U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

21–367 2016

THE STATE OF OBAMACARE’S 

CO–OP PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 3, 2015 

SERIAL NO. 114–HL05 

Printed for the use of the Committee on Ways and Means 

( 


ralbany on LAP520R082 with HEARINGS
ii 

COMMITTEE ON WAYS AND MEANS 

SAM JOHNSON, Texas, Chairman 

KEVIN BRADY, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

SANDER M. LEVIN, Michigan, 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JOYCE MYER, Staff Director 

JANICE MAYS, Minority Chief Counsel and Staff Director 

SUBCOMMITTEE ON HEALTH 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

JIM MCDERMOTT, Washington 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BILL PASCRELL, JR., New Jersey 

DANNY DAVIS, Illinois 


ralbany on LAP520R082 with HEARINGS
iii 

C O N T E N T S 

Page 

Advisory of November 3, 2015 announcing the hearing ....................................... 2 

WITNESS 

Mandy Cohen, Chief Operating Officer and Chief of Staff, Centers for Medicare and Medicaid Services ................................................................................. 6 

MEMBER QUESTIONS FOR THE RECORD 

Adrian Smith ............................................................................................................ 59 


ralbany on LAP520R082 with HEARINGS

ralbany on LAP520R082 with HEARINGS
(1) 

THE STATE OF OBAMACARE’S 

CO–OP PROGRAM 

TUESDAY, NOVEMBER 3, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:37 p.m., in Room 

1100, Longworth House Office Building, the Honorable Kevin 

Brady, [chairman of the subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


ralbany on LAP520R082 with HEARINGS
2 


ralbany on LAP520R082 with HEARINGS21367.001
3 

f 

Chairman BRADY. Good afternoon, everyone. First I would like 

to thank our witness, Dr. Mandy Cohen, of the Centers for Medicare and Medicaid Services for coming today. We appreciate your 

time and look forward to hearing your testimony. 

We are here to discuss the Consumer Operated and Oriented 

Plan Program known as CO–OP. Supporters of this program argued it would increase competition in individual and small group 

health insurance markets. That very premise should have been 

cause for alarm. Only in Washington would a group of bureaucrats 

think they know how best to micromanage competition instead of 

letting consumers and markets do what they do best. 

Well, what could go wrong? Well, it turns out quite a lot. First, 

CMS essentially allowed anyone to participate in the program regardless if he or she had any prior experience running an insurance company. 

And for financing, Democrats turned predictably to the American 

taxpayer to provide two types of loans: start-up loans and solvency 

loans, both with incredibly favorable loan terms. 

As our newly-elected Speaker said last week, ‘‘What matters are 

results.’’ So let us look at the results of the CO–OP Program to 

date: $2.4 billion in taxpayer funds have gone out the door; 11 CO– 

OPs out of 23 have failed; and thousands of Americas—and this is 

where there is bipartisan concern—have found their health care security thrown out or in limbo. 

I am interested to hear Dr. Cohen’s position, but I suspect we are 

not getting this money back. What is most surprising, I think, is 

the Administration and everyone else knew this was coming. Their 

own credit estimates project massive losses for the program, and no 

matter the capital start-up funding or the backstops, a model that 

is wrong is not going to succeed as much as people want it to. 

I am not interested in blame. I am interested in understanding 

how many of these programs are headed to failure, discussing 

where do we go from here, and figuring how we’re going to bring 

some stability to those families that have been affected. 

The hard-earned tax dollars collected from working Americans 

sitting at Treasury right now are not venture capital. You know, 

bureaucrats in Washington or wherever do not have the expertise 

to institute top-down programs in the name of competition. 


ralbany on LAP520R082 with HEARINGS21367.002
4 

We have got serious problems with provider participation in 

some areas. For example, Blue Cross Blue Shield of Texas just shut 

down a plan and narrowed the network in another, a major impact 

on our patients. 

But artificially trying to inject competition into a market by 

backing what I think were shoddily designed start-ups is not a fix. 

For true choice and competition, we need to empower patients. 

We need to eliminate the mandates that eliminate or reduce choice. 

We need to increase transparency so patients can be informed 

shoppers. On that we can all agree. 

Today, we are going to learn more about this failed CO–OP Program. I look forward to a robust conversation, and I hope we can 

use the lessons from today to help us identify better ways to protect American tax dollars going forward and ensure greater choice, 

greater competition, greater quality and access for beneficiaries 

and their families. 

Before I recognize the Ranking Member, Dr. McDermott, for an 

opening statement, I ask unanimous consent that all members’ 

written statements be included in the record. 

Without objection, so ordered. 

Chairman BRADY. I now recognize our Ranking Member, Dr. 

McDermott, for the opening statement. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

The Republicans were opposed to a public option. So the CO–OPs 

were an alternative that was put into this bill. For the past five 

years Republican colleagues have systematically and deliberately 

sabotaged the implementation of the Affordable Care Act through 

phony hearings and frivolous lawsuits and meaningless repeal vote, 

draconian funding cuts, and in a nationwide smear campaign they 

have done everything in their power to undermine this landmark 

law. 

The yearly challenges facing the CO–OPs are just the most recent consequence of this destructive Republican agenda. 

The CO–OPs played an important role in providing competition. 

They are community based, non-profit health plans that, first and 

foremost, exist to serve consumers. If Congress gives them the support they need to get off the ground, they will provide the American people with more choices and help the for-profit insurers keep 

honest. 

But my Republican colleagues have shown they have no interest 

in making this happen. Instead they have weakened and undermined the CO–OPs at every turn, and now they point the finger 

at the Administration when they struggle. In 2013, the Republican 

Congress slashed funding for loans and grants to CO–OPs by nearly two-thirds. These cuts have devastated CO–OPs across the country and prevented CMS from approving dozens of new applications. 

Moreover, my Republican colleagues have sabotaged the risk 

mitigation programs designed to provide the financial stability to 

insurers, including CO–OPs. In the CR omnibus legislation passed 

at the end of last year, the Republicans inserted a rider that 

blocked discretionary money from being shifted into the ACA Risk 

Corridor Program. As a result, that program has been badly underfunded and insurers across the country have received only oneeighth of what they expected. 


ralbany on LAP520R082 with HEARINGS
5 

Many of the fledgling CO–OPs simply do not have the capital to 

absorb this unpredictability which contributes to the failures we 

have been seeing. It is not a problem with CO–OPs. It is a direct 

consequence of Republican sabotage. 

When my colleagues continue to brazenly attack the Affordable 

Care Act, they refuse to put forward any constructive ideas. This 

is particularly ironic when it comes to risk management, risk mitigation because based on their past behavior, they should know better. 

When the Congress enacted Medicare Part D, we created several 

risk mitigation programs that are very similar to the ones in the 

ACA. My Republican colleagues have strongly supported these 

measures for more than a decade, even longer than many experts 

believe was necessary to get Part D up and running. It is really a 

subsidy of the pharma companies. 

The result has been a stable program and a stronger market for 

the Part D plans. In other words, Republicans enthusiastically support risk mitigation, but not when it is part of the Affordable Care 

Act. 

Rather than play Monday morning quarterbacking and blaming 

everybody but the people who control the purse strings, we should 

be talking about things we can do to actually strengthen competition. That conversation should examine how we can make the CO– 

OP Program stronger, and there are some changes we need to consider. 

Despite being brand new companies with no existing customer 

base, the CO–OPs are prohibited from using Federal start-up 

money on marketing. That makes it nearly impossible for them to 

compete against some of the most powerful corporations and advertising budgets in the world. We need to fix this and let the CO– 

OPs operate on a level playing field with the for-profit insurance 

industry. 

And an honest conversation about competition must also include 

a discussion of creating a public option to compete with private insurers on the exchange. This would place a meaningful check on 

the insurance industry, give consumers more choices, and reduce 

the deficit by more than $100 billion. 

We spent $480 billion on paperwork last year in the private industry, but do not expect to hear anything like that from my Republican colleagues this afternoon. Instead we will hear more of the 

same: complaints about problems they have created through their 

own sabotage and nothing constructive about how to make the system work better. 

I yield back the balance of my time. 

Chairman BRADY. Thank you, Dr. McDermott. 

Just for the members’ information, I know we started late today 

because of votes in the House. I know that Dr. Cohen does not have 

unlimited time. 

We appreciate you being here today. So we are going to be a little tight on the timing and the questions today. Dr. Cohen, you are 

recognized for five minutes, and again, welcome. 


ralbany on LAP520R082 with HEARINGS
6 

STATEMENT OF DR. MANDY COHEN, CHIEF OPERATING OFFICER AND CHIEF OF STAFF, CENTERS FOR MEDICARE AND 

MEDICAID SERVICES 

Dr. COHEN. Thank you very much for having me here today, 

Chairman Brady, Ranking Member McDermott, Members of the 

Subcommittee. I appreciate the opportunity to talk about the Consumer Operated and Oriented Plan Program, or the CO–OP Program. 

CMS takes its commitment to CO–OP consumers and taxpayers 

very seriously. A priority is to make sure that consumers have access to quality, affordable coverage. In the year since the passage 

of the Affordable Care Act, we have seen increased competition and 

more choices for consumers. 

In today’s dynamic market, consumers can choose from, on average, 50 plans and five issuers for 2016 coverage. Nearly nine out 

of ten returning consumers will have three or more issuers to 

choose from, which research has shown typically intensifies price 

competition in the market. 

