Nearly half of the non-profit co-ops created under Obamacare have now collapsed – and taxpayers will have to foot the $1.1 billion bill lawmakers say
- The experimental programs were funded with $2.4 billion in government loans – should they all topple, taxpayers could get left picking up the tab
- Already, 11 of the original 23 co-ops have now shuttered, including five in the last month
- ‘I suspect we’re never getting this money back,’ House Ways and Means Health Subcommittee Chairman Kevin Brady said yesterday
Nearly half the non-profit health organizations created under Obamacare and funded by government loans have now collapsed, causing alarm among legislators who worry Uncle Sam will get stuck with the bill.
The White House wouldn’t say today who will pay, and directed questions on the matter to the Department of Health and Human Services. But Republican lawmakers familiar with the matter say the $1.1 billion bomb will likely fall on taxpayers.
‘I suspect we’re never getting this money back,’ House Ways and Means Health Subcommittee Chairman Kevin Brady said at a hearing yesterday.
The federal government is pushing Americans whose co-ops closed toward Healthcare.gov, which conveniently opened for enrollment on Sunday and will close down on January 31. Or they can pay a fine and skip coverage altogether
Only one of the health insurance co-ops made money in 2014, a Fox News report found.
With the exit of the Arizona co-op from the health marketplace on Friday, 11 of the original 23 co-ops are now shuttered.
The 59,000 Arizonians who participated in the plan will have to find new insurance through the healthcare exchange, which conveniently opened for enrollment on Sunday and will close down on January 31, or pay $695 or more in fines in 2016.
Co-ops in Colorado, Oregon, Utah and South Carolina also closed down last month.
‘Arizona’s failure is just the latest Obamacare fright,’ House Energy and Commerce Committee Chairman Fred Upton said in a Halloween-themed statement, a nod to the timing of the closure.
He added, ‘With 11 of 23 CO-OPS shutting down, the cost now tops $1.1 billion – a nasty Halloween trick for taxpayers.’
Nebraska lawmaker Adrian Smith said in a Wall Street Journal op-ed this week, ‘These loans will likely never be fully repaid, while insurers and consumers will be on the hook for any unpaid claims left behind by failed insurers.’
The co-ops were granted in total $2.4 billion in loans. Should they all topple, taxpayers could get left picking up the entire tab.
Two U.S. senators Orrin Hatch, of Utah, one of the states that revoked its co-op, and Lamar Alexander of Tennessee, are hoping that doesn’t happen.
In a letter to the Centers for Medicare & Medicaid Services this week that was obtained by Fox News they noted the closures and said, ‘As a result, hundreds of thousands of Americans will lose their health insurance plans and will have to scramble to find new plans, most likely with higher premiums and deductibles.’
A spokewoman for HHS told Fox News that the co-ops ‘face a number of challenges, from building a provider network to pricing premiums in a new market, and unfortunately, not all will succeed.’
And she insisted that in those instances HHS will ‘work with local officials to do everything possible to make sure consumers stay covered.’
Brady blasted CMS in Tuesday’s congressional hearing and said it shouldn’t be surprising that experimental co-ops failed.
‘What could go wrong? Well, as it turns out, quite a lot,’ he said. ‘First, CMS essentially allowed anyone to participate in the program, regardless of whether he or she had any prior experience running an insurance company.’
The Texas lawmaker said, ‘the hard-earned tax dollars collected from working Americans, sitting at Treasury right now, are not venture capital.’
‘Bureaucrats in Washington don’t have the expertise to institute top-down programs in the name of “competition.” ‘
Lawmakers grilled Dr. Mandy Cohen, COO and chief of staff of the Centers for Medicare and Medicaid, yesterday at a House Ways and Means Committee hearing the state of the Affordable Care Act’s Consumer Operated and Oriented Plan (CO-OP) Program
Asked about the failing co-ops today, White House Press Secretary Josh Earnest said, ‘What we have seen is that people who are shopping on these marketplaces in general are finding a good product at an affordable cost.’
Participants in a co-op that closes will ‘be able to go into the marketplace, as of Sunday, and they’ll be able to shop for coverage.’
‘They have options,’ he said.
And seven in 10 will find that there is a good deal available for just $75 a month, the White House official posited, because the marketplaces provide ‘a competitive environment.’
The closure of the co-ops ‘does mean that there are now more customers when they are going to the marketplace,’ he said.
Yesterday the White House said it wasn’t worried that too few Americans would enroll in health insurance by the end of the year, rejecting an estimation by the the non-partisan Congressional Budget Office that said 20 million Americans should be signed up by then as opposed to HHS’ predictions that only 10 million will.
‘The Affordable Care Act I think is working better thus far than anybody predicted,’ Earnest said. ‘And over the first couple of years, we have exceeded the expectations of the Congressional Budget Office.’
The White House official said 17.6 million Americans have gained coverage since the law went into effect and the uninsured rate i’s now lower than it’s ever been.’
He did not deny reports of sticker shot and instead said, ‘We saw is we saw premium spikes all across the country before the Affordable Care Act went into effect.’
‘And the fact is, there are actually some states where health care premiums have done the unthinkable — they’ve actually gone down. I think the overall average is an increase that is lower than we’ve traditionally seen.’
Of the $75 a month plans, Earnest said, ‘That’s a good deal. That’s why millions of people have flocked to the marketplaces to sign up. And we continue to be confident that people are going to do that in this open enrollment period too.’
In the first six hours of the open enrollment period, he said, 40,000 applications were submitted, which puts the pace on par with the two preceding years