Sen. Chuck Grassley (R-Iowa), who sits on the Finance Committee, is seeking answers about why the CMS refused to provide additional funding to CoOportunity Health, a failed not-for-profit health plan operating in Iowa and Nebraska.
CoOportunity Health received roughly $145 million in federal loans and enrolled more than 120,000 Iowa and Nebraska residents in coverage during its first year of operations. But the startup insurer was hemorrhaging cash and the CMS declined its request for additional funds last month. In part because of that decision, the health plan was recently taken over by the state of Iowa and is no longer accepting new customers.
“Both CoOportunity and the Iowa insurance commissioner told CMS last summer that it would need additional funding to continue to offer coverage,” Grassley wrote in the letter to CMS Administrator Marilyn Tavenner. “While CoOportunity was facing financial challenges, if CMS had informed it earlier that it would not receive additional funds it could have taken steps to potentially avoid failure. CMS' lack of openness appears to have played a significant part in CoOportunity's failure.”
CoOportunity health was among 23 co-op plans seeded with loan dollars through the Patient Protection and Affordable Care Act. In recent months, the CMS had awarded roughly $300 million in additional solvency loans to a half dozen of the not-for-profit insurers, but CoOportunity Health was not among the beneficiaries.
The co-op program was a sop to liberal Democrats disappointed that the federal healthcare law didn't contain a public option to provide competition to private insurers. Republicans have repeatedly blasted the program, comparing it to the wind-power company Solyndra, which went bankrupt despite receiving more than $500 million in federal loans.
The collapse of CoOportunity Health leaves just one insurer, Coventry, selling plans through the exchange in Iowa. The state's largest insurer, Wellmark, isn't participating in the government-run marketplace.
The CMS did not immediately respond to a request for comment about Grassley's assertions.
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