House Ways and Means takes aim at for-profit conversions of CO-OPs

Taxpayers should not have to support the failing Affordable Care Act (ACA) by funding for-profit insurers, leaders of the House Ways and Means Committee argued.

U.S. Reps. Kevin Brady (R-TX), the chairman of the House Ways and Means Committee, Peter Roskam (R-IL), the chairman of the Subcommittee on Oversight, and Subcommittee on Health Chairman Pat Tiberi (R-OH) made their case in recent letters to the Centers for Medicare and Medicaid Services (CMS).

Evergreen Health, which was structured as a Consumer Operated and Oriented Plan (CO-OP) under the ACA in Maryland, recently announced it would become a for-profit insurer in an effort to avoid financial collapse.

However, as an ACA CO-OP, Evergreen Health was subsidized by federal taxpayer dollars and required to operate as a non-profit company.

“Taxpayers have already wasted billions of dollars on these failing organizations, which have forced hundreds of thousands of Americans off of their insurance, and those federal funds were never intended to be used to subsidize for-profit conversions of CO-OPs,” the congressmen wrote in letters to Evergreen Health officials and CMS Acting Administrator Andy Slavitt.

Additionally, Evergreen Health previously signed a $65 million loan agreement with CMS that stipulated the CO-OP could not be structured as a for-profit entity, the lawmakers said.

“In addition to the statutory requirement that a CO-OP is organized as a non-profit, Congress placed additional requirements on CO-OPs, including restrictions on involvement by individuals in the insurance industry, a requirement that profits be used to lower premiums or improve benefits of enrollees, and a requirement that a substantial portion of the CO-OP’s business are issuing qualified health plans (QHPs) in the individual and small group market,” the congressmen wrote.

Meanwhile, CO-OPs that fail to meet program requirements face a statutory penalty requiring them to repay 10 percent of the aggregate amount of loans and grants received plus interest, the lawmakers wrote.

The lawmakers requested specific documentation related to Evergreen Health’s loan agreements, compliance requirements and proposal to convert to a for-profit entity.

CMS has provided $2.4 billion in taxpayer-supported loans to 23 CO-OPs, but since 2014, all but 6 CO-OPs have failed due to financial problems. If Evergreen’s conversion is approved, just 5 CO-OPs will remain.