New entrants to any market, especially the insurance market, 

can face pressures, particularly in the early stages. CO–OPs enter 

the health insurance market with a number of challenges, including building a new provider network, no previous claims experience 

on which to base pricing, and competition from large, experienced 

issuers, as well as uncertainty that accompanies the early years of 

the health insurance marketplace. 

As with any new set of business ventures, some CO–OPs have 

succeeded while others have encountered more challenges. There 

have been successful CO–OPs which have provided consumers in 

their State an additional choice of health insurance and improved 

competition, and there have also been CO–OPs that for a number 

of reasons have faced technical, operational, or financial difficulties. 

In addition, Congress has made a number of substantial rescis- sions to the initial $6 billion in funding for the CO–OPs, impacting 

the program’s operation and available funding. 

In the face of multiple pressures, it is not surprising that some 

new entrants have struggled to succeed. CMS plays a dual role to 

the CO–OP Program, providing both oversight and support. CMS 

works to give CO–OPs tools to succeed, including sharing best 

practices among CO–OPs and looking for additional regulatory 

flexibilities. 

At the request of the CO–OPs, CMS has approved conversion of 

surplus notes, and we have provided and approved the infusion of 

outside capital and additional flexibilities that the legal and regulatory framework of the CO–OP Program allows. 

CMS also plays an important oversight role. CMS along with 

State Departments of Insurance, which serve as a primary regulator of the insurance in States, works to ensure that CO–OPs are 

well run and financially sound. 

CMS has implemented the CO–OP Program as required by statute and with available funds evaluating applications, monitoring financial performance, and conducting oversight. All CO–OPs are 

subject to standardized, ongoing program oversight activities that 

include calls to monitor goals and challenges, periodic on-site visits, 


ralbany on LAP520R082 with HEARINGS
7 

performance and financial auditing, reporting obligations, and a 

host of additional measures employed as necessary on a case specific basis such that the evaluation of CO–OPs’ sustainability. 

CMS increased the financial and data reporting requirements for 

CO–OPs, requiring them to provide quarterly statements that they 

are in compliance with all relevant State licensure requirements. 

If the CO–OPs have experienced any compliance issues with State 

regulators, the CO–OP is required to describe the steps being taken 

to resolve those issues. 

Financial data collection has helped CMS to identify CO–OPs 

with financial issues and gives CMS the opportunity work with 

State insurance regulators to help correct those issues that are 

identified. 

As part of our oversight efforts, CMS has placed some CO–OPs 

on enhanced oversight schedules or corrective action plans. 

Despite the support and oversight, some of these new entrants 

to the insurance market have struggled to succeed. When States 

and CMS determine that a CO–OP should wind down, our first responsibility is to make sure current policy holders are able to retain coverage through the end of the year. CMS’ priority is to make 

sure that the consumers have access to quality, affordable coverage. We are working with local officials to do everything possible 

to make sure consumers stay covered and retain access to high 

quality choices and issuers. 

Like other consumers, affected CO–OP enrollees are able to shop 

for 2016 coverage on the marketplace right now. In 2016, nearly 

eight in ten returning marketplace consumers will be able to buy 

a plan with premiums for less than $10 a month after tax credits. 

We continue to encourage those consumers already enrolled in 

marketplace coverage to come back to the marketplace, update 

their information, compare their options, and make sure they are 

enrolled in the plan that best meets their needs. 

Since the enactment of the Affordable Care Act, CMS has worked 

to increase access to quality, affordable coverage through the marketplace, while being responsible stewards of taxpayer dollars. 

The CO–OP Program was designed to give consumers more 

choice, promote competition, and improve quality of health insurance market as it has done so in a number of States. CMS will continue to work closely with the CO–OPs and State Departments of 

Insurance to provide the best outcome for consumers. 

We appreciate the subcommittee’s interest in this topic, and I am 

happy to answer your questions. 

Chairman BRADY. Thank you, Dr. Cohen. 

I think given the number of failures where we have seen it and 

the predictions going forward, it is pretty clear to me the history 

of the CO–OPs is one of the, I think, poor decision making and 

failed execution. 

I would like to start by asking about the action CMS is taking 

now with the remaining CO–OPs. We all know how insurance 

works. Insurers have to collect enough in premiums to cover what 

they expect to pay out in claims. That is why having well-funded 

reserves are so crucial. Insurance is a delicate balance between risk 

and capital. 


ralbany on LAP520R082 with HEARINGS
8 

So if an insurer takes on too much risk and does not have 

enough capital, well, then they will quickly become insolvent. So as 

part of the monitoring of the insurance market regulators, as you 

made the point, keep a sharp eye on insurers’ ratio of risk-based 

capital. 

It is my understanding the CMS required the CO–OPs to have 

higher risk-based capital reserve than most States generally require of the insurers they monitor, which seems to me to be a good 

thing; is that correct, Dr. Cohen? 

Dr. COHEN. That is correct. As you know, we have wanted to 

make sure that we are being good stewards—— 

Chairman BRADY. Sure. 

Dr. COHEN [continuing]. Of taxpayer dollars and wanting to be 

more conservative in these first few years. 

Chairman BRADY. You know, I suspect CMS sets the rate of 

risk-based capital standard for CO–OPs at 500 percent because 

they knew new entrants were riskier than the other insurers they 

were competing with, and they institutionalized financial discipline 

among the start-ups. Again, this makes sense to me. Is that a fair 

characterization? 

Dr. COHEN. That is accurate. 

Chairman BRADY. Okay. Regulators use the risk-based capital 

measure as an early warning sign of trouble, as a sign an insurer 

is in need of monitoring. It is an important test to ensure plans are 

appropriately capitalized for the risk they have taken on. This 

helps ensure the right protections are in place for those who purchase the plans from the CO–OPs and for the tax dollars backing 

the CO–OP experiment. 

And this is why my question really is concerned about the startup conversion process. Media reports indicate CMS is allowing CO– 

OPs to move their start-up loans, and let me underscore these are 

loans, from the liability side of the ledger where they belong to the 

equity side of the ledger. 

So, Dr. Cohen, three fairly clear questions, I think, can be answered with a yes or no. All things being equal, without any material changes to the financial situation, a CO–OP that undergoes a 

start-up conversion gets a boost of capital on their books; is that 

right? On their books. 

Dr. COHEN. So yes, and it’s an accounting mechanism to create 

a liability into an asset, yes. 

Chairman BRADY. And all things being equal, again, without 

any change in their financial situation, the CO–OP who gets a 

start-up conversion could go from failing your risk-based capital requirement to passing it; is that correct, because it increases the equity? 

Dr. COHEN. The idea, again, yes, is to improve its capital position. 

Chairman BRADY. And all things being equal, again, apples to 

apples, the CO–OP that gets a start-up conversion could go from 

being in a position to undergo monitoring and enhanced oversight 

to one not be required to do so. Again, on paper the equity looks 

stronger. 

Dr. COHEN. Yes, that is accurate, and that is why we were careful to make sure we did this in coordination with the State DepartVerDate Sep 11 2014 06:09 Oct 13, 2016 Jkt 021367 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21367.XXX 21367

ralbany on LAP520R082 with HEARINGS
9 

ments of Insurance. I think we share the concerns that you are articulating, and that is why we wanted to make sure the State regulators, who are the primary regulators in this space, were supportive of this conversion. 

And so we would evaluate each one of these individually. They 

were based on the particular circumstances of that individual CO– 

OP. They had to request that from us, and we did not move forward unless the State Department of Insurance also thought that 

it was a wise move to move forward as well. 

Chairman BRADY. Well, see, I would respectfully disagree. I do 

not understand why CMS is allowing this. Why put a test in place 

if you are not going to follow it? 

We just came through a financial crisis where reserves on the 

books really did not prove to be reserves, and so when you allow 

CO–OPs to make changes on paper to make then appear healthier 

than they really are not, you are undermining your own oversight 

measure. 

And given the number of CO–OPs that have failed and what 

looks like very shaky CO–OPs going forward, can you explain the 

logic behind this? Because they are not financially healthier or 

more sound. They just took the loan they got and made it appear 

to be capital and equity. 

Dr. COHEN. Right. Chairman, I appreciate the question. There 

are questions we made sure to ask ourselves, some tough questions, about is this the right thing for any one of these individual 

CO–OPs to make sure that improving their capital position with 

this conversion was the right thing, to make sure, again, our primary responsibility and our primary job is to make sure that the 

consumers of any one of these CO–OPs are protected. That is why 

each one of these went under individual scrutiny before we would 

make that decision, and we did it in coordination with the State 

Departments of Insurance. 

And, again, there are a number of factors that went into that, 

and this is only one small slice of what would be their capitalized 

assets, but again, that is why we looked at each individual situation to understand whether or not it made sense for that CO–OP, 

that in coordination with the State Department of Insurance. 

Chairman BRADY. I will just say I think you need to reverse it. 

This does not make sense. It does not give a true picture of the 

CO–OPs. Those who do not have the adequate reserves ought to be 

getting extremely high oversight and monitoring because these are 

patients’ lives on the line. 

The destruction has already been large in States, and the Members on this dais who have had families, patients lose their care, 

and so going forward it seems to me we ought to always be erring 

on the side of accurate, honest bookkeeping for these CO–OPs. 

And, again, thank you for being here today. 

Dr. COHEN. Thank you, Chairman. 

