ObamaCare official: Troubled co-op should have been closed sooner

By Peter Sullivan
03/10/16 12:42 PM EST

A top ObamaCare official acknowledged Thursday that a troubled nonprofit “co-op” insurer set up under the health law should have been shut down sooner.

The co-op, called CoOportunity, operated in Iowa and Nebraska and was shut down by regulators in January 2015 because of financial problems.

Andy Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services (CMS), said at a Senate hearing Thursday that the insurer should have been shut down before beginning the 2015 coverage year. That could have helped prevent customers from being inconvenienced in the middle of their coverage year.

He made the admission at a hearing of the Homeland Security subcommittee on investigations, which is looking into the larger issue of the co-op failures.

Republicans have attacked the administration for what they call management failures in overseeing the co-ops. Twelve of the 23 co-ops have now gone out of business, and Republicans point to the $1.2 billion in government loans to those failed ventures that will not be paid back in full and in some cases, not at all.

Slavitt argued that in 2014, the program’s first year of coverage, regulators did not yet have enough information to recognize the scale of the financial problems, though he made an exception for the decision about CoOportunity.

“I will say CoOportunity should never have been allowed to go into the 2015 year, either by the co-op or by ourselves, and I think that’s a very fair criticism in looking back,” Slavitt said.

As for the other co-ops, Slavitt defended regulators’ decisions given the information they had. He said detailed data on insurance claims were not available until months into the program, given that insurers were just starting up.

“The team I think did the best job they could evaluating the information they had,” he said.

Sen. Rob Portman (R-Ohio), the chairman of the subcommittee, who is facing a tough reelection race, said he was not satisfied with the answers.

He pointed to regular quarterly financial reports showing “massive losses.”

“I just don’t think it’s accurate to say you didn’t have information and there was a lag time that made it impossible to respond, it’s just not accurate,” Portman said.

He pointed to a report from the committee’s Republican staff that found that five of the 12 co-ops that failed were never put on “corrective action” by the CMS in an attempt to turn them around.

Sen. Ben Sasse (R-Neb.), who has focused on the failure of the co-op in his home state, thanked Slavitt for the “significant admission” that CoOportunity should have been shut down sooner.