- The Washington Times - Thursday, January 21, 2016

The Obama administration will try to demand repayment from Obamacare co-ops that went belly-up, even as it lays plans to try to save the few that remain, the health law’s head honcho told Congress on Thursday.

Andy Slavitt, acting administrator at the Centers for Medicare and Medicaid Services, told the Senate Finance Committee he ordered an independent review of the start-ups after growing pains forced 12 of the initial 23 co-op plans to fail.

But he said they are committed to the remaining plans, which were designed to be alternatives to the insurance offered by for-profit companies on the Obamacare exchanges — and which have already received $2.4 billion in taxpayer-funded loans.

“We need to do everything we can to make it easier for these companies to succeed and ultimately for taxpayers to get paid back on the loans that we made to these companies,” said Mr. Slavitt, who is awaiting Senate confirmation as permanent CMS administrator.

The co-ops were supposed to stimulate competition in the insurance marketplace.



But some of the start-ups struggled for market share or underpriced their offerings, precipitating their collapse this fall. Their demise was hastened by the administration’s announcement Oct. 1 that it would only pay a fraction of the losses insurers racked up by offering plans on the exchanges.

Mr. Slavitt said three-quarters of people who held coverage from one of the terminated co-ops have found new plans in the Obamacare exchanges this year.

Republicans have accused the administration of wasting $1.2 billion on co-ops that were never going to be able to compete with bigger, well-established insurers on Obamacare’s Web-based health exchanges.

The Health and Human Services Department continued to cut checks to the co-ops throughout 2014, even as monthly reports indicated the plans were hemorrhaging money, charged Sen. Rob Portman, Ohio Republican.

“These are the kind of financial red flags that any prudential regulator would have looked at, and I think HHS blew it,” he said.

Mr. Slavitt said CMS in December canceled loan agreements with plans that are no longer offering coverage, and will work with the Justice Department to figure out what steps it can take to recoup taxpayer money.

He urged state regulators to take “prudent and conservative” actions to protect consumers in co-op-related coverage going forward, even if it means freezing enrollment or deciding to shut down a plan.

At the same time, he said it should be easier for surviving co-ops to raise capital or attract a merger partner if that’s what the co-op’s board wants, and that CMS would be releasing unspecified guidance to “ease that path.”

“We need to level the playing field and lengthen the runway for these small businesses,” he said.

Ultimately, he said it is up to the co-ops themselves to be business-savvy and disciplined enough to cut their operating costs.

“Currently, I think all of the co-ops that have entered the 2016 plan year have every opportunity to be successful,” he said.

Mr. Obama nominated Mr. Slavitt in July to serve as CMS administrator, a position he’d held on an interim basis since February, when Marilyn Tavenner stepped down. She now leads America’s Health Insurance Plans, the industry’s top lobbying group.

While some lawmakers peppered Mr. Slavitt Thursday with questions about electronic health records and the opioid drug epidemic that’s rattling many states, Sen. Ron Wyden, Oregon Democrat, used his time to advocate for the nominee.

“I’ll do my best to see you confirmed,” he said.

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