[The prepared statement of Dr. Cohen follows:] 


ralbany on LAP520R082 with HEARINGS
10 


ralbany on LAP520R082 with HEARINGS21367.003
11 


ralbany on LAP520R082 with HEARINGS21367.004
12 


ralbany on LAP520R082 with HEARINGS21367.005
13 


ralbany on LAP520R082 with HEARINGS21367.006
14 


ralbany on LAP520R082 with HEARINGS21367.007
15 


ralbany on LAP520R082 with HEARINGS21367.008
16 


ralbany on LAP520R082 with HEARINGS21367.009
17 


ralbany on LAP520R082 with HEARINGS21367.010
18 

f 


ralbany on LAP520R082 with HEARINGS21367.011
19 

Chairman BRADY. Dr. McDermott, you are recognized. 

Mr. MCDERMOTT. Dr. Cohen, in my opening statement I suggested that the Republican Congress in 2013 slashed the funding 

for loans and grants by nearly two-thirds; is that correct? 

Dr. COHEN. That is correct. We started with, when the Affordable Care Act was passed, with around $6 billion. We have awarded about $2.5 billion, which is the remaining money which was left 

for the program after rescissions. 

Mr. MCDERMOTT. So your chance of supporting these CO–OPs 

was cut by two-thirds. 

Dr. COHEN. That is correct. 

Mr. MCDERMOTT. And then the risk mitigation, that is, you 

open the doors of your CO–OP and you look out there and 50 people come in. You do not know what they have got when they come 

in. You charge them a premium you think is the proper one, but 

you may have some very sick people; is that correct? 

Dr. COHEN. It is true. In the first years of the marketplace 

there was a lot of uncertainty about the risk pool for any one of 

these CO–OPs. That is correct. So they had quite a challenge in 

terms of setting prices because they did not know exactly who their 

population would be that they would be covering. 

They were also building new provider networks and trying to arrange those contracts, obviously starting all of their back ends. So 

a lot of work to be done to start a new insurance company in this 

space. 

Mr. MCDERMOTT. And so like the drug companies when they 

started on the Part D, they did not know who they were going to 

get either, and we set up risk mitigation programs, correct? 

Dr. COHEN. That is correct. 

Mr. MCDERMOTT. If it cost more than they anticipated, we 

would support them at least to a certain extent to get through that. 

Dr. COHEN. That is right. For the marketplace we have three 

risk mitigation programs, a risk adjustment program which allows 

folks to make sure that they are not cherry-picking up the well 

folks, to make sure that they are actually covering folks who need 

coverage that are sick; a reinsurance program that helps to cover 

the cost of high cost enrollees; and then a risk corridor program 

that really gets at that uncertainty about pricing. And all of those 

work in tandem with each other. 

Mr. MCDERMOTT. And so it would be similar to that program 

in Part D that we put in with the CO–OPs. We gave a pot of money 

to be used to mitigate any unforeseen kinds of problems that came 

through the door without them having any way of knowing? 

Dr. COHEN. Yes. These were programs that were not just exclusively for the CO–OPs but for all of the issuers participating in the 

marketplace because we knew it was a transition time for all of the 

issuers moving into this net market for the first time, needing to 

cover preexisting conditions, making sure that they were covering 

the essential health benefits. So it was a transition for all of these 

issuers, and that is why those three programs were in existence, 

modeled as you said after the Part D, you know, very successful 

programs in Part D. 

They are meant to be temporary. At least two of the three are 

temporary, again, to get us through a transition period. 


ralbany on LAP520R082 with HEARINGS
20 

Mr. MCDERMOTT. When did the CO–OPs discover that they 

were only going to get one-eighth, 12 percent of the money they expected? Was that the 1st of October? 

Dr. COHEN. Yes, that is correct, the end of September, correct. 

Mr. MCDERMOTT. So when you looked at the books and what 

had been appropriated by the Republicans, you only had that 

amount of money, and you announced to them, ‘‘You are only going 

to get an eighth of what you thought you were going to get’’? 

Dr. COHEN. So the risk corridor dollar amount was really a 

product of a mathematical formula based on the information submitted by the issuers themselves, based on their 2014 claims and 

premium experience. So whatever happened in 2014, they sent us 

the data on it, and that was at that point when we were able to 

calculate what the ins and outs of that program would be, and as 

you mentioned at the end of September we were able to share that 

information with folks. 

Mr. MCDERMOTT. So what happened then is the insurance 

companies in all the States looked at their reserves and so forth 

and aid to these CO–OPs, ‘‘You are no longer able to offer insurance because you do not have the proper reserves because you have 

not gotten from the Federal Government what they promised you.’’ 

Dr. COHEN. I think that was one of a number of factors. I think 

CO–OPs had, as I have mentioned, a number of difficulties. Certainly the lower risk corridor payments certainly was one of the 

things that contributed to some of their challenges. 

I would also mention in one of the other risk corridor programs, 

the reinsurance program, everyone actually got more money than 

they were expecting, about 25 percent more money. So one program 

more, so one program less. 

So while I would say, on balance, those are contributing factors. 

As I mentioned, there were a lot of challenges for the CO–OPs, the 

uncertainty of pricing, the difficulty of provider networks competing against more established insurers, but certainly the reinsurance and the risk adjustment and risk corridor certainly impacted 

that. 

Mr. MCDERMOTT. What is the longest standing CO–OP that 

you have? How long has it been running, two years? 

Dr. COHEN. This will be their second year. 

Mr. MCDERMOTT. This would be their second year. So they 

have been one year in operation. They lost two-thirds of their 

money in the loans and so forth, and then they lose the mitigation. 

They are in their second year. 

How many years do you think it takes for them to stabilize? 

Dr. COHEN. It is a good question. Certainly more than two, 

more than two to stabilize. 

Mr. MCDERMOTT. Thank you. 

Chairman BRADY. Thank you. Thank you. 

Mr. Johnson is recognized for five minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Thank you for testifying today. We appreciate that. 

I am just going to be frank with you. You know, back in Collin 

County, Texas, people do not like Obamacare, and as a result of the 

law, they have seen their insurance premiums and costs increase 


ralbany on LAP520R082 with HEARINGS
21 

and their access to doctors and other providers decrease, all the 

while having to pay higher taxes to pay for Obamacare. 

Now, we do not have a CO–OP in Texas, but the recent failing 

of the 11 CO–OPs is still important to my constituents. The reason 

why is because over $1 billion in taxpayer money has gone down 

the drain, and that is what happens when almost half of the 

Obamacare CO–OPs have failed. 

Dr. Cohen, it seems with so much taxpayer funding on the line, 

CMS should have been more proactive to ensure the solvency of 

these CO–OPs. In fact, Vermont refused to allow a CO–OP to set 

up shop because of unrealistic assumptions on rates, enrollment 

and other key factors. 

So these CO–OP failures ought not to have been a surprise. My 

question for you is: when did CMS become aware that the CO–OPs 

were failing, and why did you not do more to protect taxpayer dollars? 

Dr. COHEN. CMS has been doing oversight of the CO–OPs from 

the beginning of the program. As I mentioned, we are just in the 

second year of the program now, and we have been doing oversight 

over the course of the first year of business. 

Mr. JOHNSON. Yes, but when did you figure out that they were 

not going to make it? 

Dr. COHEN. So as you mentioned, the State of Vermont was not 

even able to comply with State licensure and we did not even allow 

them to move forward in that circumstance. So all along there are 

guideposts and check points that we make sure to look at oversight. 

If we feel like they are going beyond the guard rails that we set 

up, we enhance our oversight, put folks on enhanced oversight or 

corrective action plans. We do on-site visits to gather more information than just them sending us information. We want to go on 

site and see it with our own eyes, have our actuaries do on-site and 

make sure we are doing evaluations. 

So, you know, I will say I do not think we have been easy on the 

CO–OPs, as you can see with some of the recent actions. We have 

taken our job as stewards of the taxpayer dollar very seriously. We 

work within the parameters of the statute and the existing funding, and you know, we will continue to do that for the life of the 

program. 

Mr. JOHNSON. It seems like you just want more dollars. Well, 

I think the taxpayer just deserves more. 

Thank you, Mr. Chairman. 

Dr. COHEN. Thank you. 

Chairman BRADY. Thank you. 

Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Dr. Cohen, thank you for being here. 

I cannot help but chuckle that their side of the aisle cuts twothirds of the funding and then they blame you for not having proper oversight to make sure these CO–OPs exist. I think that is an 

interesting tactic, but I do not think it is particularly accurate. 

Just as a bit of a refresher, can you just succinctly state the top 

three reasons why these CO–OPs failed? 


ralbany on LAP520R082 with HEARINGS
22 

Dr. COHEN. Why the CO–OPs failed? There were a number of 

reasons. It is a challenge to start an insurance company in this 

market. It is a challenge just to think about it without even having 

to start a brand new market, which is what was created here. 

Whether it was building a provider network and not having the 

relationship with providers to get the best rates possible; I think 

the uncertainty as mentioned by Congressman McDermott, the uncertainty of what the consumer would look like. How sick was that 

population? And thus, how to set the proper pricing for that to 

cover their costs, and then I think obviously the lack of brand 

name. They are competing against big, experienced players with 

long relationships with their community. 

So I mean, it was an uphill challenge from the beginning. Obviously some CO–OPs have risen to that challenge and have been 

very successful and are expanding into new markets and giving 

consumers new options. 

