California's corrupt Obamacare exchange
Covered California, the state's Obamacare health insurance exchange, let $184 million in no bid contracts - including millions to a firm that has ties to the exchange's executive director.
Covered California's no-bid contracts were for a variety of services, ranging from public relations to paying for ergonomic adjustments to work stations, according to an Associated Press review of contracting records obtained through the state Public Records Act.
Several of those contracts worth a total of $4.2 million went to a consulting firm, The Tori Group, whose founder has strong professional ties to agency Executive Director Peter Lee, while others were awarded to a subsidiary of a health care company he once headed.
Awarding no-bid contracts is unusual in state government, where rules promote "open and fair competition" to give taxpayers the best deal and avoid ethical conflicts. The practice is generally reserved for emergencies or when no known competition exists.
Covered California was created in 2010 and given broad authority to award no-bid contracts as a way to meet tight federal deadlines for getting the new health insurance marketplace operational by last year. The same law also exempted it from sections of the state's public records law, a loophole lawmakers closed last year after it was disclosed by the AP.
The agency confirmed some no-bid contracts were awarded to people with previous professional ties to Lee, but emphasized Covered California was under pressure to move fast and needed specialized skills.
The fledgling exchange "needed experienced individuals who could go toe-to-toe with health plans and bring to our consumers the best possible insurance value. Contractors like The Tori Group possess unique and deep health care experience to help make that happen and get the job done on a tight deadline," Lee said in a statement.
"As this organization matures," he added, "we will rely less on private contractors."
With so much taxpayer money in play, a government watchdog group said more oversight is essential.
Kathay Feng, executive director of California Common Cause, said she recognized the need to free Covered California from cumbersome contracting rules that could have hampered its ability to meet Affordable Care Act deadlines.
But with tens of millions of taxpayer dollars at issue, "some accountability and transparency is needed, whether through audits or an alternative oversight body," she said, adding, "To spend $4.2 million on anything, let alone a contract to a friend and former colleague, raises serious questions."
The age-old excuse for bureaucratic waste and corruption is "we didn't have time to be careful." This is nonsense. Other states had no problem meeting deadlines. Are California's contracting rules that much more complex? I can't believe that.
The incestuous relation between the exchange's executive director and one of the contractors, the Tori Group, is especially galling:
The founder of The Tori Group, Leesa Tori, worked under Lee when she was a senior executive at Pacific Health Advantage, a small business insurance exchange that failed in 2006. Lee was a longtime chief executive of Pacific Business Group on Health, which managed Pacific Health Advantage, and Tori also worked with him at the parent company.
Long before it opened its doors to the public last fall, Covered California awarded a small contract to Tori for her advice on designing a program to sell insurance to small companies. The $4,900 agreement in late 2011 was executed without rival bids.
The deal would mark the beginning of a lucrative and far-reaching partnership between the agency and the company Tori formed about two years ago, just as national health care reform took root across the U.S. An initial $150,000 contract with The Tori Group in March 2013 was executed by Lee, but later amendments that increased its value to $4.2 million were approved by Covered California's board, an agency statement indicated.
Nearly three years after her first, small contract went into effect, she and employees at her firm hold senior-level positions and work on issues ranging from enrollment to health plan design at Covered California.
At least five other people who are contracted to work at Covered California have ties to the now-defunct Pacific Health Advantage, four of them at The Tori Group, whose employees are paid through the consulting contracts. In all, nine people listed on the group's website, in addition to Tori, work at the exchange.
Since those were federal subsidies, Covered California has cost American taxpayers millions of dollars because of cronyism and laxity. All the malfunctioning exchanges across the board should be billed for monies they wasted in trying to implement this monstrosity of a bill.