitted a Waiver Amendment request for wide-ranging changes to RomneyCare programs. Buried in the request was the “Commonwealth Kickback” – an estimated $1.1 billion request in Medicaid funding to cover an additional Exchange premium subsidy for Massachusetts residents earning less than 300 percent FPL. It would translate into lower out-of-pocket contributions for premiums than residents of any other state.

Why the Commonwealth Kickback?

ObamaCare Exchange subsidies are less generous than RomneyCare subsidies for those making less than 300 percent FPL. The Obama Administration and Governor Patrick knew it wouldn’t look good if health insurance coverage declined because of ObamaCare, particularly in the state touted as the model for the President’s law.  The clever use of the Medicaid Waiver to fund the vast majority of the higher Massachusetts subsidies has only one purpose – to prop up enrollment in the state out of public view.

The chutzpah doesn’t end there, however. Even in the middle of Massachusetts’ ongoing ObamaCare implementation disaster, Governor Patrick shamelessly filed a Waiver Extension request asking the Obama Administration to fund the Commonwealth Kickback with federal taxpayer dollars through June 30, 2019—a full five years. That request is currently pending. However the request for additional taxpayer money does not end there.

Despite hundreds of millions in ObamaCare-related funding, Massachusetts built a spectacularly-flawed Exchange website. State officials, obsessed with building “the absolute Rolls-Royce of any health exchange,” failed to deliver even minimal website functionality. With no backup plan to manually process applications, hundreds of thousands of MA residents faced loss of coverage beginning January 1, 2014.

With the clock ticking down to New Year’s Day, Gov. Patrick turned to his political friend in Washington, President Obama, to again turn on the taxpayer spigot that never runs dry – the Medicaid Waiver.

In just 13 days, Gov. Patrick engineered a backroom deal—call it the “Bay State Bailout,” to create a new “temporary” Medicaid coverage never before seen in the history of the program, which effectively eliminated any initial eligibility determination. Early estimates put the price tag for the program at north of $700 million.

Anyone that answered “yes” to the question: “Do you want help paying for health insurance?” could enroll. The deal was struck with no public disclosure or opportunity for public comment, as required by the Centers for Medicare and Medicaid Services’ (CMS) own guidelines.

As any other state Medicaid Director can attest, this was no ordinary CMS Waiver approval process.  Approvals routinely take six months to two years, with requests often denied. For example, CMS recently denied Iowa’s request to increase copays from $8 to $10, to discourage unnecessary ER use. Yet Massachusetts created, in just 13 days, an entirely new Medicaid program, with the ability to enroll anyone regardless of eligibility.

Further, the Waiver authority CMS granted was unprecedented. CMS essentially waived any requirement that Massachusetts make an initial eligibility determination, knowingly disregarded Massachusetts’ statutory obligation to transition Temporary Medicaid enrollees to traditional Medicaid or Exchange plans “as quickly as possible”, and did not require Massachusetts to resolve subsidy application data inconsistencies in 180 days—all of which represent a misuse of CMS’s authority. This move prompted U.S. Rep. Fred Upton, the chairman of the House Committee on Energy and Commerce, and U.S. Sen. Orrin Hatch, the ranking member of the Senate Finance Committee, to send a letter to the Centers for Medicare and Medicaid Services questioning this authority.

With CMS waiving these eligibility procedures designed to protect Medicaid integrity, it is unsurprising that the program is rife with abuse. As Julie Donnelly at the Boston Business Journal has written, “It’s not yet clear how many people—whether by good faith efforts to use the website, or by deliberate attempts to game the system—may be enjoying free coverage they aren’t entitled to.” A June 2014 report from the HHS Office of the Inspector General found that 98% of the 7,000 applications reviewed in Massachusetts suffered from data problems.

Massachusetts’ Temporary Medicaid Coverage also gives residents benefits not available in any other state.  For example, the program does not requireany premium contribution or cost sharing, even for individuals with incomes between 138% – 400% of the federal poverty level (a cost borne with subsidized Exchange plans). The Bay State Bailout is drawing federal taxpayer funding from every other state to cover for Massachusetts.

Unfortunately, the deals crafted by Gov. Patrick and the Obama Administration now pit federal and state taxpayers against one another. The lack of transparency and failure to accept public comment has made it impossible for taxpayers in Alaska, Arkansas, Colorado, Iowa, Louisiana, Michigan, New Hampshire, North Carolina and every other state from weighing in on whether they want the federal government to use their hard-earned tax dollars to bail out Massachusetts officials.

Unlike Colorado, Maryland, Minnesota, and Oregon, that have ongoing investigations for past website failures, some of which are criminal investigations, no such investigation is targeting Massachusetts, which more than any other state cries out for heightened review.

Regardless of political leanings, all states should receive comparable benefits under ObamaCare – no favorites, no payoffs. When politicians play favorites, the American people lose faith in government. And Massachusetts officials should not cheer the questionable use of federal largesse to favor them at the expense of other Americans. It is time for all Americans to demand a better, and fairer, government – there is no better place to start than in Massachusetts, the birthplace of the concepts behind our great nation, and Obamacare.

Josh Archambault is a senior fellow at the Foundation for Government Accountability and Pioneer Institute, a Boston-based think tank. Find him on twitter: @josharchambault 

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