Mr. THOMPSON. And had the money been there, the six billion 

that was in the original bill, would that have mitigated many of 

those problems? 

Dr. COHEN. Obviously, we know that these entities in early 

years, that it is a challenge to maintain their solvency, and additional money would have certainly long a long way to making sure 

they were able to cover a lot of their claims costs, figure out some 

of those uncertainties, and chart a course for long-term sustainability, and ultimately paying back the loans that we give them. 

Mr. THOMPSON. And I do not want to sound like an apologist 

for the CO–OPs. I was never a fan, but to reiterate what the Ranking Member said, this was the option that we had. What most of 

us wanted was the public option, and that would have provided the 

competition needed to really make the private insurers perform to 

a greater degree. 

But when that option was taken away, this was kind of the fallback, and I think it is important to state that. And then when you 

take the money out that was put in to make the fallback work, it 

seems near impossible. I am surprised that any of them are still 

going. 

In your oversight role, have you seen consumers and providers 

that value this CO–OP local option? 

Dr. COHEN. Absolutely. Not only do we hear from individual 

consumers. I had the opportunity to meet with some of the CO– 

OPs that are expanding and are thriving and about some of the innovative and creative work that they are doing for their consumers, 

whether it is targeting diabetic populations and making sure they 

have intensive care management. You know, as a physician those 

are exciting and innovative ways to think about caring for a tough 

disease. 

So, again, they were designed as a nonprofit entity that is really 

connected to the community with consumers on their board driving 

decisions about the entity and really trying to create benefits that 

are really tailored very closely to what the community needs, and 

so I think that there are a lot of great things are doing in that 

space. 


ralbany on LAP520R082 with HEARINGS
23 

And the ones that are succeeding are able to sort of get through 

this period of uncertainty. I think there is a lot of benefit they can 

bring. 

Mr. THOMPSON. Getting back to where he said he wanted to 

go when he started the hearing is to figure out where the problems 

are and make it work, how would you suggest that we as Members 

of Congress support these local options and to make sure that they 

work and deliver to our constituents? 

Dr. COHEN. So I think, as you know, on Sunday we started the 

next open enrollment period, and we are in it right now. So I would 

hope all Members are doing is educating customers and consumers 

that are in CO–OPs, that are not, about their options on 

HealthCare.gov; if they are in Federal facilitated marketplace 

States, make sure they know if they go and shop that they can 

even save even more money. 

We did some analysis to show that if you can go back, you can 

actually save more money than they already are. We know that 

eight in ten consumers are benefitting from financial assistance to 

the tune of about $270 a month. 

So there are real financial benefits for folks to go look at their 

options, see what is there, see what is right for their family, and 

so I would encourage you to make sure that your constituents know 

what is there for them and that there are options out there. 

Mr. THOMPSON. Thank you. 

Dr. COHEN. Thank you. 

Chairman BRADY. Thank you. 

Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

Dr. Cohen, thank you for your time today. 

Just to correct the record and to make sure I am clear on something, the public option has been discussed today. I am not a fan 

of the public option. I opposed it. Every Republican opposed it, but 

the Republicans were not running the show; is that not right, when 

the Affordable Care Act was crafted and it was passed? Is that not 

right, Dr. Cohen? 

It was all Democratic votes. So by definition, the people that took 

the public option away were Democrats; is that not correct? 

Dr. COHEN. That is correct. 

Mr. ROSKAM. Okay. And then as we move forward, the $6 billion that could have mitigated some of these losses, the $6 billion 

works until when? Until the $6 billion runs out, right? 

Dr. COHEN. So we had less than $6 billion to work with, about 

2.5 billion, but you are right. It was a limited pool of funding, and 

the idea is to get folks through a time of uncertainty to a place 

where they had a long-term plan of, you know, having premiums 

to cover their costs, outside capital to fund different parts of their 

business. 

But we knew in any start-up period that they would need both 

start-up and solvency loans, which is how the program was designed. 

Mr. ROSKAM. But the limited amount of funds is, by definition, 

it is finite, and a couple of minutes ago when you were asked the 

question how long can the CO–OPs last by themselves, you said, 

and I am paraphrasing, but my understanding was, well, we know 


ralbany on LAP520R082 with HEARINGS
24 

they cannot last by themselves in the first two years; is that not 

right? 

Dr. COHEN. Well, we see a lot of the CO–OPs are successful 

right now and moving forward. 

Mr. ROSKAM. Right, but 11 of them, 12 if you count Vermont, 

they have not made it. 

Dr. COHEN. That is true. We have done a lot of work in the last 

few months using our oversight hat to make sure that consumers 

know moving forward if they are shopping in open enrollment right 

now, we wanted to make sure that they knew that the CO–OPs 

that remain in the marketplace were financially viable, can make 

it through the entire year. Our first priority is to make sure there 

was not going to be a midyear failure next year for any consumers, 

you know, and that is how we really went about our decision making. 

We played it very conservative in that way, which is why I think 

there has been so much activity in the last several months. We 

worked in partnership with the State Departments of Insurance on 

that oversight and will continue to do so. 

Mr. ROSKAM. So sort of just the sense of restraint and reluctance and the wariness that you hear from this side of the aisle is 

based on the representations that were made in the past by CMS 

about how good things were looking, and even your language today 

in your testimony, things like ‘‘the CO–OP application review process was rigorous, objective and independent and since awarding 

both start-up and solvency loans CMS has closely monitored and 

evaluated all CO–OPs to assess performance and compliance.’’ 

You know, to Mr. Johnson’s point, this is costing a lot of money, 

and it seems like at many levels it is simply a failure. It is out of 

balance. The risk corridors, by definition, were supposed to be 

budget neutral, and yet it seems like there is an admonition 

against a Republican Congress that you are not funding these 

things. 

And to just follow up, to put a finer point on Mr. Johnson’s interchange with you, you know, a lot of us feel like this is good money 

after bad. 

So why in the world or what hope would you hold out that based 

on past CMS performance and past CO–OP performance and the 

fact that we are in a really limited time frame and things like, you 

know, quotes that come from the CMS spokesman back in a 

Bloomberg article of March of 2014, ‘‘While it is still early, we are 

encouraged by what we have seen so far and will continue to work 

closely with these CO–OPs to monitor their progress and assess 

their performance.’’ 

I mean, it just seems like it is a disaster. Let us turn the page, 

call it what it is, and move on. Do you not think that is a good 

idea? 

Dr. COHEN. Well, so we have been, you know, at any given 

point in time there is certain information that we have in front of 

us. We continue to work with the State Departments of Insurance, 

which are the primary regulators to make sure we are understanding what is happening in the State and with those CO–OPs. 

We will continue to play that oversight role. At the same time 

we wear another hat, which is to support the CO–OP Program, and 


ralbany on LAP520R082 with HEARINGS
25 

I think if you are thinking about a value proposition of any program, you want to understand why was it created in the first place, 

and when I think about that, you know, it is really, as I was mentioning earlier, is to create a program that allowed for additional 

competition in an era of insurer consolidation where there are not 

a lot of choices for consumers, you know, just looking to give folks 

yet one more choice of an affordable option that they can choose 

from. 

Again, we are going to do our best to support those that are 

showing themselves to be successful and moving in the right direction. 

Chairman BRADY. Thank you. 

Mr. Kind, you are recognized for five minutes. 

Mr. KIND. Thank you, Mr. Chairman. 

Dr. Cohen, thank you for your testimony here today on an important topic. 

But before I do, since you are a representative from CMS before 

the panel today, I cannot help but commend you and CMS for moving forward on advanced care planning reimbursement. 

Dr. COHEN. Thank you. 

Mr. KIND. It was long overdue. Many of us were actively engaged, including my absent colleague. I am not here to call him out 

right now, but Mr. Blumenauer and the leadership that he provided. 

I hale from a part of the country in Western Wisconsin. We are 

very proud of the advanced directive programs that have been established at Gundersen Lutheran, Mayo Health Clinic, all over my 

district. I am a member at Gundersen Lutheran myself. Ninety-five 

percent of the patients there have an advanced directive on record. 

I have one. My wife has one. My teenage boys do. My parents do, 

and what a relief that is that they are respecting our decisions 

when it comes to end of life care planning. 

And I always thought it was wrong that our health care providers were not being reimbursed for the education and the consultation that inevitably has to occur to help patients through this 

planning process. 

So thank you for moving forward on that. 

Now, back to the health CO–OPs. Again, I am from Wisconsin. 

Every time you turn around in our State you see a CO–OP. We are 

not afraid of CO–OPs. They are very successful business models in 

the private sector, whether it is farm co-ops, whether it is the 

health care CO–OP we have right now that is thriving in the Madison area, whether it is financial co-ops. Shoot, even the Green Bay 

Packers you could claim is a co-op because it is a fan-owned team, 

and granted, I will concede to you that they failed miserably the 

other night against the Broncos, but the Packer model has generally worked pretty well, and it is a matter of consumer owned, 

consumer driven, and that is the whole concept behind the CO– 

OPs. 

But as you mentioned in your testimony, they were going to face 

some difficulties. Start-up capital any new business needs is tough 

to come by. Making sure you get the risk corridor, the risk management done the right way, and that is my question to you. 


ralbany on LAP520R082 with HEARINGS
26 

For any insurance company, whether it is a nonprofit CO–OP or 

a private or large or small, if you do not get the right blend of customers in there from older to younger and healthier, it is going to 

be very tough to stay in this very difficult business. 

