VIDEO: Smith Testifies on Bill to Exempt Co-Op Customers from Individual Mandate

Congressman Adrian Smith (R-NE) testified before the Ways and Means Health Subcommittee today on H.R. 954, his bill to exempt consumers who purchased coverage under a terminated qualified health plan funded through the Consumer Operated and Oriented Plan (co-op) program from paying Obamacare’s individual mandate penalties.



Testimony:
Thank you Mr. Chairman, Ranking Member McDermott, and subcommittee colleagues for being here today and allowing the opportunity to share ideas. I introduced a bill as a result of taxpayers facing penalties through no fault of their own due to losing health care coverage through the failure of Obamacare’s Consumer Operated and Oriented Plans, or co-ops.

My bill would exempt taxpayers from the individual mandate if they lose health coverage because of the failure of the co-ops in their local area. Under my bill, the exemption applies for the remainder of the calendar year for those who lose coverage in the months of January through September, and through the next calendar year for those who lose coverage in October, November, or December.

With co-ops failing and other insurers choosing to pull out of the marketplaces, more than 650 counties, largely in rural areas, are projected to be covered by only one health insurance provider in 2017. This compounds the existing barriers impeding access to necessary, affordable health care for rural Americans.

Created under the Affordable Care Act, 23 co-ops were authorized by the Centers for Medicare and Medicaid Services. They received nearly $2 billion in federal start-up funds, mostly in the form of loans. However, on December 23, 2014, the Iowa Insurance Commissioner filed a petition to liquidate CoOportunity Health, which was providing coverage to nearly 120,000 people across Nebraska and Iowa.

In 2015, an additional 11 co-ops discontinued operations. The 11 remaining co-ops also continue to lose money, including Community Health Options of Maine, the only one of these entities ever to have reported a period of profitability.

While taxpayers deserve an accounting of what went wrong with the co-ops, where this money went, and if these loans will ever be paid back, it is not the focus of today’s hearing or my testimony.

The premise of my legislation is simple – regardless of one’s opinion of the ACA, the facts remain: consumers were required to purchase health insurance under that law, many chose to purchase insurance through the state and federal health exchanges, and consumers in thirteen states who chose co-op plans lost coverage through no fault of their own.

Those consumers who made a good faith effort to comply with the law should not be forced to pay a penalty because the plan they chose ceased operation.

While CoOportunity is the only co-op to be liquidated in the middle of a plan year so far, experience tells us it may not be the last. Community Health Alliance of Tennessee was in danger of mid-year liquidation before HHS permitted it to halt enrollment, and recent reports indicate Community Health Options of Maine may be on the brink of collapse.

A recent lawsuit by the Iowa insurance commissioner against the U.S. Department of Health and Human Services over the distribution of risk corridor funds to CoOportunity may raise additional solvency concerns and drive liquidation decisions for commissioners overseeing the remaining co-ops.

I would also like to note, while Nebraska and Iowa consumers were provided a special enrollment period to select a new insurance plan, we should not assume one will be provided in the future.

In addition, depending on how quickly consumers choose a new plan during a special enrollment, they may still have uninsured months which could be subject to penalty. Some consumers who choose high deductible plans should not be penalized if the best decision for them is to wait until a new plan year rather than start over on a new deductible when they have already paid large sums toward a deductible in their previous plan.

True fairness would waive penalties for these taxpayers.

Again, I thank you for the opportunity to testify today. My bill is a simple solution which would provide a measure of relief for consumers who followed the law and purchased health coverage, only to lose it through no fault of their own. I look forward to working with you to improve our health care system. Thank you.