For Immediate Release
June 05, 2014
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CONTACT:  Aaron Fobes/Julia Lawless (202) 224-4515

Hatch Calls for More Obamacare Oversight During Burwell Debate

In Speech on Senate Floor, Utah Senator Says, “At least seven states have failed to build a successful website and exchange, even though they received and accepted federal taxpayer dollars specifically for that purpose. Now, these states are scrambling to either rebuild their entire systems or to transition to the federal exchange.”

WASHINGTON – In a speech on the Senate floor today, Finance Committee Ranking Member Orrin Hatch (R-Utah) emphasizing the need for rigorous oversight and legislation regarding failed state Obamacare exchanges while highlighting the President’s nominee to head HHS, Sylvia Mathews Burwell, in her commitment to using “the full extent of the law to get those funds back for the taxpayers.”            

And, while I support Ms. Burwell’s nomination, no one should mistake that to mean that I have somehow softened in my resolve against Obamacare.  Indeed, I am as committed as ever to repealing and replacing this horribly misguided law,” said Hatch. 

In May, Hatch wrote CMS with former Finance Committee Chairman Chuck Grassley (R-IA) asking for answers regarding the failed Obamacare state exchanges. 

Earlier last month, Hatch introduced the State Exchange Accountability Act with Senator John Barrasso (R-WY), a bill that forces states who’ve scrapped their state-run Obamacare exchanges to repay their federal exchange grants over a 10 year period.  

Hatch is the coauthor of the Patient CARE Act, a proposal to repeal and replace Obamacare, with Sens. Richard Burr (R-NC) and Tom Coburn (R-OK). 

Below is the text of Hatch’s full speech delivered on the Senate floor today: 

Mr. President, today, the Senate is expected to vote on the nomination of Sylvia Mathews Burwell to be the next Secretary of Health and Human Services. 

I expect she’ll be confirmed.  And, I expect that she’ll receive a fair number of votes from both sides of the aisle.  

I, for one, plan to vote in favor of confirming Ms. Burwell.  I believe she is well qualified and well suited for this position. 

But, let’s be clear, Mr. President, if Ms. Burwell is confirmed, she will have a difficult job ahead of her, particularly when it comes to implementation of the so-called Affordable Care Act. 

And, while I support Ms. Burwell’s nomination, no one should mistake that to mean that I have somehow softened in my resolve against Obamacare.  Indeed, I am as committed as ever to repealing and replacing this horribly misguided law. 

I hold this position, not due to politics or partisanship, but due to the very real problems this law is causing for our citizens, for our government, and for our nation’s health care system.     

I want to take a few minutes today to talk about some of the specific problems we’re seeing with Obamacare, and what some of my colleagues and I are doing to address them.  

As we all know, under the so-called Affordable Care Act, states are required to have an online exchange where citizens can go to purchase health insurance.  The law gives the states the option of creating their own exchange, using an exchange provided by the federal government, or using a hybrid of the two.  

The Department of Health and Human Services gave every state a million dollars to fund research and analysis to determine what type of exchange they would use.  Additional grants were given in two stages for those states who chose to build all or part of their own exchanges.  

On top of that, HHS awarded seven early innovator grants to states who decided early on to build their own exchanges in order to help support the development and early implementation of the necessary IT systems.  

All told, states received $4.7 billion from HHS to assist them in building their exchanges. 

The problem we’re seeing now is that, apparently, this money was just handed out with little or no accountability.  

At least seven states have failed to build a successful website and exchange, even though they received and accepted federal taxpayer dollars specifically for that purpose.  Now, these states are scrambling to either rebuild their entire systems or to transition to the federal exchange.  

These seven states received roughly $1.3 billion from HHS to build their exchanges.  

That’s $1.3 billion – with a B – to just seven states.  

That’s more than one quarter of the total amount HHS provided to states for the purpose of building state healthcare exchanges.  And, apparently, these states have little to nothing to show for it. 

In fact, at least three of them are looking to drop their own exchanges entirely and use the federal exchange instead.  

You heard that right, Mr. President, three states – who, between them, received hundreds of millions of dollars from the federal government to build their exchanges – now want to abandon the prospect entirely and join the federal exchange.  

Let’s keep in mind that adding them to the federal exchange will not be simple, nor will it be cheap.  More millions will be spent to transition these states – along with any other states that may choose the same course in the future – into the federal exchange. 

This is simply preposterous, Mr. President.  

Where is the accountability?  

Where is the outrage from HHS over its lost funds? 

There doesn’t seem to be any. 

For her part, the President’s nominee to run HHS, Ms. Burwell, has at least acknowledged that there’s a problem here. 

During her confirmation hearing in the Finance Committee, I asked her whether states who have negligently mismanaged their exchange funds should be required to reimburse the taxpayers for their failures. 

Her answer was somewhat encouraging.  

She said that, if she was confirmed, she would want to get to the bottom of this problem and “use the full extent of the law to get those funds back for the taxpayers.”  

Unfortunately, in answer to my follow-up question – whether she would commit to withholding additional exchange-related funds from those failing states – she wasn’t quite so definitive.  

Still, I was glad to hear her at least acknowledge the problem and make a commitment to recouping taxpayer funds lost in these debacles.  If she’s confirmed, I hope that she’ll live up to this commitment. 

