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Administration Poised to Begin Sending Out Health Insurance Subsidies

By Melissa Attias, CQ Roll Call

January 16, 2014 -- Subsidies to help people buy health coverage on the new insurance exchanges begin flowing to insurers next week, a top official at the Centers for Medicare and Medicaid Services (CMS) recently told lawmakers.

In addition, Gary Cohen, director of the CMS Center for Consumer Information and Insurance Oversight, indicated that there might be a shortfall in funds collected from a 3.5 percent user fee paid by insurance companies and intended to be used to finance the operations of the federal exchange. Cohen testified at a hearing before the House Energy and Commerce Oversight Subcommittee on the rollout of the health care law (PL 111-148, PL 111-152).

In distributing the subsidy payments, Cohen said the administration is using a process based on insurers' records rather than records being generated by the federal insurance exchange, noting that making certain that plans are getting paid is a major issue for government officials.

He said that the automated process for payments is still being built and that he did not have information on an anticipated completion date, while emphasizing that they do have a working process in place.

"We've actually had tremendous responsiveness from the insurers and they've told us that they're very pleased with the way that process is going," Cohen said. "It's not ideal, but it will work to get them paid."

Cohen was also asked about the 3.5 percent user fee on insurance companies who participate in the federal exchange and whether other sources of funding would be needed.

"I don't believe that the amount of that fee will fully cover the costs of operating in the federally facilitated marketplace," Cohen said. He said that the agency is tapping resources within its own budget and he expects that there will be a fee next year as well, which CMS officials previously had predicted.

GOP lawmakers also honed in on testimony that was provided by Cohen to Congress prior to the start of open enrollment on Oct. 1 and pressed him for specifics on exactly what he knew when.

Subcommittee Chairman Tim Murphy, R-Pa., asked Cohen why he testified that the exchange would be ready on time. Murphy also brought up briefings on a report by the consulting group McKinsey & Co. that identified problems prior to the launch.

Cohen said he gave lawmakers the best information he had at the time but that the problems were dramatically bigger than anyone expected. He also confirmed that he attended the briefings and that a number of risks were identified, but he said that at no time did the firm say the effort would not succeed.

"I think we took very much to heart what the McKinsey people recommended that we do and we proceeded forward and tried to do the best we could to maximize the likelihood that we would be successful," Cohen said.

As to who on his staff gave him the positive outlook, Cohen said he received regular briefings from those responsible for overseeing the website and pointed to CMS Deputy Chief Information Officer Henry Chao as the person he probably heard from the most. He noted that his September testimony before open enrollment was based on briefings from Chao and others, though he said he did not know if Chao ever specifically saw the McKinsey report.

"Clearly it was wrong, but it was also what I believed and what I understood based on what I had been told," Cohen said about his September testimony, when pressed on the issue again by Texas Republican Michael C. Burgess.

Burgess maintained that he could not understand "why no one has been accountable for an error that egregious," suggesting that the administration now faces a credibility problem.

"Why should we believe you now when nothing you said over the past year, year and a half, has been accurate?" Burgess asked.
Tennessee Republican Marsha Blackburn told Cohen later in the hearing that she thinks he should be fired.

Burgess also expressed concern about the funding of the health care law's risk corridor program and asked if Cohen could assure lawmakers that it would not require more money from the taxpayers. Cohen said he did not currently have an answer but acknowledged it's an issue, adding that his agency is working with the Office of Management and Budget.

Meanwhile, subcommittee ranking member Diana DeGette asked what the administration is doing to bump up the enrollment numbers, both in terms of young people and the general population. The Colorado Democrat said in her opening statement that focusing on what happened last fall when everyone admits it was a disaster is not helpful.

Cohen said he expects to see a stronger media campaign, noting that the administration and insurance companies somewhat held back when the site was not working well. He mentioned an advertisement featuring Magic Johnson and said that there would be advertising during the Olympics, as well as through social media.

Also last week, House Speaker John A. Boehner told reporters that he expects Republicans to unveil a proposal to replace the health care law, in response to a question about why Republicans haven't gotten behind a plan of their own.

"The Republican House members will be having our retreat about a week and a half from now," the Ohio Republican said. "It's one of the big issues for conversation in terms of our agenda for this year. And I think you'll see Republicans come forward with a plan to replace Obamacare; a plan that will actually reduce costs for the American people and make health insurance more accessible."

Earlier this month, House Budget Chairman Paul D. Ryan, R-Wis., said in a Wisconsin radio interview that he plans to spend "a good deal of my time" this year developing a replacement plan. Members of the House Republican Study Committee have also been continuing to highlight a replacement bill (HR 3121) they introduced in September, which currently has 119 cosponsors.

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