Allan Tannenbaum/Polaris

Allan Tannenbaum/Polaris

The federal taxpayers have spent over $5 billion to build Obamacare’s exchanges. Unfortunately for taxpayers, these investments have not delivered a good return and are ongoing.

Despite the muddled launch of many exchanges, the federal government is still doling out grant money, giving out over $200 million to nine states last month. Fourteen states and the District of Columbia are running their own Obamacare exchanges and they all received federal grant money to help build them—a total of over $4 billion. California alone received $1 billion to set up its exchange.

Many state-based exchanges have struggled with similar website problems as the federal site, and some are still barely operational despite being four months into the open enrollment period.

Consider Maryland and Oregon:  The Maryland exchange, called the Maryland Health Benefit Exchange, has received $171 million in federal grant money but its exchange still isn’t functioning properly, causing enrollment difficulty and the site even listed an incorrect phone number to call for assistance.. The Washington Post reviewed “thousands of pages of previously undisclosed documents, including e-mails, internal reports, audits and court records, along with interviews with dozens of current and former contractors, state officials and others exchange documents.” It concluded: “The review shows that the creation of the exchange was dysfunctional from the start and that there were repeated missteps at almost every level.” Recently, Rep. John Delaney (D-MD), asked state officials how much it would cost for Maryland to switch to a federally run exchange and is awaiting a response.


Oregon’s exchange, known as Cover Oregon, has cost the federal taxpayer $305 million thus far. Cover Oregon has struggled with technical glitches. For example, end to end online enrollment is still unavailable even though it is over four months into the open enrollment period. Now, Oregon officials are reportedly exploring switching over to a federally run exchange in the future. As reported by the Associated Press, “Bruce Goldberg, interim director of Cover Oregon, said…that the state will consider partnering with other states or the federal government if its technology still isn’t working after the open enrollment period ends in March.”

Should a state successfully switch to a federally run exchange, it is unclear whether the federal government will, or will be able to, recoup any of the billions in federal grant money that was wasted.

While $4.9 billion in grants have already gone to the states, a recent Congressional Budget Office report estimates another $2 billion in grants to the states will be distributed in 2014.

Spending on the federal exchanges is not much better. The federal government is facilitating exchange enrollment for 36 states (Idaho and New Mexico are using the federal website for enrollment but are state-based exchanges) via As  was well reported, the launch of the federal website has been a debacle. Unfortunately, the exact cost of the federal website remains unclear. According to the Washington Post Fact Checker, “[Sebelius] said that HHS had spent $319 million on the website through the end of October, though a total of $677 million has been obligated, meaning the amount could get that high if bills are submitted.”

The billions of dollars wasted on building Obamacare’s exchanges are a prime example of both government waste and incompetency.