In a hearing before the Senate Finance Committee on Thursday, Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt admitted that he’s not surprised the vast majority of the Obamacare co-ops have lost money.
When Sen. Orrin Hatch (R-Utah), chairman of the committee, rightfully asked why in the world CMS would move forward with co-ops they expected to fail, Slavitt blamed the states:
“Of the 11 co-ops still in operation, there is reason to call their long-term financial viability into question—all but two of them are losing money,” Hatch said.
“And as co-ops continue moving into weaker financial conditions, several show signs of running out of money this year,” he said. “Why would CMS certify these plans to sell on federal marketplace knowing there’s a good chance that these plans will fail and leave their enrollees in the lurch?”
“It doesn’t surprise me that in the first couple of years that the co-ops are going to lose money,” said Slavitt. “I think most small businesses competing in this space have those investment years.”
“The states, I think, reviewed very carefully with our assistance and our participation whether or not the co-ops should indeed move forward into the coming year and as a result as you know decisions were made to not allow certain co-ops to enter the year,” he said. “The ones that entered the year, the states, which are the ultimate regulatory authority, with our support believed that these co-ops had the wherewithal to make it through the year.”
Of the 24 Obamacare co-ops created, more than half have failed, resulting in the loss of $1.2 billion in taxpayer money.
As Sen. Rob Portman (R-Ohio) pointed out, “That’s enough, by the way, to pay for healthcare premiums for more than 300,000 Ohio families in one year.”