Lawmakers in D.C. Scrutinize Health Exchanges, Demand Failing Systems Repay Tax Dollars

May 15, 2014

WASHINGTON — Lawmakers are scrutinizing state-based health insurance exchanges in light of reports Colorado plans to raise fees yet awarded a huge bonus to its director, and systems in other states are crumbling or have already failed.

“We need to have transparency and ultimately, accountability,” said Colorado Republican Rep. Scott Tipton.

Connect for Care Colorado CEO Patty Fontneau was awarded a $14,000 bonus and 2.5 percent pay raise this week in spite of threats consumer fees would be raised to cover a $13 million shortfall.

“It is absolutely unacceptable that Connect for Health is proposing huge user fees to Coloradans who are already paying too much under the president’s healthcare law, while handing out cash to their own executives,” said Republican Rep. Cory Gardner.

Meanwhile, western Republican lawmakers including Sen. John Barrasso of Wyoming introduced a bill this week forcing states with failed health exchanges to repay the federal government hundreds of millions of taxpayer dollars awarded through Obamacare grants.

“The American people are sick and tired of writing a blank check for the health care law’s complete failures,” Barrasso said in a statement.

“Enough is enough,” Barrasso said. “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.”

The federal government awarded nearly $5 billion in grants to states including Colorado to create their own marketplace systems and sell health insurance plans under Obamacare. States where exchanges have already failed or are still struggling after spending a combined $474 million in taxpayer dollars include Oregon, Maryland, Nevada and Massachusetts.

Colorado’s exchange has received $177 million in federal grants and recently balked at undergoing a state audit to ensure it is financially sound.

The state Senate defeated a bill requiring the review based in part on testimony from Fontneau that it would only duplicate federal audits of her agency. Fontneau’s bonus came just days after the legislature adjourned, and a report from The Observer that no federal audits were ever conducted.

Fontneau’s salary now totals more than $195,000, making her the third-highest paid health exchange executive in the nation.

“It’s appalling that the health exchange failed to meet its goals, then Fontneau lied when telling the legislature that her organization had been audited by the federal government and avoided (a state) audit,” said Kelly Maher, executive director of Compass Colorado.

“If this was a private business, someone would be trying to figure out how to file criminal charges, but because it’s a government agency, Fontneau gets a bonus,” Maher said.

State Rep. Dan Nordberg, Colorado Springs Republican, authored the state audit bill and said that in light of recent events he will be pursing the legislation in the next session.

“Connect for Health Colorado is proposing $13 million in fees just to keep it sustainable, yet they have money for big executive bonuses?” Nordberg said. “That sends a horrible message to the taxpayers and provides yet another reason why I’ll be reintroducing legislation to audit the exchange.”

State Sen. Greg Brophy, Denver Republican, said Colorado’s exchange has a history of shrouding itself in “smoke and mirrors.”

“None of what they’ve said is true. No federal audit. No, you can’t keep your health care plan. No, you can’t keep your doctor, and no, they’re not financially secure,” Brophy said.

Just hours after Fontneau’s bonus and raise were reported by Health News Colorado, she released a statement defending her role and listed the agency’s accomplishments.

“I want to be clear: Connect for Health Colorado is one of the most financially secure marketplaces in the nation,” Fontneau said. “We have a solid plan that moves us to become self-sustaining by January 2015, when our federal start-up grants supporting operations will be gone.”

Key to that plan of financial sustainability is raising fees charged on Coloradans for purchasing health insurance, whether or not they participate in the exchange.

Fontneau said more than 131,000 Coloradans signed up for health insurance through the exchange, but did not mention reports that number is expected to dip below 100,000 for paid participation this year.

“As a public non-profit, we’ve been transparent about the roadmap we’ve set to reaching our goals and continuing to meet our mission to improve access, choice and affordability of health insurance for Coloradans,” Fontneau said.

Republican strategist Jonathan Lockwood said that comes as little comfort for Coloradans who are paying more money for health care while struggling to make ends meet.

“She’s working really hard at filling her own pockets, and spending $8 million in advertising and marketing on exchange-branded packets of sunscreen and Chap stick, on party buses and bouncy castles,” Lockwood said.

“She’s making her entire salary off the backs of taxpayers,” Lockwood said. “How do you go to Coloradans and say ‘we are here for you, so we are going to jack up your premiums so we can raise our own paycheck?’”

Gardner introduced legislation in December that would prevent the federal grant money from being awarded as bonuses to state exchange chief executives, after reports surfaced that Fontneau was seeking additional payment.

“While hundreds of thousands of Coloradans were dealing with cancellation and rate increase notices in October, the CEO of Connect for Health Colorado seemingly had more pressing concerns at hand – making sure that her taxpayer-funded salary grew even larger,” Gardner said in a December statement introducing the measure.

“Connect for Health Colorado’s inability to meet the lowest target enrollment numbers calls into question the exchange’s ability to even fund itself when federal grants run dry in 2016,” said Gardner. Those running the exchanges need to put more effort into raising enrollment numbers, and less time figuring out how to make more taxpayer money.

Gardner is running for the Senate seat held by incumbent Democratic Sen. Mark Udall, whose staff did not respond to a request for comment on Fontneau’s bonus or claims by the exchange it had undergone federal audits.

Comments made by visitors are not representative of The Colorado Observer staff.

5 Responses to Lawmakers in D.C. Scrutinize Health Exchanges, Demand Failing Systems Repay Tax Dollars

  1. Bob terry
    May 15, 2014 at 11:05 am

    Just like the hearings on the VA…The same words, Transparency and Accountability. We will meet our goals. Hey I need a raise. Like everything bloated Big government does is talking points, same old song and dance, and the hopes you will be pacified by the answers. Ms Fontneau, the board of directors, needs to be shown the door. Money, doesn’t matter…hey how “bout that 13.5 million dollars tax for everybody. Connect for Colorado and Ms Fontneau can stick it… Oh and even a bigger surprise..Mr. Udall didn’t comment, nor did his staff. another empty suit on many issues.

  2. Brian McFarlane
    May 15, 2014 at 11:47 am

    Forgot to mention …
    Colorado is spending a total that is more than $21 million in public money to market Connect For Health Colorado. That puts the state eighth nationally on spending to promote new opportunities for health insurance coverage under the Affordable Care Act. It gave out $17 million to 58 groups across the state to provide in-person assistance over 18 months.


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