That said, it is clear that, if we’re going to make the taxpayers whole on this matter, we’re going to need to do something besides waiting around for HHS to address the problem.  Indeed, if our experience has taught us anything, it’s that commitments made in the context of a confirmation hearing often fall by the wayside.  That has been particularly true with this administration, especially when the commitments deal with Obamacare. 

That’s why I have joined with the Ranking Member of the Senate Judiciary Committee, Senator Grassley, in an investigation into this matter.  

Congress needs to exercise proper oversight on this issue.  We need to get answers.  And, one way or another, we’re going to get them. 

Last month, Senator Grassley and I sent a letter to CMS Administrator Tavenner asking for information about CMS’s communications with the states with regard to the difficulties they’ve had setting up exchanges and their use of federal funds.  

Like I said, Mr. President, all told, these failures amount to over a billion dollars in lost funds.  The American people deserve to know where the money went and why it was so horribly misused.  

That’s not all the American people deserve.  They also deserve to be paid back for these losses.  

That’s why I have joined with Senator Barrasso in introducing the State Exchange Accountability Act, a bill that will require the states to pay back these wasted funds. 

Specifically, if enacted, our bill would require those states that operated a state exchange in 2014 and subsequently chose to use the federal exchange to repay all of their establishment and early innovator exchange grants. 

The bill would give them a ten-year time frame to do so. 

States would have to enter into an agreement with HHS to repay, at a minimum, 10 percent of the total grant money they received every year. 

States that fall under these requirements but fail to enter into such an agreement would see their Federal Assistance Medical Percentages, or FMAP, reduced by HHS.  The FMAP reduction would be uniform and take place over a ten-year period and would be equal to the amount of exchange grant money the state received.  

Under the bill, HHS would be explicitly prohibited from reducing the amount of reimbursement the states owe the federal government.  

I expect some will deem this approach to be too punitive.  But, they shouldn’t.  

I don’t think anyone can reasonably dispute that this is a problem that needs to be dealt with.  Our solution is reasonable and achievable.  All we ask is that the states that have wasted taxpayer funds repay them within a reasonable period of time.  

We give these states ten years to pay the money back.  

This isn’t punitive, Mr. President.  It’s necessary.  

More than anything, the failures we’re seeing with the state healthcare exchanges demonstrate that the Affordable Care Act has been flawed from the beginning.  Indeed, it was the law itself that included an open-ended appropriation to help states build their exchanges without any mechanism to make states accountable for wasting those funds.  

Given these fundamental problems, I expect that we’ll see more states take this route, especially if no steps are taken to make them accountable.  

Congressional oversight into these failings is vital.  And, I hope that the administration will cooperate in our effort to resolve this problem.  

Our legislation is no less important.  It’s the only way to guarantee that the American taxpayers get their money back.  

But, that’s not all we need to do.       

Make no mistake, Obamacare is doing serious damage to our nation’s health care system and to our nation’s fiscal future.  

When it comes to his health law, the President’s favorite argument is that Republicans haven’t produced an alternative of our own.  However, this is simply untrue.  And, I suspect the President knows that. 

Earlier this year, two of my colleagues and I unveiled a legislative proposal that would undo the damage Obamacare has inflicted on the American people.  

Unlike the Affordable Care Act, our proposal would actually reduce costs and shore up our entitlements.  And, it would do so without all the harmful, distortive mandates and regulations we see under Obamacare.  

Once again, in the immediate future, we need to solve this problem with the failed state exchanges.  But, we also need to keep our eyes focused on the long-term goal of repealing Obamacare once and for all and replacing it with something that will actually work for the American people. 

I hope that, as time wears on, more of my colleagues – particularly those on the other side of the aisle – will recognize that this is what we have to do. 

Now, like I said, Mr. President, I intend to vote today in favor of Ms. Burwell’s nomination to head HHS.  But, I still have a number of concerns about the direction that agency is heading. 

During the course of her confirmation hearing, Ms. Burwell made two important commitments to me.  

The first commitment she made was to respond promptly – within 30 days – to questions and inquiries submitted to HHS from members of Congress.  

This is an important commitment.  One that I hope she lives up to. 

Under this administration, HHS has been one of the least transparent of all federal agencies.  Letters and inquiries, often times, have been ignored entirely.  And, when we do receive letters in return from HHS, they’re almost always unresponsive. 

Ms. Burwell has committed to changing that practice.  Once again, I hope she does. 

I mentioned the other major commitment she made to me earlier.  In dealing with the failed state exchanges, Ms. Burwell committed to doing everything in her power to retrieve wasted taxpayer funds.  

This commitment is also important because, thus far, HHS has refused to acknowledge many of the problems they’ve faced in implementing the Affordable Care Act.  The fact that she made this commitment to me demonstrates that she is at least willing to admit that there are some major problems with the program.  

I support Ms. Burwell’s nomination in large part because of these commitments she’s made.  I hope she lives up to them.  

No one should misread my vote today as an acknowledgement that all is now right with the world of Obamacare and at HHS, because nothing could be further from the truth.  But, Ms. Burwell has, for her part, acknowledged that problems exist and has committed to doing what she can to fix some of them.  

Under this administration, that’s probably the best we can hope for.           

I yield the floor. 

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