A new audit finds a South Carolina state agency has only spent a fraction of the $2.4 million in federal funds it received under the health care reform law.
The Department of Insurance (DOI) applied for three different grants under the Affordable Care Act as it works to set up state health insurance exchanges required under the law. However, officials now say they don’t think all of that money was needed.
The exchanges are online marketplaces each state is responsible for setting up, where the uninsured can compare insurance plans from different companies and buy the plan that best fits their needs. It was the cornerstone of President Obama’s reform bill passed in 2009.
A review released Tuesday by the Legislative Audit Council says less than 12 percent of the grants have been used as their deadlines approach. Five Democratic legislators requested the audit in the spring, saying they were concerned South Carolina was not making a serious effort to create the exchanges.
“They haven’t spent very much money on any of these grants,” Marcia Lindsey, who ran the audit, told South Carolina Radio Network.
The report only examined DOI and did not look at other agencies such as the Department of Health and Human Services, which has received $16.4 million in grants so far.
DOI requested three grants: $411,000 for a “consumer assistance program”, $1 million to establish a health insurance exchange, and $1 million to go towards reviewing insurance premiums.
However, only $280,500 has been spent since July 2010 (although an additional $555,000 has been promised through contracts). In fact, the consumer assistance grant expired on October 14 with only $19,000 (4 percent of the total grant) set aside to enhance a consumer complaint database.
DOI spokesman Ann Roberson said the agency realized after winning the grant that it did not actually need the money. “As far as our outreach and talking to consumers, we already do that,” Roberson said, “That’s part of our ongoing daily activities.”
She said many of the specific requirements for the grant did not come down until South Carolina had already applied for and been awarded the money. The report says no plans have been made for the remaining $422,500 in funds, although the agency is trying to partner with nonprofit groups such as the AARP and AccessHealth SC.
Another $1 million grant is supposed to help the state set up a new health insurance exchange. The agency hired a project director to oversee the grant, with a salary of $102,000. DOI also contracted with the University of South Carolina for a $180,000 study to determine what’s needed for an exchange. The agency is waiting for that final report to come in. USC government professor Robert Oldendick says the report will be finished in November.
The Department of Insurance had to ask for an extension of the grant this month; otherwise it would have expired before the final report was complete.
The final $1 million grant was meant to review health insurers’ rate increases to ensure they were reasonable. In June, the agency hired an actuarial firm for $375,000 to do the reviews. The firm has not finished its work and the grant was extended through next March after it would have otherwise expired on October 1. Roberson said the reviews were expected to come under budget. DOI also hired a program director for the grant with a $100,000 salary.
The lack of action comes as South Carolina is one of 26 states challenging the Affordable Care Act in court. The Supreme Court is expected to hear arguments on the constitutionality of the law next year. That lawsuit focuses more on the law’s requirement that all Americans hold health insurance, although state exchanges could also be thrown out if the court rules the entire law unconstitutional.