May 14,2014

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Aaron Fobes/Julia Lawless (202) 224-4515

Hatch and Barrasso Introduce State Exchange Accountability Act

Bill Forces States Who’ve Scrapped their State-Run Obamacare Exchanges to Repay their Federal Exchange Grants Over 10 Year Period

WASHINGTON, D.C. – Today, Sen. Orrin Hatch (R-UT) joined Sen. John Barrasso (R-WY) to introduce The State Exchange Accountability Act (S.2339 [113th]). The bill will force states that wasted hundreds of millions of taxpayer dollars on failed Obamacare exchanges to repay the federal government.  If a state chooses to no longer operate their own individual exchange, they will have to repay Washington for all of the taxpayer funding they received for their failed exchange. Specifically, the state will have to repay ten percent of their wasted federal grant funding each year over a ten year period. 

“The American people are sick and tired of writing a blank check for the health care law’s complete failures.  After forcing taxpayers to pay hundreds of millions of dollars for the failed website, the Obama Administration now expects Americans to pay hundreds of millions of dollars for failed state exchanges,” said Barrasso.  “Enough is enough.  States that scrap their state-run Obamacare exchanges are admitting they’ve wasted millions of dollars in federal grants. It’s only fair that states have to pay American taxpayers and the federal government back for their total incompetence.” 

“Hard-working American taxpayers should not be forced to foot the bill for what has already turned into an almost $500 million dollar boondoggle,” said Hatch.  “This bill rightly restores accountability by ensuring that the hundreds of millions of dollars wasted by these failed exchanges are returned.  It is unfortunate that Obamacare’s flawed policies continue to force American families to fund administrative ineptitude like this time and time again, and I am committed to seeing that this is stopped with this bill.”    

In addition to Barrasso and Hatch, The State Exchange Accountability Act is co-sponsored by Senators Saxby Chambliss (R-GA), Tom Coburn (R-OK), Mike Enzi (R-WY) and John McCain (R-AZ). 


The President’s health care law provided an indefinite appropriation for grants that were to be used by states to create their own insurance exchanges.  Under the health care law, no grant can be awarded after January 1, 2015.  There were three types of grants awarded by HHS for this purpose, planning grants, exchange establishment grants and early innovator grants.  According to the Congressional Research Service, the federal government has awarded approximately $4.7 billion in grants for this purpose.

Many state exchanges have encountered significant problems.  In fact, the problems have been so widespread that Oregon has already decided to scrap their state exchanges and use the federal exchange starting next year.  Maryland is also being forced to replace its health exchange.  Politico recently highlighted this issue and the $474 million that was spent developing four separate state exchanges that are now facing significant problems. 

The State Exchange Accountability Act specifically: 

  • Requires states that operated a state exchange in 2014 and subsequently elected to utilize the federal exchange to repay their establishment and early innovator exchange grants over a ten year period.
  • States must enter into an agreement with the Department of Health and Human Services to create a repayment agreement. The agreement at a minimum must ensure that the state repays 10 percent of the total grant money received per year.
  • States that fail to enter into a repayment plan are required to have their FMAP reduced by the Department of Health and Human Services. 
  • The reduction must be uninform and take place over a ten year period and be equal to the total amount of exchange grant funding received. 
  • The federal government is explicitly prohibited from reducing the amount of reimbursement required under the bill.