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CMS Doesn't Know How Much It May Recover From Failed CO-OPs

By Melanie Zanona, CQ Roll Call

February 25, 2016 -- Officials for the Centers for Medicare and Medicaid Services (CMS) told House lawmakers it's too early to predict how much money may be recovered from failed nonprofit insurance cooperatives (CO-OPs) that sprung from the 2010 health care overhaul but assured lawmakers that the agency intends to use all available tools to recoup the losses.

More than $1 billion was loaned to the 13 of 24 CO-OPs that were funded by the health law and later failed. CMS Chief Operating Officer and Chief of Staff Mandy Cohen said the agency is currently working through the process of recovering the taxpayer money.

"The co-ops that wound down at the end of last year are now going through a process of doing their claims run out, understanding what revenue has come in. Some of them are taking action with their vendors," Cohen said at a House Oversight and Government Reform Subcommittee on Health Care, Benefits, and Administrative Rules hearing Thursday. "We go through a process based on the loan agreements and the state law to use all of the tools at our disposal to get the funding back."

But when pressed by lawmakers, she was unable to estimate how much money or what percentage will likely be recouped. "It's a case by case basis," Cohen said. "It's too early to speculate...but certainly as much as we can."

The CO-OPs were meant to lower prices in the health insurance market by challenging the dominance of giants in the industry. Their struggles have been blasted by Republicans as proof that the health care law is not working.

"We can pretend Obamacare is popular, but it's not," said Scott DesJarlais, R-Tenn. "Today's hearing is a great example of one of the reasons it's failing."

Democrats, meanwhile, have largely pinned the failures on repeated obstacles from Congress. Funding for the co-op program was dramatically whittled from the $6 billion initially designated for the program, and restrictions were put in place that led to the shortfall in so-called risk corridor payments designed to limit insurers' losses, Democrats say.

"Congress has gutted about $4 billion of the $6 billion originally appropriated for the program, and now we're here to criticize how they did after we cut their legs off at the knees," said Pennsylvania Democrat Matt Cartwright, ranking member on the subcommittee. "This is getting tiresome."

However, DesJarlais shot back that there were originally supposed to be CO-OPs in every state, "so we did save the taxpayer a fair amount of money by cutting that."

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