Politics

Chaffetz Panel Wades Into Obamacare Healthcare Co-op Collapses

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Members of the House Committee on Oversight and Government Reform want to know why half of the 23 Obamacare health insurance co-ops have failed, and they are demanding documents from the Obama administration that may offer answers.

Utah Republican Committee Chairman Rep. [crscore]Jason Chaffetz[/crscore] and three subcommittee chairmen sent a letter to the Centers for Medicare and Medicaid Services (CMS) Nov. 20 demanding it turn over documents about the co-ops by December 4. CMS is part of the Department of Health and Human Services and manages Obamacare.

An estimated 800,000 Americans are scrambling to find new health insurance coverage as a result of the collapses. It will cost federal taxpayers at least $1.2 billion. President Barack Obama spent $2.4 billion overall to establish the co-ops, which are intended to provide publicly-funded competition for private sector health insurers.

Chaffetz addressed Andy Slavitt, the acting CMS administrator who Obama nominated to serve as its permanent top official.

Marilyn Tavenner, his predecessor, left CMS in disgrace over the failures that plagued the roll out of the Obamacare program. Slavitt’s nomination requires Senate confirmation but so far the Senate has not acted on it.

Nebraska Republican Sen. Ben Sasse is promising to put a “hold” on Slavitt’s nomination until the administration provides additional information over the failures of the Obamacare exchanges.

In his letter to Slavitt, Chaffetz writes, “With 2016 premiums rising by double digits in some states, and more difficulties predicted both for the Exchanges and co-ops, it is critical that Congress assess CMS’ plans to protect consumers and safeguard billions in taxpayer dollars.”

But in only two years of operation, half of them face financial insolvency, low enrollment and higher-than-expected medical expenses. Many co-ops quickly ran into the red as they tried to offer below market rates that failed to generate sufficient revenue to cover promised benefits.

Iowa’s Co-Opportunity Health, one of the first co-ops to fail this year, paid out $1.40 in medical costs for every dollar it took in as premiums.

Compounding the problem, the original federal rules for the co-ops stop anyone with experience in the commercial insurance industry from joining board or in management. As a result, many of the co-ops can’t hire people with knowledge and experience in health insurance.

A July 2015 Inspector General Report for the U.S. Department of Health and Human Services found 22 of the 23 co-ops are in the red and hemorrhaging large amounts of money.

Signing the letter with Chaffetz are Ohio Republican Rep. [crscore]Jim Jordan[/crscore], chairman of the panel’s health care subcommittee, North Carolina Republican Rep. [crscore]Mark Meadows[/crscore], chairman of the Subcommittee on Government Operations, and Texas Republican Rep. [crscore]Will Hurd[/crscore], who heads the Subcommittee on Internet Technology.

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