The Obama administration has acknowledged the problems that led to the failure of many of the health insurance co-ops that were set up as part of the Patient Protection and Affordable Care Act, and it’s taking steps to make sure the remaining co-ops don’t meet the same fate.

In particular, the administration hopes to get back some of the $1.17 billion that it loaned to the nonprofit insurers that shuttered. It hopes to divert that money to those that are still operating.

Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services, told a Senate committee last week that the agency was conducting diligent reviews of the co-ops finances, and that more than three-quarters of those who had been enrolled in a co-op plan that failed had been able to find a new insurance plan.

The feds don’t have a lot of money to play around with for the remaining co-ops. Republicans slashed the funding available for co-ops in a 2013 budget deal from $6 billion to $2 billion. Co-op administrators have blamed the federal government for reneging on its deal to provide them financial stability to get started.

But Republicans on the Senate Finance Committee chastised the administration, saying that the Department of Health and Human Services was to blame for the widespread failure.

Sen. Orrin Hatch, R-Utah, who chairs the committee, accused HHS of encouraging co-ops to produce misleading financial reports.

"Last year, the agency issued guidance allowing co-ops to apply surplus notes to program start-up loans, which essentially allowed the co-ops to record loans as assets in their financial filings," he said, according to MedPage. "Quite honestly, I think I'm being generous when I call that kind of accounting creative. Yet, it is, as far as we know, now the standard of practice among Obamacare co-ops."

Sen. Ron Wyden, D-Ore, the committee’s ranking member, pushed back, arguing that Republicans had largely sabotaged the program by cutting its funding and imposing tough loan repayment rules.

"Congress denied the ability to move resources that would help new co-ops weathering growing pains to continue serving consumers,” he said.

Instant Insights /

Obama administration seeks to preserve remaining co-ops

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