California health insurance exchange sparks controversy

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Covered California awards $184 million in contracts to organizations associated with executive director

California’s health insurance exchange, called Covered California, has sparked some controversy this week. According to records obtained by the Associated Press through the state’s Public Records Act, some $184 million in no-bid contracts have been awarded to numerous organizations throughout the state. This is controversial because these contracts were awarded without the competitive bidding and oversight process that is common in the state government. Some of the deals awarded have sent millions of dollars to organizations that are associated with Covered California’s executive director.

No-bid contracts generate controversy for the state government and its exchange

No-bid contracts are somewhat uncommon in the California government. The state’s regulatory structure is designed to promote open and fair competition among organizations, providing taxpayers with insight into how contracts are awarded by state agencies. The regulatory structure is meant to help avoid ethical conflicts, but awarding no-bid contracts has happened before in the past. No-bid contracts are usually awarded when there is a lack of competition in a given market or in certain emergency situations.

Contracts were awarded to organizations with close professional ties to Peter Lee

california political health insuranceSeveral $4.2 million contracts have been awarded to The Tori Group, a consulting firm whose founder has strong ties with Covered California‘s executive director, Peter Lee. Other contracts were awarded to a subsidiary of a health care organization that Lee had once been in charge of. Covered California has confirmed that some contracts were awarded to organizations with ties to the executive director, but there may be good reason for this.

Covered California suggests that contracts were awarded in order to help the organization prepare for the upcoming open enrollment period

According to Covered California, the exchange was under pressure by state lawmakers to improve its structure and ready itself for the upcoming open enrollment period. The exchange was in need of highly specialized skills in order to help it live up to lawmaker’s expectations. As such, contracts were awarded to organizations that were deemed worthy, with these contracts being issued in an “emergency situation.”

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