Will Failed Obamacare Co-Ops Repay Taxpayers’ Money?
|Failed Obamacare co-ops “were a costly|
experiment gone wrong, and real people
got hurt,” Sen. Rob Portman, R-OH.
“Today’s hearing is about the families who lost their health care plans, it’s about the taxpayers who were swindled, it’s about the bureaucrats who mismanaged this program, and it’s about the local governments who had to cut budgets from firefighters and schools to make up for Washington’s failures,” Sen. Ben Sasse, R-Neb., said.
During the hearing, held by the Permanent Subcommittee on Investigations within the Senate Homeland Security and Governmental Affairs Committee, senators paid particular attention to the 12 of 23 Obamacare co-ops that have failed.
The Affordable Care Act, popularly known as Obamacare, created consumer oriented and operated plans (co-ops) as a public option for health care. The Department of Health and Human Services awarded $2.4 billion of taxpayer money in the form of startup and solvency loans to the 23 nonprofit co-ops.
Kevin Counihan, CEO of HealthCare.gov, the government’s online health insurance exchange set up by Obamacare, also testified during the hearing. Counihan, deputy director of the Centers for Medicare and Medicaid Services, which oversees Obamacare, told the subcommittee:
“These failed co-ops were a costly experiment gone wrong, and real people got hurt,” Sen. Rob Portman, R-Ohio, chairman of the Permanent Subcommittee on Investigations, said.
“The subcommittee obtained the failed co-ops’ most recent financial statements, and those statements show that none of the failed co-ops have repaid a single dollar, not a single dollar [of] principal or interest, of the $1.2 billion in federal loans they received,” Portman said.
Portman presented a new report on the failure of the co-ops, released Thursday by the subcommittee’s Republican staff, at the hearing.
“In my view, it is unlikely they will pay any significant fraction back,” Portman said. “The latest statements show that the failed co-ops’ non-loan liabilities exceed $1.13 billion—which is 93 percent greater than their reported assets, including money they expect to receive. On top of that, they owe $1.2 billion to the federal government. We should not hold our breath on repayment.”
The Centers for Medicare and Medicaid Services’ Slavitt listed three “potential” sources of funds: claims still coming in, a series of receivables, and lawsuits and judgments with contractors and vendors.
Under questioning by Sasse, Slavitt said he could not guess what percentage the government expects to recover of the $1.2 billion in taxpayer loans to the 12 failed co-ops.
“Obviously we don’t expect 100 percent recovery or anything close to that, but we are expecting that between those sources and the strategies that they pursue, that there will be funds recovered for the taxpayers,” Slavitt said.
“Very little, if any, of the $1.24 billion in federal startup and solvency loans to establish those co-ops will be repaid, and at least several will be unable to meet all of their obligations to policyholders and health care providers,” Scott Harrington, professor and chairman of the Health Care Management Department at the University of Pennsylvania’s Wharton School, testified.
In 2014, the co-ops lost $376 million and in 2015, more than $1 billion.
“But despite getting regular reports that co-ops were hemorrhaging cash, HHS took essentially no corrective action for over a year,” Portman said:
On Dec. 16, 2014, when people were signing up for 2015 coverage, the Iowa insurance commissioner placed CoOportunity under a supervision order, Sasse said.
“One month later, in January of last year, the Iowa insurance commissioner said that rehabilitation of CoOportunity would be impossible and he sought a court order for liquidation.”
Slavitt acknowledged that CoOportunity should not have entered the 2015 market.
Leah Jessen (@_LeahKay_) is a news reporter for The Daily Signal.
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