Republicans demand answers on surviving health co-ops

The CMS answered questions from Congress as eight of the surviving insurance nonprofits remain under enhanced oversight

Insurance News


Congressional Republicans grilled representatives from the Centers for Medicare and Medicaid Services late last week over the financial health of the remaining health cooperatives established under the Affordable Care Act.

Eight of the 11 insurance nonprofits have been subject to enhanced oversight or placed on a correction plan due to uncertain financial instability. Republicans say the troubled co-ops raise questions about the long-term viability of the healthcare law and this tenet in particular.

“This is a horrible, horrible venture,” said Republican Representative Jody Hice during a House Oversight and Government Reform subcommittee hearing.

Representatives from CMS, insurance co-ops and insurance commissioners from affected states fielded questions, stressing that they wouldn’t disclose the co-ops under oversight but that it planned to recoup the $1.2 billion injected in startup and solvency loans from the federal government.

“We do very much expect to get taxpayer dollars back for these loans,” said Dr. Mandy Cohen, chief operating officer and chief of staff at CMS.

Co-ops were established to keep the price of health insurance premiums in check by providing added competition to major insurers. However, 12 of the 23 startups have folded since their debut in 2013.

Many of the struggling and failed co-ops have blamed the failure of Congress to deliver promised funding. However, Cohen says CMS oversight means problems remain at the operations and as such, the agency will be involved in identifying operational issues involving provider networks or business strategy. Correction plans will then be made in order to fix the problems.

Cohen added that she did not know how many of the co-ops were making a profit, or whether more would need to be put under review.

She did say the Obama administration is encouraging the groups to look for outside capital or opportunities to sell in the large group market.

“We are doing our job here and are being pretty tough on the co-ops,” Cohen told lawmakers.

Yet Republicans continued to express concerns about accounting methods used by the co-ops, including using government loans to meet capital requirements.

“Anyone in business would pull the plug immediately,” Representative Earl Carter said. “Something isn’t working.”

Co-ops have closed in Arizona, Colorado, Iowa, Kentucky, Louisiana, Michigan, Nevada, New York, Oregon, South Carolina, Tennessee and Utah. The failures have caused an estimated 700,000 individuals to seek new individual and group health insurance.

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