As thorough as it is, the damning report about the Hawaii Health Connector, issued last week by the state auditor, should not mark the end of public inquiry into how taxpayer-funded grants, totalling $204.4 million, were spent establishing the online health-insurance exchange.
This is only the most recent strike against the Connector, which was one of 14 state-based exchanges built to deliver health plans under the federal Affordable Care Act.
The audit aimed its most scorching comments at Coral Andrews, the Connector’s first executive director. The audit described Andrews as an "uncooperative" executive who "misused" her position and got around the rules governing the procurement process in awarding contracts with grant money.
While the current chief, Jeff Kissel, offered assurance that key problems identified in the audit have been corrected, that can’t be enough for state and federal officials, who must demand further investigation.
The staff of the agency, still run as a nonprofit under the limited oversight of a state-mandated audit, have corrected most of the initial technical dysfunction that greeted consumers upon the website’s launch in October 2013. And Kissel said strict controls on procurement are in place.
But Andrews’ stunning lack of response to the audit, which was required under the state law establish- ing the exchange, sends up red flags. And the sheer extent of contract mismanagement identified in the audit report ought to prompt further action.
To begin with, the report was signed by Acting State Auditor Jan K. Yamane, who asserts that questionable costs do not comply with federal regulations, which might compel the state to repay grant funding.
But even if Hawaii is not subjected to that extreme outcome, there’s also the sense of foreboding that Yamane has just scratched the surface.
In fact, the hammer has come down hard on federal exchanges as well. On Jan. 20, the inspector general of the Department of Health and Human Services slammed the federal agency overseeing the ACA for insufficient oversight of the contractors who built the federal exchange, HealthCare.gov. Within DHHS, the job of planning and procurement for the exchanges belonged to the Centers for Medicare and Medicaid Services (CMS).
"The complexity of the Federal Marketplace underscored the need for CMS to select the most qualified contractors," Inspector General Daniel Levinson said in that audit. "However, CMS did not perform thorough reviews of contractor past performance when awarding two key contracts."
In that context, the disaster surrounding the Connector seems to be a piece in a larger puzzle of dysfunction, but that doesn’t excuse it. Other states managed to figure out a way for an exchange to be built that made effective use of resources to serve the public adequately. Hawaii clearly did not.
It wasn’t only Andrews.
"The Hawaii Health Connector Board of Directors’ inadequate planning led to an unsustainable health exchange," according to the report.
That board was undeniably derelict in its duties to agree on a realistic scope for the Connector, which, given the well-known failings in the state’s information technology underpinnings, should have been simplified.
Instead, the board let the contracts progress, without demanding adequate updates from Andrews, until its eleventh-hour discovery that it was crashing.
For her part, Andrews kept things close to the vest, and costs ballooned without adequate supervision.
The most egregious case may have been that of Mansha Consulting, an IT company that started out hired for a $56,000 job assisting with the design review.
Mansha’s duties were broadened to include integrating the state’s Medicaid eligibility system with the Connector. Despite the many problems with this integration, this consultant, following more contract amendments, ended up with $21.9 million.
Without recounting the auditor’s full 58-page litany, there’s ample reason for federal and state authorities to probe more deeply into what work was done for what money and whether there were laws broken.
The top line in the audit underscores that, beyond the lack of contract supervision, there was a basic failure by Connector leadership to structure a delivery system that had any hope of being sustainable.
The board at the time included representatives of the health-insurance sector familiar with the number of uninsured, and with the difficulty of funding the agency through sales fees alone.
Although under federal law the exchanges are supposed to be self-sufficient this year, Kissel has projected that the Connector will be sustainable by 2022.
Before any more red ink flows, the public deserves more answers. The questions should start at the state Capitol, with congressional delegates knocking on the door of the inspector general in Washington, as well.
