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#SubOversight Examines Failed Obamacare CO-OPs

Nov 5, 2015
Cost to Taxpayers Now $1.23 Billion

WASHINGTON, DC – The Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), today held an investigative hearing examining the failed Obamacare CO-OPs and the $2.4 billion in insurance loans paid out. To date, 12 of the original 23 CO-OPs have closed, bringing the total cost to taxpayers at more than $1.23 billion.

“As early as 2011, HHS predicted that 36 percent of the loans would go unpaid,” said Chairman Murphy in his opening statement. “In 2012, the Office of Management and Budget projected taxpayers would lose 43 percent of loans offered through the program. The following year, a HHS OIG report expressed concern about CO-OPs’ financial sustainability and ability to repay loans.”

“Regardless of one’s view of the president’s health law, the law itself and its implementation demand oversight,” stated full committee Chairman Fred Upton (R-MI). “It seems that the news gets worse by the day, with more and more taxpayer dollars squandered. The CO-OP program has sadly followed the same script. With 12 out of 23 having failed at a loss of over $1.23 billion, who is taking responsibility and being held accountable?”

James Donelon, Commissioner of Insurance for the State of Louisiana expressed his frustration with the failed CO-OPs. “How the CO-OPs in operation, and those that were formerly in operation around the nation, turned out, has been a disappointment for state regulators and ultimately for consumers and taxpayers,” he testified.

Also testifying before the subcommittee was Gloria L. Jarmon, Deputy Inspector General for Audit Services at the Office of Inspector General. Citing a July 2015 OIG report, Ms. Jarmon expressed the urgency of CMS addressing the growing number of failed CO-OPs. “In our July 2015 report, we found that low enrollments and net losses could limit the ability of some CO-OPs to repay startup and solvency loans and to remain viable and sustainable,” Ms. Jarmon commented. “Given the growing concerns about the financial viability of CO-OPs, it is critical that CMS provide the necessary guidance to improve program oversight and protect taxpayer dollars from significant losses.”

For more information on today’s hearing, or to watch an archived webcast, click HERE.

CO-OPs that have failed and taxpayer dollars received (in order by closing announcement):

CoOportunity Health - Iowa and Nebraska
Cost: $145,312,100

Louisiana Health Cooperative, Inc.
Cost: $65,790,660

Nevada Health Cooperative
Cost: $65,925,396

Health Republic Insurance of New York
Cost: $265,133,000

Kentucky Health Care Cooperative - Kentucky and West Virginia
Cost: $146,494,772

Community Health Alliance Mutual Insurance Company - Tennessee
Cost: $73,306,700

Colorado HealthOp
Cost: $72,335,129

Health Republic Insurance of Oregon
Cost: $60,648,505

Consumers' Choice Health Insurance Company - South Carolina
Cost: $87,578,208

Arches Mutual Insurance Company – Utah
Cost: $89,650,303

Meritus Health Partners – Arizona
Cost: $93,313,233

Consumers Mutual Insurance – Michigan
Cost: $71,534,300

TOTAL TAXPAYER DOLLARS: $1,237,022,306

Note: This total does not include Vermont’s CO-OP, which was denied an insurance license by the state, and was dissolved before enrolling a single person.  

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