At the first of two congressional hearings on the subject this week, Republicans blamed the structure of the Affordable Care Act's program intended to foster consumer-focused insurance plans for a cascade of failing co-op plans. Democrats say the GOP killed them by withholding essential funds.
This year, 11 of the original 23 not-for-profit co-op programs have announced they will close. Most of them cited a shortfall in federal funding that left the CMS paying only 13% of the money the programs had requested from the ACA's risk-corridors program.
The risk-corridors program was established to help insurers with higher than expected costs cover their losses with funds collected from others that saw lower than expected claims. Republicans have called the program a "massive bailout" for insurance companies.
Dr. Mandy Cohen, chief operating officer for the CMS, said Tuesday that the co-ops have faced a number of challenges in getting traction, including the uncertainty of what type of consumers would be attracted and the lack of a recognizable brand name.
Cohen was the lone witness at Tuesday's hearing before a subcommittee of the House Ways and Means Committee. The matter will be before lawmakers again on Thursday during a hearing of the House Energy and Commerce Committee's Oversight and Investigations Subcommittee, which will include the deputy inspector general for audit services at HHS' Office of Inspector General and several state insurance officials.
On Tuesday, Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Health Subcommittee, said taxpayer money should not have been risked on the programs, which he said were destined to fail.
"That very premise should have been cause for alarm,” he said. “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.”
Ranking Member Rep. Jim McDermott (D-Wash.), who countered that Republicans are “complaining about problems they have caused," asked Cohen how many years it would take to for a new health insurance program to become financially stable.
“Certainly more than two years,” Cohen said.
Rep. Tom Price (R-Ga.) said the co-ops are failing because they have been mismanaged. “The co-ops haven't failed because they don't have enough money,” he said. “The co-ops have failed because they have people running them who don't know how to run insurance companies.”