Are we doing enough in order to attract especially the younger, 

healthier people into the CO–OPs or into the exchanges or what 

have, or is there a lot more work that we need to do in order to 

spread that risk and have a better chance of managing it? 

Dr. COHEN. I very much agree that it is very important to make 

sure that we are getting a risk pool that can manage the different 

types of risk of the different patients across it, and that is why we 

target most of our outreach to the 18 to 35 year old population, 

most of whom do not realize the financial assistance that is available. They think health care is something that is unattainable. 

They also think that they are never going to get hurt, break an 

arm, get in a car accident, get an unfortunate disease at a younger 

age. So we have been doing a ton of work with the 18 to 35 year 

old population. All of our marketing efforts are targeted in that 

space, and so we continue to do that and make sure that we 

are—— 

Mr. KIND. I am sure the CO–OPs are probably experiencing the 

same challenge of trying to attract that risk pool—— 

Dr. COHEN. Absolutely. 

Mr. KIND [continuing]. That can make it work and viable for 

them. 

Another concern I want to raise with you and I am wondering 

if you are sharing it is obviously when you have CO–OPs failing, 

it means less competition in the marketplace, but we are also seeing on the other end greater mergers in the insurance market. 

Is that something that we ought to be paying closer attention to, 

the consolidations and the mergers in the private health insurance 

world right now? 

Dr. COHEN. So I think that is why the CO–OP Program was 

created in the first place, again, in that era of one or two dominant 

players in a market. This is, again, a locally owned, locally driven 

option to give consumers choices. They, you know, try to have more 

relationships with local providers, again, so that they can be an affordable, creative, innovative option, and I think for the entities 

that continue on that are expanding, they have done just that. 

We are going to try to support the ongoing CO–OPs as much as 

possible, share best practices, have them do some shared services 

if they can help each other out, you know, if they share call centers 

or do some sort of shared services in order to help along to improve 

their operations. 

Mr. KIND. My time is about to expire, but could you also just 

quickly address what is going on with the individual health insurance market right now? I am talking about those people who do not 

qualify for premium tax credits. Where they are seeing their premiums because I have had a couple of encounters back home of individuals who do not qualify and how expensive it is and where 

they are seeing their own premiums going right now. 

Dr. COHEN. Yes. So we did a recent analysis of the rate increases in the individual market, about a seven percent increase of 

the second lowest cost over within the marketplace, and again, we 


ralbany on LAP520R082 with HEARINGS
27 

have seen historically double digit increases in the individual market. So, you know, trying to rein in the prices and I think that the 

competition speaks exactly to that point of being able to keep the 

prices under control. 

Mr. KIND. Great. Thank you. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Dr. Price, you are recognized. 

Mr. PRICE. Thank you, Mr. Chairman, and thank you for this 

important hearing. 

And I want to thank you for your testimony, Dr. Cohen. 

If you listen to the folks on the other side, the reason that the 

CO–OPs are failing is because there just is not enough money and 

it is those nasty Republicans who have removed all that money. 

You mentioned that you were aware of the rescissions that occurred for the CO–OPs, and that there were bills that came forward to Congress that removed money from the CO–OPs. Do you 

remember what those bills were? 

Dr. COHEN. I do not have them in front of me, but I am happy 

to follow up. 

Mr. PRICE. There were three of them. One was the Department 

of Defense Continuing Appropriations Act of 2011. How many 

Democrats voted for that? Do you know? 

Dr. COHEN. I do not. 

Mr. PRICE. Eighty-one Democrats on that one. 

A second one was the Consolidate Appropriations Act of 2012. Do 

you remember how many Democrats voted for that? 

Dr. COHEN. Sorry, sir. I do not. 

Mr. PRICE. A hundred and seventy-two. 

And the third one was the 2012 Continuing Resolution. How 

many Democrats voted for that one? A hundred and eighty-two. 

How about that? 

So the fact is that the CO–OPs have not failed because they have 

not had enough money. The CO–OPs have failed because we have 

got people who do not know how to run insurance company running insurance companies and not able to respond to individuals. 

As a physician I can tell you that when we talk about this stuff 

people’s eyes glaze over when you just talk about money and those 

kinds of things, but I want to talk about patients. Five hundred 

and fifty thousand patients are going to lose their coverage through 

a CO–OP because 11 of the CO–OPs have failed; is that correct? 

Dr. COHEN. Well, we are working very hard to make sure the 

consumers have a—— 

Mr. PRICE. Five hundred and fifty thousand patients are going 

to lose their coverage, correct? 

Dr. COHEN. That is not correct. They are going to have the opportunity to shop during this open enrollment period and can transition. 

Mr. PRICE. Are they going to be able to stay in the insurance 

coverage in the CO–OP that they had? 

Dr. COHEN. The CO–OP will end, but they will have the opportunity to—— 

Mr. PRICE. The CO–OP will end. That is the point. So if you like 

your doctor in that CO–OP, you may or may not be able to keep 


ralbany on LAP520R082 with HEARINGS
28 

that doctor, right? He or she may not be in the next plan that you 

are signing up for; is that correct? 

Dr. COHEN. That is right. They will need to go to 

HealthCare.gov and look at their options and see whether or not 

their provider is—— 

Mr. PRICE. Let me talk about a couple of specific challenges that 

patients have. The individual mandate, which would have been 

complied with because of the CO–OP, does that mean that the individual does not have to become subject to the individual mandate 

depending on whether he or she is able to get coverage? 

Dr. COHEN. So our goal has always been for coverage, and these 

folks are clearly, you know, saying, ‘‘I want coverage.’’ And I think 

we are going to—— 

Mr. PRICE. But the question is whether or not they still have 

to comply with the individual mandate even though they have already fulfilled that. 

Dr. COHEN. So they have fulfilled it, and the mandate says you 

need to have coverage for at least nine months of the year. So at 

this point they will have had coverage for at least nine months of 

the year, and they will not be—— 

Mr. PRICE. There are some CO–OPs that they are not going 

through nine months; is that not correct? 

Dr. COHEN. There was one CO–OP earlier in the year that—— 

Mr. PRICE. What about deductibles? If an individual paid part 

of their deductible in the CO–OP and then they move to a different 

plan, does that deductible transfer over or does the individual have 

to make their new deductible? 

Dr. COHEN. It would depend on the individual situation. 

Mr. PRICE. The fact is that it is not likely that the deductible 

will be accepted by the next insurance company; is that not correct? 

Dr. COHEN. So we are making sure that folks have coverage 

through the end of the year, which is why it is very important that 

we did our work now to make sure that there are no midyear closures so that—— 

Mr. PRICE. More money is going to come out of pocket and—— 

Dr. COHEN [continuing]. They can make it through the—— 

Mr. PRICE [continuing]. More difficult access to care. 

I have got just a few minutes left. In the original final rule on 

CO–OPs it said, quote, ‘‘All CO–OP loans must be repaid with interest and loans will only be made to private nonprofit entities that 

demonstrate a high probability of becoming financially viable.’’ 

How many CO–OPs got loans? 

Dr. COHEN. A total of 24. 

Mr. PRICE. And how many remain in business as of the end of 

this year? 

Dr. COHEN. At the end of this year we will have 11. 

Mr. PRICE. At the end of this year we will have 11. 

Dr. COHEN. That is right. 

Mr. PRICE. Which means I think 11 are closing, correct? 

Dr. COHEN. So there are 12 that will be closing, one that closed 

a while back. 

Mr. PRICE. So how did you do on a high probability of becoming 

financially viable when 50 percent of them have closed? 


ralbany on LAP520R082 with HEARINGS
29 

Dr. COHEN. So obviously we wish we would have a better batting average here, but we wanted to make sure that overall that 

we kept the consumer at the center of this process. We wanted to 

make sure that we did our oversight role and took—— 

Mr. PRICE. The fact is that these are not working for patients. 

They simply are not working for patients from a health care standpoint or from a financial standpoint. 

I want to touch very briefly in my closing seconds on this comment that you just made to Mr. Kind, and you mentioned that the 

amount of increase in premiums for individuals is seven percent. 

You were very careful to mention that it was in the Silver Plan. 

What if you take all four of the plans together? What is the increase that was seen in 2015 in premiums for individuals in all 

four plans? 

Dr. COHEN. I think it is important when you talk about rates 

you have to talk about—— 

Mr. PRICE. Twenty, point, three percent, Dr. Cohen, 20.3 percent. 

What is the projection of all four plans in 2016? 

Dr. COHEN. So it is important to remember that an average—— 

Mr. PRICE. Twenty, point, three percent, Dr. Cohen. 

Dr. COHEN [continuing]. Person gets about $270. 

Mr. PRICE. The fact of the matter is costs are going up. Access 

is going down. Quality is being limited. 

Chairman BRADY. Thank you very much. 

Let us ask questions; answer questions promptly. We are going 

to move through this on time, and, Mr. Smith, you are recognized. 

Mr. SMITH. Thank you, Mr. Chairman. 

And thank you, Dr. Cohen, for sharing with us your expertise 

and insight. 

I need to express my frustration and I also though want to express my understanding that there are perhaps some frustrating 

points of your job as well. 

