Senate chairmen probe failed ObamaCare insurer startups

Two Senate committees are deepening their investigations into a controversial ObamaCare program that has given $2.3 billion to startup insurers, half of which have since failed.

Sen. Orrin HatchOrrin Grant HatchFinance to hold hearing on ObamaCare repeal bill Overnight Finance: CBO to release limited analysis of ObamaCare repeal bill | DOJ investigates Equifax stock sales | House weighs tougher rules for banks dealing with North Korea Week ahead in finance: Clock ticking for GOP on tax reform MORE (R-Utah) and Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderWeek ahead: Senators near deal to stabilize ObamaCare markets Corker pressed as reelection challenges mount Overnight Health Care: CBO predicts 15 percent ObamaCare premium hike | Trump calls Sanders single-payer plan ‘curse on the US’ | Republican seeks score of Sanders’s bill MORE (R-Tenn.) wrote to the head of the agency overseeing ObamaCare on Monday, demanding to know how federal officials are dealing with the string of co-op failures — and how they will recoup the money.

“The CO-OPs are not living up to their expectations,” the senators wrote in a letter to Centers for Medicare & Medicare (CMS) Acting Administrator Andy Slavitt.

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Eleven of the 23 co-ops have shuttered, including those in the senators' home states of Tennessee and Utah. A half dozen have failed in the last two weeks leading up to the open enrollment period that began Nov. 1.

The senators also raise new concerns of “creative accounting” tactics that they said make the co-ops “appear more profitable than they actually are and [wonder] if false positives will then result in even more failures.”

They cited a July 2015 memo in which federal health officials offer state co-op directors the chance to apply surplus notes to the program’s startup loans. The letter reiterated that the loans would be subject to repayment.

More collapses are likely in the future, according to a dismal inspector’s general report this summer that found that all but one co-op was in financial distress.

The Obama administration has stayed mum about options for the co-op programs, which have faced problems after the release of this year’s less-than-expected ObamaCare risk corridor payments to insurers.

In her first remarks on the co-op collapses, Health and Human Services Secretary Sylvia Mathews Burwell did not offer details about her involvement with the mostly state-run programs.

“Right now, that is what we are doing, is exploring our options,” she said when pressed by several reporters about the federal government's options. “We are continuing to examine what, if any, options we have.”

But she also did not voice concerns about the program's fate, even amid a growing chorus of Republican criticism.

Two GOP-led committees, the House Energy and Commerce and Ways and Means panels, have scheduled hearings on the co-op programs this week.

- This post was updated on Nov. 2 at 5:44 p.m.