Study: $1B Price Tag for ACA Health Exchange & New Medicaid Program in Mass.

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Study: $1 Billion Price Tag for ACA Health Exchange & New Medicaid Program in Massachusetts

Over half due to two-year cost of switch to new ACA website at the Connector

BOSTON – The cost of transitioning to an Affordable Care Act compliant health insurance exchange is likely to top $1 billion over two years, far more than it would have cost had Massachusetts simply used the federal government’s exchange, according to a new Policy Brief published by Pioneer Institute.

The Undisclosed Cost of Developing an Affordable Care Act State Exchange in Massachusetts

The two-year cost of getting the new exchange up and running will be more than $600 million, more than the commonwealth spent on economic development, environment and recreation, libraries, and statewide homeless support services over the same two year period.

A new transitional Medicaid program that was created when the state exchange failed last year will cost more than $540 million for calendar year 2014.  Almost 300,000 people are now in the program, which had little eligibility verification upon enrollment.


“There has been little in the way of transparency regarding the cost of the exchange’s failure,” said Pioneer Institute Senior Fellow Josh Archambault, the author of ‘The Undisclosed Cost of Developing an Affordable Care Act State Exchange in Massachusetts.’ I hope this report will prompt greater oversight and accountability of how taxpayer money is spent in the future.”

The total cost of the exchange may not be known for months, as the commonwealth and the federal government reconcile whom is responsible for paying for what portions of the rollout.

“The Legislature and the new Governor will be in for a rude awakening when the bill from the feds comes due early next year,” said Pioneer Institute Executive Director Jim Stergios.  “The cost will likely mean cuts to education, transportation, public safety, or higher taxes to fill the gap.”

Archambault calls for an immediate investigation by the state’s Inspector General, Glenn Cunha, to oversee a top-to-bottom examination of the failed website and a full accounting of how taxpayer money was spent.

In addition, the U.S. Health and Human Services Inspector General and the FBI should add Massachusetts to the list of states that require a full examination of what went wrong and whether state officials lied about the progress of the exchange to maintain the flow of federal funds to the commonwealth. Former U.S. Health and Human Services general counsel Michael Astrue has noted in writing about exchange implementation, “Knowingly making false statements to a federal official in this context is a federal felony…”

Finally, Archambault suggests that the federal Government Accountability Office (GAO) should look closely at the eligibility process for the transitional Medicaid program to gauge the likelihood of fraud. Massachusetts was obligated to verify the eligibility of all those enrolled in the program within 180 days, but it has missed that deadline.


Josh Archambault is Senior Fellow at Pioneer Institute. In the past, Josh served as a Legislative Director in the Massachusetts State Senate and as Senior Legislative Aide in the Governor’s Office of Legislative Affairs. His work has appeared or been cited in outlets such as USA Today, Wall Street Journal, The New York Times, Fox News, NPR, Boston Herald and The Boston Globe. He is the editor and coauthor of The Great Experiment: The States, The Feds, and Your Healthcare. Josh holds a Masters in Public Policy from Harvard University’s Kennedy School and a BA in Political Studies and Economics from Gordon College.