Back in the summer of 2013, Pam Weldon, a constituent, approached me unprompted and presented me with her cancellation 

letter. That was certainly a plan that she liked, and it even covered 

her preexisting condition. She could afford it, and you know, fast 

forwarding a little bit to November 14th, she learned that the Platinum Plan she had chosen from the CO–OP in Nebraska and Iowa, 

CoOpportunity Health, she had chosen to replace the first plan she 

lost that was being discontinued. She would again have to choose 

a new plan. 

Then she learned at the beginning of 2015, that CoOpportunity 

Health would be going out of business, forcing her to again find a 

new plan. 

I have a letter here, and I would ask unanimous consent for submitting Pam Weldon’s letter into the record. 

Chairman BRADY. Without objection. 

[The information follows:] 


ralbany on LAP520R082 with HEARINGS
30 


ralbany on LAP520R082 with HEARINGS21367.012
31 


ralbany on LAP520R082 with HEARINGS21367.013
32 


ralbany on LAP520R082 with HEARINGS21367.014
33 


ralbany on LAP520R082 with HEARINGS21367.015
34 


ralbany on LAP520R082 with HEARINGS21367.016
35 


ralbany on LAP520R082 with HEARINGS21367.017
36 


ralbany on LAP520R082 with HEARINGS21367.018
37 

f 


ralbany on LAP520R082 with HEARINGS21367.019
38 

Mr. SMITH. This may be our first hearing dedicated to the topic, 

but certainly Nebraskans have been living with this failed CO–OP 

for nearly a year, and I have asked several questions of the department, of HHS. I spoke and wrote to Secretary Burwell, and actually I am awaiting more answers, certainly more solid answers. 

And I would like to submit for the record the letter that I sent 

Secretary Burwell in January. 

Mr. JOHNSON [presiding]. Without objection. 

[The information follows:] 


ralbany on LAP520R082 with HEARINGS
39 


ralbany on LAP520R082 with HEARINGS21367.020
40 

f 


ralbany on LAP520R082 with HEARINGS21367.021
41 

Mr. SMITH. And, Dr. Cohen, we have had, you know, various 

meetings, hearings about the overall situation with Obamacare, 

and I have followed up numerous times with various obviously 

questions and just concerns about taxpayer dollars, and actually I 

would like to also submit for the record, and request unanimous 

consent to place my questions and the Secretary’s responses into 

the record. 

Mr. JOHNSON. Without objection. 

[The information follows:] 


ralbany on LAP520R082 with HEARINGS
42 


ralbany on LAP520R082 with HEARINGS21367.022
43 


ralbany on LAP520R082 with HEARINGS21367.023
44 

f 


ralbany on LAP520R082 with HEARINGS21367.024
45 

Mr. SMITH. Thank you. 

Now, finally, on September 30th, I joined Chairman Brady and 

my colleague, Mr. Roskam, in sending a letter to the Acting CMS 

Administrator seeking further information on CO–OP solvency and 

oversight. We requested a response by October 14th, but have not 

yet received a response. 

In the meantime, actually in the meantime, seven additional 

CO–OPs have collapsed. I am sure you are well aware of that, and 

I would like to request unanimous consent to submit that letter for 

the record as well. 

Mr. JOHNSON. Without objection. 

[The information follows:] 


ralbany on LAP520R082 with HEARINGS
46 


ralbany on LAP520R082 with HEARINGS21367.025
47 


ralbany on LAP520R082 with HEARINGS21367.026
48 

f 


ralbany on LAP520R082 with HEARINGS21367.027
49 

Mr. SMITH. And I have a question. What did HHS or why did 

HHS deny in our case, Nebraska-Iowa CoOpportunity Health’s request to suspend enrollment? 

Dr. COHEN. Why did we deny their request to suspend enrollment? 

Mr. SMITH. Correct. 

Dr. COHEN. I am not actually familiar with that request and 

that denial. I know that I would say any of those decisions we do 

in coordination with the State Department of Insurance, who are 

the primary regulators of the insurance companies. They obviously 

have additional information about the state of play of any one of 

the insurance companies, the state of the risk pool. 

I am happy to take back and look further to understand sort of 

the sequence of events there for you. 

Mr. SMITH. Right. I would really appreciate that because it appeared then that Tennessee then requested a suspension of enrollment and that was granted. So any background that you could give 

to us on that scenario of perhaps what the standards are for either 

granting or denying the requested suspensions in enrollment. 

I actually asked the Tennessee Insurance Commissioner about 

her interactions with HHS, and she told us that HHS, quote, ‘‘certainly had a differing opinion about the financial stability of the 

company,’’ end quote, and referring certainly to the Community 

Health Alliance there in Tennessee. 

Now, in Nebraska and Iowa, the Life and Health Insurance 

Guaranty Associations have begun paying out $80 million to cover 

outstanding claims on CoOpportunity Health policies. Will providers in other States where CO–OPs have shut down be made 

whole? 

Dr. COHEN. I am sorry. Can you repeat that? 

Mr. SMITH. Will providers in other States where CO–OPs have 

shut down be made whole? 

Dr. COHEN. So the reason we have been doing the work we have 

and the oversight place is to make sure that CO–OPs could make 

sure to pay out the remaining claims over the course of this year 

and have an orderly wind-down process, and we do that in coordination with the State Departments of Insurance. 

Obviously like in the case of Nebraska, there is a guaranty fund 

that is a backstop for consumers there to make sure that claims 

are paid. 

Mr. SMITH. I have further questions, but my time has expired 

so I will submit those in writing. I request your assistance in getting those answered. 

Dr. COHEN. Absolutely, Congressman. 

Chairman BRADY [presiding]. Thank you. 

Mr. Pascrell, you are recognized. 

Mr. PASCRELL. Yes, thank you, Mr. Chairman. 

Mr. Chairman, I have heard a lot of crocodile tears. Let us get 

down to the nitty gritty. 

You are attempting to do to the ACA what you did to the IRS. 

You are trying to choke the funding. Let us put it all on the table. 

That is the bottom line. That is where you are heading. 

I have listened very carefully to our astute folks on the other side 

of the aisle. The health insurance marketplace is rooted in competiVerDate Sep 11 2014 06:09 Oct 13, 2016 Jkt 021367 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21367.XXX 21367

ralbany on LAP520R082 with HEARINGS
50 

tion. I think you are for competition. That is all you talk about, or 

do you believe in it? 

When the ACA was being crafted some advocated strongly for the 

public option because I believed, as many others, that would truly 

drive competition and consumer choice in the marketplace. The 

public option was not part of the final bill. 

It is imperative that local nonprofit insurers continue to be part 

of the marketplace. In the State of New Jersey our CO–OP, Health 

Republic of New Jersey, the name of the CO–OP, offers 17 plans 

on the marketplace in 2016. The CO–OP offered the lowest priced 

Silver Plan on the marketplace and enrolled over 60,000 residents 

last year. 

New Jersey was unique in that our State has an unusually small 

number of insurers offering plans. No competition. In fact, when 

you look through all of the 50 States before the ACA, there was 

very little competition going on in those States, and we know what 

the results of it were in premiums and everything else. 

Since the marketplace opened for business, new insurers have 

come into the marketplace, into New Jersey. Five insurers are now 

offering a total of 59 plans for 2016, and premium increases have 

been much lower than the average. 

So I have got some questions, Dr. Cohen. I am not the grand inquisitor. So I come as a friend. Can you discuss what we have seen 

on a national scale with respect to competition and choice in the 

health insurance marketplaces? 

Dr. COHEN. Yes. Thank you. 

We for the coming 2016 year, we recently released information 

about what consumers can experience now if they go to 

HealthCare.gov in the federally facilitated marketplace States, and 

the average consumer can choose amongst 50 plans and five 

issuers, and 90 percent of folks are looking at three or more issuers 

to choose from. 

So, you know, that is great progress in terms of the competition 

that is available to them in the marketplace, and again, I want to 

make sure that folks know that in addition, what is so unique 

about the marketplace is the financial assistance. We know that 

eight in ten are taking advantage of that financial assistance. 

Mr. PASCRELL. Thank you. 

The Affordable Care Act has been successful, I think, in arming 

consumers with the tools that they need in order to make these 

judgments. We want people to go on there, want people to study 

these different plans because my needs are different than your 

needs, et cetera. 

The designation of the plans by metal and the user friendly 

interfaces on HealthCare.gov help consumers compare apples to apples when shopping for health insurance. 

Dr. Cohen, during the open enrollment period which just started, 

consumers will be able to do more than compare coverage and premiums between different plans. HealthCare.gov now has a feature 

that helps people understand out-of-pocket costs. 

Dr. COHEN. Right. 

Mr. PASCRELL. Very concerned about out-of-pocket costs. Can 

you tell us a little bit about how that works and how you think it 

is going to improve the situation? 


ralbany on LAP520R082 with HEARINGS
51 

Dr. COHEN. Yes, absolutely. We share your concern your concern about out-of-pocket cost because it is not just the premium per 

month that people are paying, but it is that total out-of-pocket cost. 

Mr. PASCRELL. Do you think most people understand that 

when they go to compare? 

Dr. COHEN. We know that it is a challenge. 

Mr. PASCRELL. Well, why are we not telling people? Why are 

we not educating people? 

Dr. COHEN. Actually when you go to the HealthCare.gov site, it 

actually walks you through the definitions. 

Mr. PASCRELL. Right. 

