Obamacare’s Co-Op Implosion ‘Just Seems Like It’s A Disaster’

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Juliegrace Brufke Capitol Hill Reporter
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Obamacare is in serious trouble, and the folks steering the ship have a solution: More money.

Centers for Medicare and Medicaid Services Chief of Staff Mandy Cohen cited a shortage of funds as part of the problem as to why so many of the Obamacare co-ops, which received $2.4 billion in federal loans, largely failed during her Tuesday testimony before the Ways and Means Subcommittee on Health.

Twelve out of 23 co-ops, designed to increase competition in the marketplace, have failed since they kicked off in 2011. Those who enrolled in the collapsing programs now need to find new plans through the health care marketplace.

“Obviously, we wish we had a better batting average here,” Cohen said, adding that there have been some successes.

Republican lawmakers have argued mismanagement and government overreach are the reason the co-ops have failed, while Democrats said the programs would have been more successful if they had received the $6 billion it was initially supposed to receive.

“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,” said subcommittee Chairman Kevin Brady. “What could go wrong? Well, as it turns out, quite a lot.”

Ranking member Jim McDermott said the program had no chance of success with the slashed funding.

“If Congress gives them the support they need to get off the ground, they will provide the American people with more choices and help keep the for-profit insurers honest,” the Washington state Democrat said. “But my Republican colleagues have shown that they have no interest in making this happen.”

Cohen said while many of the co-ops have gone under, some have provided competition in the marketplace as they were intended to do.

“It seems like at many levels, it’s simply a failure. It’s out of balance,” said Rep. Peter Roskam. “It just seems like it’s a disaster. Let’s turn the page, call it what it is and move on.”

Cohen said the co-ops faces challenges in that they had no previous claims experience making pricing difficult and faced difficulties building a provider network.

“If you listen to the folks on the other side, the reason the co-ops are failing is because there just isn’t enough money and it’s those nasty Republicans who’ve removed all that money,” said Rep. Tom Price. “The co-ops haven’t failed because they haven’t had enough money, the co-ops have failed because we’ve got people who don’t know how to run insurance companies running insurance companies, and not able to respond to individuals.”

Cohen will appear before the Committee on Energy and Commerce Subcommittee on Oversight and Investigations Thursday morning.

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