At least half of the funds awarded to 23 experimental health insurance co-ops since 2012 have been lost to date.
The co-ops were devised by the Obama administration to provide tax-funded non-profit competition to for-profit private commercial health insurance companies. Many of the co-ops were led by inexperienced activists or those with close political ties to the Obama administration.
All but one of the 23 operating co-ops suffered large net operating losses and 12 ultimately closed their doors last year. A 24th co-op in Vermont was never licensed.
The co-op failures forced more than 450,000 health insurance customers to scramble last year to find new coverage.
Maine, the sole co-op that last year reported a positive balance sheet, announced in early December it would no longer sell insurance policies in 2016.
The failed co-ops are supposed to “forfeit all unused loan funds” with interest within 60 days of state liquidation, according to federal law.
Johnson doubts, however, that any funds will be repaid and he slammed CMS for its lack of openness and transparency about the co-op failures.
“CMS’s oversight of the troubled co-op plan has been plagued by a fundamental lack of transparency with the American public and Congress,” Johnson said.
It’s also possible the 2015 run of co-op defaults may not have ended. As previously reported by TheDCNF, at least 11 surviving co-ops are under “enhanced oversight” by CMS because of poor enrollment and are facing significant operating losses.
“CMS has reportedly placed 11 operational CO-OPs on an ‘enhanced oversight’ list, but has declined to disclose which CO-OPs it placed on the list or its rationale for doing so,” Johnson noted in his letter.
Slavitt, the CMS acting administrator, has been tainted by ethics charges and allegations of conflicts of interest. He was nominated by President Barack Obama to succeed former CMS Administrator Marilyn Tavenner who resigned after the November 2013 Obamacare launch failure.
Slavitt was given a rare “ethics waiver” when he joined CMS, which permitted him to rule on regulations that could affect his previous employer, United Health Group (UHG).
UHG is the largest health insurance company in the country and generates a third of its revenues from the federal government, primarily from CMS.
Johnson asked for original copies of the co-op loan agreements and the standards used by CMS and its accounting consultant, Milliman, to approve co-op applicants.
Johnson demanded a CMS response by Feb. 2, but CMS has been chronically slow to respond to congressional requests for Obamacare information and documents since the program’s inception in 2011.
A CMS spokesman declined to comment.
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