Dr. COHEN. Premium, deductive, out-of-pocket cost, and now for 

the first time in this open enrollment season we have an out-ofpocket cost calculator. It tries to ask you a few simple questions 

about you, your family. Are you a high utilizer of health care? Do 

you have a chronic illness? Do you take prescription drugs ongoing, 

or if something bad happens, do you use the doctor? 

And it helps you understand what type of product might be the 

best fit for your family. 

Mr. PASCRELL. Every State had the ability to get money from 

the Federal Government to educate the public about these changes 

that have been going on over the past several years. 

Our State of New Jersey chose the governor—may I finish my 

sentence, Mr. Chairman? 

Chairman BRADY. Yes, sir. 

Mr. PASCRELL. Thank you. 

My State of New Jersey, the governor of that State chose not to take the $7.5 million, which is what it was in New Jersey, to help 

educate the public. On every turn my friends on the other side of 

the aisle and their counterparts in State governments have tried 

to close down the ACA, for the record. 

Thank you, Mr. Chairman. 

Chairman BRADY. The gentleman’s time has expired. Thank 

you. 

Ms. Jenkins, you are recognized. 

Ms. JENKINS. Thank you, Mr. Chairman. 

And thank you, Dr. Cohen, for being here with us today. 

Dr. COHEN. Thank you. 

Ms. JENKINS. The recent developments and failings of 

Obamacare’s CO–OP Program are extremely disconcerting to me 

and should be for all Americans. Hard earned taxpayer money has 

once again been wasted with now almost half of all the CO–OPs 

resulting in failure. 

And according to the Office of Inspector General, many more 

CO–OPs remain at risk of shutting down. This is not only a disaster for all of Americans who have lost their health insurance 

plan, but also for the American taxpayer. Billions of dollars of taxpayer funding has been wasted; hard earned taxpayer dollars were 

wasted on a program that was improperly designed at the most 

fundamental level. 

This is exactly the sort of thing that I and so many others 

warned about during the debate on Obamacare. When the government gets so deeply entangled in the private sector, things go 

badly. 


ralbany on LAP520R082 with HEARINGS
52 

Now we must seek to understand what led to the massive failure 

and what, if anything, we can do moving forward to avoid the situation in the future. 

Dr. Cohen, CMS joined by State regulators allowed certain CO– 

OPs to reclassify their start-up loans as surplus notes, as the chairman noted. This means that CO–OPs would be able to categorize 

these loans as equity rather than liability on their balance sheet, 

essentially allowing some CO–OPs to appear to satisfy CMS’ 500 

percent risk-based capital requirement. 

Of course, the truth is the underlying economic substance of the 

CO–OP has not been changed. This is basically an accounting trick. 

Can you tell us and give us any idea how popular this shell game 

is with the remaining CO–OPs? 

So how many States applied for a start-up conversion? 

Dr. COHEN. So I want to make sure to let you know that we 

share your concern about being good stewards of taxpayer dollars. 

We are going to use every tool at our disposal to make sure that 

any funds that can be recovered back for the taxpayer will be for 

this program. 

On this question in particular about the conversion that we were 

talking about, we look at those on an individual case-by-case basis, 

as I was mentioning. We do that in coordination with the State Departments of Insurance and then make a decision about whether 

or not that is the appropriate thing to move forward in that position. 

I believe we have done that for seven of the CO–OPs. 

Ms. JENKINS. Do you know which States? 

Dr. COHEN. I have that I am sure in my many—I am happy to 

search through and give you the list now or I am happy to follow 

up if that is helpful. 

Ms. JENKINS. Okay. If you can put your finger on it relatively 

quickly. If not, if you can get that to the committee. 

Dr. COHEN. The seven that have gotten the conversion, I have 

it: Arizona, Michigan, Oregon, Colorado, New Mexico, Connecticut, 

and Wisconsin. 

Ms. JENKINS. Okay. How many States were granted a start-up 

conversion? 

Dr. COHEN. Those are the seven that were granted the conversion. 

Ms. JENKINS. So all seven of those States were granted. 

Dr. COHEN. That is right. 

Ms. JENKINS. How many States have applications for a startup conversion pending? 

Dr. COHEN. We have a number pending. I do not know the 

exact number that are pending. 

Ms. JENKINS. Can you get those to us and which States are 

pending? 

Dr. COHEN. I will see what I can do in follow-up. I know that 

there is market sensitivity about sharing. Once it is done, I am 

able to share that information, which is why I can share who has 

already been approved. While it is in consideration, there are market sensitivities, but I will be happy for our staff to work with 

yours to see what we can provide. 


ralbany on LAP520R082 with HEARINGS
53 

Ms. JENKINS. Okay. How many were rejected for a start-up conversion? 

Dr. COHEN. The same thing. I know there are some market sensitivities around it, but I will see what we can do in terms of providing that information. 

I know I am allowed to, which I have in front of me, I am allowed to share those that we have approved, but I will get back to 

you about the ones—— 

Ms. JENKINS. Okay. Do you know how many of the remaining 

CO–OPs would have failed the risk-based capital test but for their 

participation in the start-up conversion process? 

Dr. COHEN. I do not know the answer to that question. 

Ms. JENKINS. Okay. Can you try to get us that? 

What specific monitoring and oversight activities has CMS conducted for those specific CO–OPs that would not have met the riskbased capital test without the start-up conversion process? 

Dr. COHEN. So we obviously do a number of oversight activities, 

as I was reading off a litany before, whether it is on-site visits and 

the increased reporting, but what I would say is that we do that 

in partnership with the State DOIs. They are the folks that day to 

day are managing the health of these insurance companies and 

making sure they are operating within the parameters of the State. 

And so we work very closely for that ongoing oversight, and we 

will continue to do that for the CO–OPs that continue to be in existence. 

Ms. JENKINS. Okay. Thank you, Dr. Cohen. 

I yield back the balance of my time. 

Dr. COHEN. Thank you. 

Chairman BRADY. Thank you, Ms. Jenkins. 

Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

I thank you for being here, Dr. Cohen. 

Dr. COHEN. Thank you. 

Mr. MARCHANT. This last week I read four articles about the 

CO–OPs. The first one was in the New York Times. The headline 

was ‘‘Health Care CO–OP Closings Narrow Consumer Choices,’’ not 

exactly a right-wing institution. 

Bloomberg Business, ‘‘Your Health Plan Will Now Destruct was 

the headline. 

Newsweek, ‘‘The Calamitous Collapse of the Obamacare CO– 

OPs,’’ again, not a right-wing organization. 

And the Washington Post, ‘‘Financial Health Shaky at Many 

Obamacare Insurance CO–OPs.’’ 

So do these articles make a fair representation of the status of 

what is going on with the CO–OP Program? 

Dr. COHEN. Well, the facts on the ground know that 12 of the 

CO–OPs will not be continuing to 2016 of the 24, and obviously our 

job is to protect consumers, make sure that we are being good stewards of taxpayer dollars, but also supporting what we think is a 

very important program adding additional competition into the 

marketplace. 

I think it is important to also remember that CO–OPs are only 

one piece of the larger Affordable Care Act which we have been 


ralbany on LAP520R082 with HEARINGS
54 

talking about and, you know, make up a larger piece of what consumers are experiencing when they go to HealthCare.gov. 

So, again, we had some work to do on the oversight front, which 

we have done, in order to make sure that consumers knew that if 

they went to the marketplace now, that they can put their faith in 

the products that are there. They know that they are financially 

viable and will be there to provide them coverage for next year. 

Mr. MARCHANT. Is your agency looking to use the surplus in 

the transitional reinsurance program to support the CO–OPs that 

remain open? 

Dr. COHEN. Are we looking at using the reinsurance dollars to 

support the CO–OPs? No. That appropriation is for the reinsurance 

program for the entire market. That will be used for the three 

years that the program—— 

Mr. MARCHANT. No, use the surplus. 

Dr. COHEN. No, the surplus carries over to the next year of the 

reinsurance program and will be used with the reinsurance program itself, which applies well beyond the CO–OPs to all of the 

issuers participating in the marketplace. 

Mr. MARCHANT. So if you took the amount of money that was 

lost, would you agree that the $1,072,000,000 number is correct 

about the amount that was lost last year? 

Dr. COHEN. That is the number of dollars that were loaned to 

these CO–OPs. As I mentioned to the Congresswoman, we are 

going to be using every tool available to recover taxpayer dollars 

here. Obviously that money went to provide coverage to Americans 

over the past two years. So we know all dollars will not come back 

to us, but we will be using all tools available to recover any 

unspent taxpayer dollars. 

Mr. MARCHANT. That money will go back into the fund? 

Dr. COHEN. To the Treasury. 

Mr. MARCHANT. To the Treasury or will it go back to into—— 

Dr. COHEN. To the Treasury. 

Mr. MARCHANT [continuing]. A revolving fund that goes out to 

the other CO–OPs? 

Dr. COHEN. No. I do not want to give you inaccurate information. So let me follow up on when we recover money where that 

money goes exactly, whether it comes back to the CO–OP Program 

or back to the Treasury. 

Mr. MARCHANT. Is 400,000 a correct number to use? Is that 

participants who have lost or is that the number of policies that 

have been lost? 

Dr. COHEN. That is a good question. I will have to follow up 

whether it is participants or policies. What I would say is that that 

represents folks not just in the marketplace. It represents folks potentially inside and outside the marketplace in the individual market and in the small group market, and depending on the CO–OP 

and what book of business they picked up, some even picked up 

some Medicaid managed care business as well. So those numbers 

can represent a mix of different types of policies. 

