A new audit from the Health and Human Services inspector general’s office shows the $2.4 billion taxpayers loaned the federal government to implement an Obamacare overhaul demanded by President Obama did not bring the promised results, and in fact, could prove to be a total waste.
Taxpayers provided the money at Obama’s request to get nonprofit co-ops, the Obamacare alternative to mega-insurers, up and running so more Americans would join the health care plan. But of the 23 funded by the $2.4 billion, only one has met sign-up goals, the audit found, the Associated Press reported.
And one, the Iowa/Nebraska co-op, actually had to shut down after regulators voiced concerns over how money was being used, AP said.
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“The low enrollments and net losses might limit the ability of some co-ops to repay startup and solvency loans and to remain viable and sustainable,” the audit said.
The audit only covers the co-ops’ activities through the end of 2014, but a review of the last few months shows 2015 appears to follow the same failing trend. Co-ops continue to report financial losses, AP reported.
The co-ops are officially called Consumer Operated and Oriented Plans and they were put in place as an Obama-inspired and Democratic-implemented option to the corporate insurance agencies, after failing to get enough people to sign on to the government-run insurance plan. The deal was taxpayers would provide startup money and reserve money for the nonprofits to get going.
Just a few months ago, the White House was calling the co-ops a success. The president’s Domestic Policy Council said just recently, “In states throughout the country, co-ops have competed effectively with established issuers and attracted significant enrollment,” AP said.
But the inspector general’s report finds differently.
Among the findings of the audit: Maine was the only co-op that recorded financial solvency for 2014, with $5.9 million in income. Kentucky’s co-op lost $50.4 million; Montana’s lost $3.5 million. New York’s lost $35 million.
Medicare chief Andy Slavitt downplayed the findings in a statement to AP: “The co-ops enter the health insurance market with a number of challenges, [from] building a provider network to pricing premiums that will sustain the business for the long term,” Slavitt said. “As with any new set of business ventures, it is expected that some co-ops will be more successful than others. [The administration] takes its responsibility to oversee the co-op program seriously.”