Millions of Mis-Spending Found by Federal Audit of Oregon Health Care

Oregon Health Plan allowed $10 in wasteful spending
Oregon Health Plan allowed $10 in wasteful spending

A recent federal audit found that Oregon might have saved more than $10 million in the Medicaid-funded Oregon Health Plan that served low-income citizens in the state. The Oregon Health Plan gave health care organizations broad leeway in the spending of billions, leading to money inefficiently spent. The state of Oregon is seeking to recover $50 million allegedly overspent by a group called FamilyCare.

The new federal audit tackles a new, little-noticed aspect of the state’s Medicaid reforms…Specifically, it looks at how Oregon went a different direction from the larger federal reforms called the Patient Protection and Affordable Care Act, or Obamacare. While the federal reforms tacked Medicaid as well as private health insurers, Oregon’s reforms only looked at Medicaid,” the Portland Tribue reported about the federal audit.

In making this exception, it allowed what were called coordinated care organizations (CCOs) broad leeway, not allowed under Medicaid, over the spending of money that lead to the lack of savings discovered by the federal audit.

The audit highlights one of the many political compromises that went into crafting the reforms. Former Gov. Kitzhaber and the Oregon Legislature didn’t require the coordinated care organizations to meet the same spending standards that private insurance companies must meet,” the Portland Tribue reported.

As a result of the rules created by Kitzhaber and his political cronies, the CCOs were not required to limit their administrative costs to 15 percent as were the private insurance companies providing health care coverage in Oregon. The audit found that 11 of the 16 CCOs in Oregon exceeded the 15 percent limit on administration costs. As a result, they over-spent by about $10 million.

The Cover Oregon exchange had gone down in spectacular failure as the web site for the exchange was developed and Gov. John Kitzhaber appointed his chief political consultant to oversee its closing. After spending more than $300 million on the exchange, the state signed up to participate in Obamacare via the federal Healthcare.gov exchange. Cover Oregon was put in the hands of the governor’s political cronies under the heat of the 2014 reelection campaign. Soon after, in an effort to deflect the blame for Cover Oregon’s failure, Gov. Kitzhaber and his advisors filed a lawsuit against Oracle Corporation, the IT firm that built the web site for the exchange. Since this failure in 2014, the Cover Oregon disaster has been the subject of several Congressional oversight investigations and has been questioned by several members of the Congress and the Senate. In the end, the Cover Oregon web site failed to sign up a single Oregon citizen for health care insurance under Obamacare.

The release of e-mails from Gov. Kitzhaber illustrated the depth of cronyism and corruption in the Cover Oregon failure in which the overlaps of conducting state business and their own private consulting work overlapped in several conflicts of interest. In the end there remained so many unanswered questions about the spending of the $300 million of federal taxpayer money on the failed Oregon exchange.

The audit reveals more corruption and cronyism in Oregon health care, and clearly the state should require the CCOs to comply with the same administrative spending limits required under Medicaid. Kitzhaber and others proved they clearly could not be trusted to responsibly run the health care system in Oregon, and it also demonstrates the larger failure of government-managed health care, and proves that the private sector is far better equipped to provide health care services to citizens than the government.

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