The failures of a dozen nonprofit health insurance plans created by the Affordable Care Act could cost the government up to $1.2 billion, according to a harsh new congressional report that concludes federal officials ignored early warnings about the plans’ fragility and moved in too late as problems arose.
The report, released by a Senate investigations panel, says that the bulk of those loans are unlikely to be recovered, with some plans unable to pay “a substantial amount of money” they still owe doctors and hospitals for members’ care.
Nearly three-quarters of a million people in 14 states were forced to scramble for new insurance coverage as the plans shut down last year, voluntarily or under regulators’ orders.
“These failed CO-OPs were a costly experiment gone wrong, and real people got hurt — including the more than 700,000 Americans who lost their health plans,” the panel’s chairman, Sen. Rob Portman (R-Ohio), said as he opened a hearing Thursday to review the problems.
The Consumer Oriented and Operated Plan program was a part of the health-care law intended to foster a new breed of coverage that would serve as an alternative to traditional insurers. Proponents said the co-ops never had a fair chance to compete, with funding for them cut up front. That blow was followed by federal health officials’ decision last fall to pay just 12.5 percent of what the plans and other insurers were owed under a different part of the law designed to balance the risk of covering healthy patients vs. sick ones.
The new report says the Department of Health and Human Services was told early by its outside financial consultant that the 12 co-ops’ business plans and financial forecasts were inadequate, incomplete or based on unsupported assumptions — and yet officials approved loans anyway.
Read the full story at the Washington Post: $1.2 billion in loans to ACA health insurance co-ops may be a loss, report warns – The Washington Post