Several leading Republicans in Congress are asking Health and Human Services Secretary Kathleen Sebelius, who is overseeing the disastrous Healthcare.gov website rollout, to explain the $2 billion loaned to various interests to launch health insurance CO-OPs and whether any of that taxpayer money will be recovered.
Just when it seems the Obamacare experience couldn’t get any worse – the website malfunctions, millions of policies have been canceled, only thousands are able to sign up and premiums are skyrocketing – come the questions about loans.
“Out of the $1.98 billion awarded to CO-OPs, what amount does HHS expect to be repaid? What is the period of time by which HHS expects these funds to be repaid?” were among the questions presented to Sebelius.
The questions were raised in a letter from Sens. Orrin Hatch, ranking member of the Senate Finance Committee; Lamar Alexander, ranking member of the Health, Education, Labor and Pensions Committee; Michael Enzi, ranking member of the Health, Education, Labor, and Pensions Subcommittee on Children and Families; Tom Coburn, ranking member of the Homeland Security and Government Affairs Committee; and Rep. Charles Boustany Jr., chairman of the House Ways and Means Committee on Oversight.
It’s not the first time members of Congress have asked for information about the HHS program called Consumer Operated and Oriented Plans, which has loaned money to non-profit health insurance issuers that offer qualified health plans in the individual and small-group markets.
Two dozen of those groups have been loaned the money, the members of Congress note, for startup costs and solvency, “which help CO-OPs meet state insurance solvency and reserve requirements.”
“When we wrote to you in May 2012, we noted that there was little evidence that the CO-OP program would promote greater competition and lower costs in most state insurance markets, and we questioned whether HHS had significantly underestimated the financial risk,” the lawmakers wrote.
They said the “responses to our letter from CMS Administrator Marilyn Tavenner – which were delivered on your behalf more than nine months after we sent our letter – did little to assure us that HHS or CMS was prepared to address these issue.”
The scanty information that was available was not reassuring, the lawmakers said.
An inspector general’s report, for instance, said “11 of 16 CO-OPs reported estimated startup expenditures … that exceeded the total startup funding ultimately provided,” producing a “risk that CO-OPs could exhaust all startup loan funding before they are fully operational or before they earn sufficient operating income to be self-supporting.”
The lawmakers also note that at least one of the CO-OP plans was denied a license by the state of Vermont to operate.
In the letter today, they want to know whether the government, on behalf of the $2 billion in tax money, monitored licensing processes and how many have or have not been granted licenses.
They also want to know when the plans will be operational and if they be within budget.
They ask for an explanation of the startup costs, what the “problematic launch” of the Healthcare.gov website mean to the operations, whether or not all the required reports been submitted and whether or not the operations meet their required milestones.
“Please provide all documents related to (1) the Vermont CO-OP’s failure to obtain an insurance license and (2) HHS’s decision to terminate the Vermont CO-OP loan,” they ask.
Earlier this year, a number of Republican senators asked the Government Accountability Office to conduct an independent audit examining the effectiveness of CO-OPs. The members also requested GAO evaluate efforts by CO-OPs related to covering the uninsured, providing lower-cost plans and repaying loans from the U.S. Department of Health and Human Services.