Just two years after 23 non-profit health insurers were created under President Obama's Affordable Care Act, the administration has warned in a secret document that 11 of the co-ops may be on the verge of failure, according to The Daily Caller, which noted that Congress has also been left in the dark about the possible failures.
The unidentified co-ops appear to still be operating and were sent in letters from the Centers for Medicare and Medicaid (CMS), which manages Obama's health insurance program, urging that they should take action to avoid shutting down.
CMS spokesman Aaron Albright said the co-ops "are either on a corrective action plan or enhanced oversight. We have not released the letters or names," according to The Daily Caller.
In a Nov. 30 letter to CMS acting administrator Andy Slavitt, three Republican members of the House Ways and Means Committee expressed concern over the lack of oversight and requested more information on the financial solvency of the co-ops.
"We have long been concerned about the financial solvency of CO-OPs," the committee members wrote to Slavitt. "Which plans have received these warnings or have been placed on corrective plans? Describe the criteria used to determine CO-OPs subject to increased oversight. Also, please provide all corrective action plans."
The co-ops in Colorado, Oregon and Tennessee announced last week that they are shutting down, and in the previous week, Kentucky's co-op also said that it would close, leaving just 15 of the original 23 co-ops in business next year, reported The Hill.
Many of the failing co-ops have said they are experiencing financial trouble due to low payouts from the Affordable Care Act's risk corridors program. The risk corridors program was designed to protect insurers from heavy losses by redistributing money from insurers that were doing well, but the Obama administration announced on Oct. 1 that the program only had enough money to pay out 12.6 percent of the $2.87 billion requested by insurers.
"The government's refusal to honor its risk corridor obligations represents a negative financial impact of over $20 million," Dawn Bonder, CEO of the Oregon co-op Health Republic Insurance, said in a statement, reported The Washington Post. "This has placed us in a difficult financial position that could jeopardize our members and partners. As a result, we believe the most ethical step is for Health Republic to refrain from entering the market in 2016 and begin an orderly wind down of business."
