The Massachusetts Health Connector website suffered a series of problems when it first launched. Photo: Massachusetts Health Connector
The total cost of implementing a new Massachusetts health insurance exchange could exceed $1 billion over two years, according to a new report that is being roundly dismissed by the Patrick administration.
The report, published Wednesday by the Pioneer Institute's senior fellow Josh Archambault, estimates that taxpayers will have spent more than $600 million to implement the new exchange, which includes the cost of rebuilding the balky website after a failed rollout last fall.
Another $540 million will be poured into a temporary Medicaid program created to insure the hundreds of thousands of residents who could not sign up for new health insurance under the Affordable Care Act due to the web problems, Archambault writes in the report.
"These budget numbers are a call to action," he wrote. "Unlike in other states with faulty exchanges where multiple investigations have been opened, our elected officials have been surprisingly quiet given the website's failure."
Archambault said much of the expense could have been avoided if Massachusetts had joined the federal healthcare.gov exchange in 2014. He called on Inspector General Glenn Cunha to open an investigation into the failed Connector site and to do a full accounting of how state money has been spent, and said the U.S. Health and Human Services Inspector General and the F.B.I. should add Massachusetts to the list of states under review to see if officials lied about the progress of the site to keep federal dollars flowing.
Gov. Deval Patrick, who is traveling in England and France on Wednesday, issued a statement blasting the Pioneer Institute and its report.
"One thing I won't miss is having to answer spurious charges from the Pioneer Institute based on politics rather than facts," Patrick said. "The truth is that Massachusetts is still successfully expanding health care and doing so within budget. The philosophical objections to the ACA of this reliable critic don't change that."
Administration and Finance Secretary Glen Shor, who chairs the Health Connector board, suggested the Pioneer report is "full of double counting and errors," pointing as an example to one line-item listed for $105 million to pay new IT vendor Optum that was a revised contract estimate presented at a board meeting, not a new expense.
The administration also took issue with Archambault not differentiating between federal and state tax dollars and using charts in the report that compare two years of Connector costs to single years of spending on public health, early education, housing and economic development.
"We know the Pioneer Institute is fundamentally opposed to the Affordable Care Act. They are not an objective source of expertise or analysis on the cost of implementation and this is an attempt to misrepresent to advance their policy issues on political grounds," Shor said.
The administration initially received $174 million from the federal government to build its state-based health exchange under the ACA. When the first site failed, the state hired new contractors to rebuild the site and now estimate that it will cost an additional $80 million to finish the IT project.
Shor also said the federal government has reimbursed the state for 50 percent of the cost of insuring over 300,000 residents on temporary Medicaid coverage until they can be placed in final plans, and MassHealth remained within budget for fiscal 2014 despite the unanticipated program.
Without trying to rebut each point and suggesting even a few errors would not meaningfully change the bottom line, Archambault said part of the reason he did the report was to try to pry loose information he feels is being withheld.
"I made it clear in the report this was a possibility because they haven't been completely transparent," Archambault said.
Shor took issue with Archambault's charge that the administration has been less than transparent, citing numerous public briefings, reports and testimony to legislative committees about progress being made on the new website, and its cost.
While many residents in temporary Medicaid will ultimately qualify for subsidies, Archambault said it remains unknown how many of that population should not have been receiving government help. The state and the Centers for Medicare and Medicaid Services plan to reconcile the subscribers later this year once they are determined for their permanent coverage option.
"We also knew that offering more expansive options would require additional state and federal funding," Shor said. "We support the Affordable Care Act because we know it builds on the success of Massachusetts health reform. They oppose it on policy grounds and are throwing numbers around recklessly and inaccurately to cloak what is a broader opposition to the ACA.
Administration officials did not put a total price tag on costs of ACA implementation, but said the cost estimates associated with the failed website are far lower than the report suggested.
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