Republicans at the House Energy and Commerce Committee are asking for evidence that organizers of the new “CO-OP” program cooperative health insurers can pay back CO-OP startup and solvency loans.
The Republican committee leaders have sent a letter asking for documents relating to the Consumer Operated and Oriented Plan (CO-OP) to Marilyn Tavenner, the acting administrator of the federal Centers for Medicare and Medicaid Services (CMS).
Congress has appropriated a total of $3.4 billion for CO-OP startup and solvency loan funding.
A program table indicates that “the loan subsidy percentage, or expected losses percentage, is about 43% of the face amount of $7.25 billion for all the loans,” the Republican committee leaders say.
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The expected loss ratio is higher than the 35% expected loss ratio that the U.S. Department of Health and Human Services (HHS) included in a proposed rule published in July 2011, the lawmakers say.
HHS has awarded $845 million in CO-OP loans to 10 organizations in 10 states, lawmakers say.
The loan program is structured in such a way that the government would be last in line to get paid if a CO-OP failed, and, in the past, insolvency problems in earlier programs, such as the multiple employer welfare arrangement (MEWA) market, have led to disruption in the health insurance market, the lawmakers say.
The lawmakers ask for a long list of documents to help them learn more about the nature of the CO-OP loans and the likely solvency of the borrowers, including documents related to CO-OP program surplus notes, documents related to loan applications, documents related to decisions to approve or deny loans, and documents related to HHS and CMS communications with state departments of insurance.