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Cost of Health Connector’s website failure disputed

Report says $1b, others say less

When the website that thousands of people in Massachusetts use to shop for health insurance failed disastrously, the recovery was bound to cost a lot of money.

But how much, exactly? And was it worth the cost?

The Pioneer Institute, a Massachusetts-based policy think tank, is releasing a report Wednesday that puts a high price on last year’s failure of the Massachusetts Health Connector website.

But state officials vehemently reject the institute’s estimate as wildly inaccurate and politically motivated.

Pioneer calculates that in fiscal 2014 and 2015, taxpayers will pay $1 billion for rebuilding the website, administering it, and providing Medicaid coverage to people who could not find out whether they were eligible for public assistance because the website did not work.

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It calls for greater transparency, and says the inspectors general for Massachusetts and the US government should investigate the failed effort to bring the Massachusetts website into compliance with the Affordable Care Act.

Glen Shor, state secretary of administration and finance and chairman of the Connector board, said the report was “error-laden, contrived, a desperate attempt to float a billion-dollar pricetag.” He said that Pioneer’s calculations double-counted certain expenses and in one case counted revenue as an expense.

The report seems to have struck a nerve in state government, however, prompting even Governor Deval Patrick to weigh in with an e-mail saying, “One thing I won’t miss is having to answer spurious charges from the Pioneer Institute based on politics, rather than facts.” (The governor’s term ends in January.)

“The truth is that Massachusetts is still successfully expanding health care and doing so within budget,” Patrick said.

While state officials described the Pioneer Institute as an opponent of the Affordable Care Act, Joshua Archambault, a senior fellow with the institute and the report’s author, disagreed and described the institute as a watchdog concerned with costs and unintended consequences.

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The Pioneer report, a nine-page policy brief, says it cost $616 million to get the refurbished exchange operating, money that “will pay for systems to administer health care, not care itself.” An additional $400 million, it calculates, will go to pay for the medical care of the 285,000 people who were placed in a temporary Medicaid program when the Connector was unable to determine whether they were eligible for subsidies or Medicaid.

Shor said that is all wrong. As previously announced, he said, the technology costs for rebuilding the failed website will come to $254 million, all but $30 million paid by the US government; the Pioneer report did not distinguish between federal and state taxpayer dollars. The state has so far paid $259 million in medical care for people in the temporary program and has a commitment from the US government to reimburse at least half of that. And that program is costing less than expected, he said.

Shor said that the temporary program did not cause any cost overruns in the state Medicaid program in the last fiscal year.

“I don’t understand how the Pioneer Institute makes the claim that this is a raw deal for taxpayers,” Shor said. “It completely ignores the cost-
effectiveness of the program.” Shor said that most people in the temporary Medicaid program qualify for assistance, either Medicaid or highly subsidized private insurance, so they are not costing the state more than they would have if the system had worked.

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Archambault acknowledged that the report might contain errors, but he blamed the Connector for a lack of transparency on precise costs. For example, he said, the state is not saying how much it owes in unpaid medical bills for people in the temporary program. He denied stretching to reach a $1 billion figure and said total cost was not the main point. “I want to have a higher-level discussion,” he said. “Is the amount of money we’re spending a good taxpayer investment?”

Nancy Turnbull, a member of the Connector board, agreed that the numbers looked completely wrong and noted in an e-mail that the report fails to address “how much would the state have spent had all gone smoothly since last fall, so have we ended up spending more or less? I don’t think we have the information yet to answer that question.”

But John E. McDonough, a professor at the Harvard School of Public Health and an architect of the state’s health care overhaul, said: “I do think the Pioneer folks have a legitimate criticism concerning the overall lack of transparency and accountability with this matter.”


Felice J. Freyer can be reached at felice.freyer@globe.com. Follow her on Twitter @felicejfreyer.