The Obama administration is defending its establishment of government-supported health insurance co-ops, even as it answers questions from lawmakers about the troubling performance of those organizations.
Senior officials with the Health and Human Services Department were called to address these issues – which are prompting several hundred thousand people to find new coverage – in a congressional hearing before the House Ways and Means Community Tuesday.
During that time, Dr. Mandy Cohen, chief operating officer and chief of staff for the CMS, confirmed that 12 of the 23 nonprofit co-ops that were established at the advent of the Affordable Care Act will not be selling health coverage next year. The vast majority of these shuttered insurers closed their doors due to solvency concerns that continue to plague many of those remaining.
Cohen laid blame to the uncertainty of co-ops as to which types of consumers would be attracted to their organizations and the lack of a recognizable brand, and stressed that it would take “certainly more than two years” for the program to become stable.
Republican members of the committee, however, expressed their displeasure over what they see as the failure of the program – a failure many considered to be a foregone conclusion.
“That very premise should have been cause for alarm,” said Texas Representative Kevin Brady, who decried the use of taxpayer money to fund the co-op program. “Only in Washington would a group of bureaucrats think they knew how to micromanage competition instead of letting consumers and markets do what they do best.”
Representative Tom Price from Georgia added that mismanagement of the co-ops is to blame.
“The co-ops have failed because they have people running them who don’t know how to run insurance companies,” he said.
Democrats, meanwhile, countered that Republicans had exacerbated the problems by cutting funding to the co-op program. Cohen also echoed this line, pointing out that the ACA originally provided much more money for the program – $6 billion – but that Congress failed to greenlight that budget.
The National Association of Insurance Commissioners has not adopted either stance, and has said there are many reasons for the failure of the co-ops: the fact that they were new companies, a lack of consumer knowledge, and a very competitive marketplace.
Consumers Mutual Insurance of Michigan is the latest co-op to close its doors, announcing its shutdown Tuesday. Altogether, the 12 collapses will disrupt insurance for 740,000 individuals and small-business employees.
