Yesterday, the Senate Finance Committee held a hearing: Healthcare Co-Ops: A Review of the Financial and Oversight Controls. Andy Slavitt, who serves as the acting administrator of the Center for Medicare and Medicaid Services (CMS), served as the lone witness at the hearing. The hearing was largely charged with investigating the financial losses of the insurers and how much of the funding in the $2.4 billion program could be recoverable from the failed insurers. It followed up a letter sent last year by Senate Finance Chairman Orrin Hatch (R-UT) and Lamar Alexander (R-TN) to CMS asking if the agency has recovered any loan funding from the failed co-ops. Following last year’s slew of closings, only 11 of the original 23 co-ops remain in operation. Slavitt’s testimony noted the independent reviews of the co-ops operations during 2014, the solvency loans that were provided to shore up struggling co-ops to prevent closure, and the significantly reduced program funding due to rescissions made by Congress ($2.2 billion in 2011, $1.4 billion in 2012, and $13 million in 2013).
Hatch centered his questions largely on whether CMS has been able to recover funding and what CMS has been doing to prevent closures during the current plan year. Slavitt responded that CMS is working with state departments of insurance and failed co-ops to recover funds, but that it doesn’t yet know how much can be recovered, noting that failed co-ops were placed into receivership. Ranking Member Ron Wyden (D-OR) focused his questions on what CMS can do differently to prevent future failures. Slavitt mentioned that they are looking at outside capital, potential for mergers, use of enrollment caps to adequately structure the size of the businesses, and appropriate pricing models. Senator Chuck Grassley (R-IA), one of the more vocal critics of the program given his state’s CoOpportunity Health that failed last year, expressed concern about potential for future failures and asked CMS to have actuaries re-evaluate the program. Senator Rob Portman (R-OH) charged that $1.2 billion in federal funding was wasted and will never be recovered, with half of that disbursed on or after 2014. Senator Bob Casey (D-PA) commented that there are three camps for the ACA: those who fully support it and see no flaws, the “repeal and walk away caucus,” and those who want to fix problems in the ACA. Slavitt acknowledged that the program was not perfect but noted ways that it could be fixed, such as attracting outside capital particularly given the significant loss in public funding. NAHU is encouraged by the “fix” approach to health reform in general as we look to work with Congress on our federal priorities during the year ahead.