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Chairman Brady: The State of Obamacare’s CO-OP Program

November 03, 2015

WASHINGTON, DC — Today, House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) delivered the following opening statement during a hearing on the status of the Consumer Operated and Oriented Plan (CO-OP) Program, established under the president’s health care law.

“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 Program, also known as CO-OPs. Supporters of this program argued it would increase competition in the 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 knew how to micromanage ‘competition’ instead of letting consumers and markets do what they do best.

“What could go wrong? Well, as it turns out, quite a lot. First, CMS essentially allowed anyone to participate in the program, regardless whether 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’s 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 have found their health care security has been thrown in limbo.

“I’m interested to hear Dr. Cohen’s position, but I suspect we’re never getting this money back. What’s most surprising about this situation is the Administration 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.

“I’m not interested in blame. I’m interested in understanding how many of these programs are headed to failure, discussing where 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. Bureaucrats in Washington don’t have the expertise to institute top-down programs in the name of ‘competition.’

“Look, we’ve got serious problems with provider participation in some areas. Blue Cross Blue Shield of Texas just shut down a plan and narrowed the network in another. But artificially trying to inject competition into a market by backing shoddily designed start-ups is no fix.

“For true choice and competition, we need to empower patients. We need to eliminate the mandates that eliminate or reduce choice. And we need to increase transparency so patients can be informed shoppers.

“Today, we’re 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 taxpayer dollars going forward and ensure greater choice, competition, quality and access for beneficiaries and their families.”