Mr. MARCHANT. Well, if you took that number and divided 

using 400,000 into the amount of money lost, it is about $2,700. 


ralbany on LAP520R082 with HEARINGS
55 

Dr. COHEN. So again, not money lost. We still have tools at our 

disposal to recover that fund, as well as that money went to pay 

claims and coverage for Americans over the last several years. 

Mr. MARCHANT. And my last question is: using the business 

metaphor, when you inject this loan in there, you have to have 

some repayment scheme in mind. The insurance companies have to 

have some eventual repayment of this money that they presented 

you or did you make them in their business plan tell you when and 

under what circumstances they would pay the money back? 

Dr. COHEN. Yes, absolutely. All of the companies that applied 

for this, and I will say almost 150 entities applied to be CO–OPs 

and we only chose the best 24. Obviously they presented business 

plans—sorry, Chairman—business plans and strategies. Obviously 

though when the rubber hits the road and reality hits, business 

plans are just that, plans, and then we have to evaluate them as 

they move along. 

Chairman BRADY. Thank you. The time has expired. 

Mr. Davis, you are recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. 

And thank you, Dr. Cohen, for being here. 

I have always been a big fan of co-ops ever since I have understood what they were, and I view them as a great business model 

because they actually spanned opportunity and create opportunity 

for more people to be engaged and involved in the process of commerce in our society and in our country. 

I come from Illinois where our experiences with the Affordable 

Care Act have been great, quite good. I mean it has generated tremendous returns for our citizens in terms of health care and other 

kinds of benefits that we have experienced as well. 

It has also been my experience that with start-up businesses, if 

they do not have enough capital or if they do not have the capital 

resources that are needed, it increases the likelihood that they are 

going to have some difficulty and in many instances they actually 

fail. 

And so we have had CO–OPs that have been successful. We have 

had some that were not so successful, but the one thing that we 

do know is that many important Affordable Care Act protections 

have made dramatic improvements to American lives. These include a prohibition on health insurers denying coverage for children with preexisting conditions. 

The Administration estimates that 17.6 million children are no 

longer denied coverage by insurers because of an illness. Additionally, 105 million Americans have had lifetime coverage limits eliminated. 

You obviously travel throughout the country, and I suspect that 

you have met a lot of people from all political parties who have 

benefitted from these protections. What do people tell you about 

the Affordable Care Act and how it has helped them? 

And what would happen to these people if my Republican colleagues got their way and were able to actually dismantle this law 

and these programs? 

Dr. COHEN. So it is interesting. Once we get outside of our 

world here at CMS and are able to interact with folks who are benefitting from the new options of coverage and taking advantage of 


ralbany on LAP520R082 with HEARINGS
56 

the tax credits, it is not about politics for them. It is really about 

what is right for their family, and that for the first time they are 

able to compare choices and find something that is affordable for 

them. 

I think poignant in my mind were some particular parents who 

were able to start their own new business. They had wanted to for 

a long time, had been thinking about it, but because one of their 

young children had a severe illness, they worried about what coverage would look like for them on the individual market and so 

stayed with the job they had, which they were lucky enough to 

have, but what the Affordable Care Act gave them was that freedom and flexibility to start the new business and find coverage that 

worked for them and for their children. 

And that is what we hear about every day, whether it is coverage 

for someone who has a preexisting condition or just thought it was 

out of reach for them; a young person who goes and gets one of 

their preventative care visits and realizes they had high blood pressure, and as a physician I am like, ‘‘Great. Get on your ACE inhibitor now so that they prevent problems well into the future.’’ 

So those are the kinds of success stories, small, but each build 

up to something really great. 

Mr. DAVIS. Well, thank you very much, and I think that they 

would say the risk that we take is worth it even if there are some 

instances where we are not exactly successful, but they are in 

much better shape than they were before the ACA was passed. 

Thank you, Mr. Chairman. I yield back. 

Chairman BRADY. Thank you. 

Mrs. Black, you are always good about joining the Health Subcommittee. You are recognized for five minutes. 

Mrs. BLACK. Thank you, Mr. Chairman. It is great to be a part 

of this Committee. 

And, Dr. Cohen, thank you for being here to testify today. 

Dr. COHEN. Thank you. 

Mrs. BLACK. Dr. Cohen, my friends on the other side of the aisle 

would suggest that Congress is at fault for this failure. We have 

heard it several times, and because we stopped good taxpayer 

money following after bad, and I suspect that we could have 

pumped billions of dollars more into this program and still not 

overcome what I think are the fundamental problems of this program. 

So let us talk about the program that the Democrats actually designed. This is not a Republican design. Let us talk about that. Let 

me ask you a couple of questions. 

In this program could a health insurer applying for a loan under 

the CO–OP Program be a for-profit entity? 

Dr. COHEN. So there are restrictions in terms of the types of 

dollars that the CO–OPs could get. They could get a bank loan and 

other types of outside loans. There are restrictions about whether 

or not that outside capital would influence the governance structure, which is pretty prescriptive in statute. 

And, again, I think as you have heard, that governance structure 

is really consumer driven, and that was why the nature of the program was put in there. 


ralbany on LAP520R082 with HEARINGS
57 

So it does limit their options. It also prohibits them from merging 

or getting dollars from another for-profit insurer. 

Mrs. BLACK. The answer really is no on that. 

So let me ask you this. Could a health insurer applying for a 

loan under the CO–OP Program use the funding for marketing? 

Dr. COHEN. They are not allowed to use their dollars for marketing. What I would say is that one of the things the Affordable 

Care Act does and HealthCare.gov in particular, it allows for CO– 

OPs to be listed side by side of some of the much more established 

plans and so they can compete on price and benefits, which is what 

the CO–OPs—— 

Mrs. BLACK. In fact, what happened in the State of Tennessee 

is we had our CO–OP could not market. So what they were doing 

is giving free cell phones, and they were stopped by our Commissioner as a result of that. 

Could a health insurer applying for the loan under the CO–OP 

Program be one that actually operated as a health insurer prior to 

the law’s passage? 

Dr. COHEN. There are some restrictions about getting funding 

from current insurers. I would have to look back if there is a statute of limitations of how long ago they were an insurer, et cetera, 

about getting funding. 

Mrs. BLACK. Essentially the answer is no. 

So here is the situation. The American taxpayer has invested 

$2.4 billion, and this is taxpayer money, into a group of folks who 

never operated an insurance company before, never made any 

money at it, and in your testimony you also answered a question 

to say they had no previous claims experience, which was a problem, and they could not advertise their product to potential customers. 

It seems like it is awfully difficult given those circumstances, 

that there are some really fundamental problems with the program 

to begin with. 

You are an internist; is that correct? 

Dr. COHEN. That is right, ma’am. 

Mrs. BLACK. Have you practiced in private practice? 

Dr. COHEN. I have not practiced in private practices. 

Mrs. BLACK. Oh, you have not. Okay. Well, I would just set forward this scenario in real life because I have worked with physicians who have practice in private practice, and I know how important it is to have a business manager operating their particular office. So let us just say they hired someone that said, ‘‘Oh, by the 

way, I have never operated a physician’s office and I have never 

made any money at it. I have no experience in previous claims, and 

I am not going to advertise.’’ 

Do you think that office could be successful with that business 

manager being in charge? 

Dr. COHEN. What I think it is important to step back and recognize about the CO–OP Program is that they were designed specifically to have a governance board that was consumer driven. I think 

that was the heart of it. I think you had some of your other colleagues mention that this is not unique to the health care space. 


ralbany on LAP520R082 with HEARINGS
58 

Mrs. BLACK. Just real quickly because I am going to run out of 

time here, I do want to ask a question about what you expect to 

recover. Do you all have a number that you expect to recover? 

Dr. COHEN. We are doing the work right now with the CO–OPs. 

As you know, the recent announcements they are still winding 

down over the course of this year. As I mentioned, we take taxpayer dollars very seriously but—— 

Mrs. BLACK. But you do not have a number that you anticipate? 

Dr. COHEN. No, not right now. 

Mrs. BLACK. And I just may close by saying the reason why coops work in other situations, and I like them; we have farmers coops. We have an electric co-op. We have other utility co-ops, and 

the reason why they work is because everybody in it has skin in 

the game. It is not taxpayer dollars. It does not come from some 

dropping of dollars out of the sky. It works because everybody that 

is in it has something in the skin of the game. Here we have taxpayer dollars to the point of $2.4 billion, and 

that is a real concern. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Chairman BRADY. Thank you, Mrs. Black. 

I would like to thank you, Dr. Cohen, for your testimony today. 

I appreciate your continued assistance. A number of questions were 

raised, and if you would follow up with them. 

As well, as a reminder, any Member who wishes to submit questions for the record will have 14 days to do so. If any of them do, 

please respond in writing in a timely manner. 

Again, thank you very much for being here today. 

With that, the committee is adjourned. 

[Whereupon, at 3:59 p.m., the subcommittee was adjourned.] 

[Member Questions for the Record follows:] 


ralbany on LAP520R082 with HEARINGS
59 


ralbany on LAP520R082 with HEARINGS21367.028
60 


ralbany on LAP520R082 with HEARINGS21367.029
61 


ralbany on LAP520R082 with HEARINGS21367.030
62 

Æ 


ralbany on LAP520R082 with HEARINGS21367.031