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 HatchOvernight Finance: NAFTA defenders dig in | Tech pushes Treasury to fight EU on taxes | AT&T faces setback in merger trial | Dems make new case against Trump tax law | Trump fuels fight over gas tax What sort of senator will Mitt Romney be? Not a backbencher, even day one Lawmaker interest in NAFTA intensifies amid Trump moves MORE (R-Utah) and Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderOvernight Health Care: Trump health chief backs CDC research on gun violence | GOP negotiators meet on ObamaCare market fix | Groups sue over cuts to teen pregnancy program GOP negotiators meet on ObamaCare market fix 30 million people will experience eating disorders — the CDC needs to help 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.

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.